FTC to ban “deceptive” mobile-banking app
On March 29, the FTC announced a proposed stipulated final order against the operators of a mobile banking app to settle allegations that the defendants deceived users about their supposedly high-interest bank accounts and falsely promised users “24/7” access to their funds. As previously covered by InfoBytes, the FTC alleged, among other things, that the defendants represented that users would receive “‘minimum base’ interest rates” of at least 0.2 percent or 1.0 percent, but that users actually received a starting interest rate of 0.04 percent and stopped earning any interest if they requested that their funds be returned. The FTC also claimed that while the defendants promised users 24/7 access to their funds and represented they could make transfers out of their accounts and receive requested funds within three to five business days, some users waited weeks or months to receive funds despite repeated complaints to the defendants, while other users stated they never received their money.
The proposed stipulated final order bans the defendants from operating or advertising a mobile banking app or any other product or service that can be used to deposit, store, or withdraw funds, and prohibits them from misrepresenting the interest rates, restrictions, and other aspects of any financial product or service. Additionally, the defendants must issue full refunds, including interest, to all customers. The FTC vote approving the stipulated final order was 3-1, with Rohit Chopra, President Biden’s nominee to head the CFPB, voting no. Commissioner Chopra has not published a statement explaining his vote.