Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Cash advance app Cleo AI to pay $17 million in FTC settlement over deceptive practices, (Mar 28, 2025)

By George Basharis, J.D.

Financial technology company misled consumers about cash advance amounts, timing, and made it difficult to cancel subscriptions, according to federal regulators.

The FTC announced that Cleo AI, Inc. has agreed to pay $17 million to settle charges that the personal finance app company deceived consumers about its cash advance services. The settlement resolves allegations that Cleo misled customers about how much money they could receive, how quickly funds would be available, and created obstacles for customers trying to cancel their subscriptions (FTC v. Cleo AI, Inc., No. 1:25-mc-00134-LAP (S.D.N.Y. Mar. 27, 2025)).

According to the FTC’s complaint, Cleo’s marketing prominently advertised access to cash advances of “hundreds of dollars,” particularly highlighting “$250 spots” in their promotional materials. The company’s advertisements promised that consumers could receive these funds “instantly” or “today.”

The reality, however, was starkly different. The FTC investigation revealed that Cleo’s internal policies limited cash advances to well below the advertised amounts. For first-time customers, advances were capped at $100, regardless of the marketing claims. Even more striking, during the period between when Cleo began advertising $250 cash advances and when the company received notice of the FTC’s investigation, only a tiny fraction of Plus-tier customers who obtained an advance received the advertised $250.

The company offered two subscription tiers—Cleo Plus at $5.99 per month and Cleo Builder at $14.99 per month—promising higher advance limits for Builder subscribers. However, the FTC alleges that no Builder customer received the advertised $500 limit simply by subscribing. Instead, customers needed to take additional steps, including applying for and being approved for a Builder Cleo credit card and setting up direct deposit from their payroll.

Hidden fees for “instant” access. The FTC complaint also details how Cleo misled consumers regarding the timing of fund availability. While advertisements touted “instant” or “same-day” cash, the reality was that consumers who wanted their money quickly had to pay an additional, previously undisclosed fee ranging from $3.99 to $9.99. Even after paying this expedited processing fee, there was no guarantee the money would arrive the same day—funds might not be available until the next day.

Customer complaints cited in court documents highlight the frustration this caused: “Hi. I just subscribed and paid for IMMEDIATE 35 dollars. Now I go on here and it says up to 24 hrs. I have my son today and he needs food and I need gas to go get it. I can't wait 24 hours, or I wouldn't have bothered,” one consumer stated.

Another consumer expressed similar distress: “There's no other way for me to say it. I need my money right now to pay my rent. I have no other option I can't wait 3 days. I can’t wait 1 day I need it now. I would never have used Cleo if I would have thought I would ever be in this situation.”

Subscription cancellation hurdles. The third major allegation in the FTC’s complaint involves Cleo’s practices around subscription cancellations. Until at least late 2023, Cleo prevented consumers with outstanding cash advance balances from canceling their subscriptions until they had fully repaid their advance. This practice forced consumers to continue paying monthly subscription fees—$5.99 or $14.99 depending on their tier—for a service they no longer wanted to use.

The complaint details how customer service representatives would tell consumers that the “system” would not allow cancellations or that they were “unable to cancel” the subscription while an advance was outstanding. Representatives frequently told customers they could not cancel because they “still have an active loan” or that “a subscription is unable to be canceled when an Advance is active or overdue.”

“I have requested over and over and over to cancel my account and you refuse to, and then deduct another month out of my account after I have requested you cancel my subscription,” one consumer explained, according to the complaint.

Concerns about marketing tactics. The FTC’s documents reveal that Cleo’s advertisements created a misleading impression about the product consumers would receive. For example, one video advertisement compared Cleo to competitors, highlighting that while competitors provided “funds in 2-3 business days,” Cleo provided “quick access to funds.” Other ads featured explicit claims about getting up to $250 “today” or “instantly.”

Internal communications at Cleo, referenced in the complaint, indicated that employees discussed the potentially misleading nature of advertisements. When ads referred to $100 advances, internal chats acknowledged that the advertisements might not align with the actual customer experience.

Customer feedback cited in the complaint consistently revealed disappointment about the disparity between marketing and reality: “And also you said you give 250 advance so you hook people thinking they will get that and then swipe them for monthly hidden fee membership that doesn't help at all,” one customer complained.

Another customer stated: “Cleo says the biggest advance I can get is $30…I won’t ever use this service if it isn’t 100% as advertised. I guess I was misled…Wouldn’t have signed up for that in a million years had I not been misled from the advertising.”

Settlement terms. Under the terms of the settlement, Cleo will pay $17 million, which the FTC intends to use for consumer refunds. The company is also prohibited from:

• Misrepresenting material terms about its cash advances, including the amount of money available to consumers and any fees they will be charged.

• Failing to clearly disclose subscription terms.

• Making charges without obtaining consumers’ express informed consent.

• Failing to provide a simple mechanism for consumers to cancel subscriptions.

The settlement requires Cleo to clearly and conspicuously disclose all material terms of transactions before obtaining consumer billing information, including any fees, restrictions, or conditions. The company must also implement a “simple mechanism” for consumers to cancel the Negative Option Feature (subscription) that is at least as easy to use as the mechanism customers used to sign up.

The Case is No. 1:25-mc-00134-LAP.

Judge: Preska, L.

Attorneys: Adam Saltzman for the FTC.

Companies: Cleo AI, Inc.

News: ConsumerProtection FederalTradeCommissionNews NewYorkNews