In one of the first settlements since the new administration took office, the Federal Trade Commission (FTC) announced a $17 million monetary judgment with Cleo AI to resolve allegations that Cleo violated Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). Cleo operated a personal finance mobile app that purportedly allowed consumers to take out “instant” or same-day cash advances. The vote to authorize the settlement was 2-0.
According to the complaint, Cleo advertised that consumers could access same-day or instant cash advances in the hundreds of dollars. The FTC alleged that when consumers attempted to use Cleo’s services, they were required to enroll in an automatically renewing subscription service where they were charged a subscription cost of $5.99 or $14.99 monthly. Only after the consumers entered in their payment information and enrolled in the subscription service did Cleo disclose to consumers the cash advance they were eligible for.