Brigit Settles with FTC for $18 Million Over Deceptive Practices

Brigit, an app firm known for its cash advance and credit building services, has agreed to an $18 million refund to its customers following charges of false advertising by the Federal Trade Commission (FTC). The FTC accused the company of engaging in deceptive marketing tactics by making unfounded promises regarding free and instant cash transfers.

Misleading Cash Advance Promises

The FTC complaint highlighted that Brigit’s claims of providing “instant” cash advances of up to $250 were misleading, as customers were often unable to receive the advertised amount. Moreover, the company mandated a 99-cent fee for immediate transfers or a waiting period of up to three business days. Users found themselves locked into a $9.99 monthly subscription, unable to cancel until they repaid any advances, all the while Brigit continued to charge the subscription fee.

Company’s Response to Allegations

Despite agreeing to the settlement, Brigit has publicly denied any wrongdoing. A company representative expressed Brigit’s disagreement with the FTC’s allegations, asserting that the claims “misunderstand our business” and pledging that the company would have succeeded in court. Nonetheless, Brigit opted for a settlement to avoid protracted litigation and focus on its mission of promoting financial health.

Terms of the Settlement

The proposed settlement, awaiting judicial approval, will not only involve refunds but also prohibit Brigit from misleading consumers about the availability and speed of cash advances, associated fees, and the ability to cancel services. The company will be required to clearly disclose terms related to its subscription products and simplify the cancellation process for customers.

A Broader Issue: Paycheck-to-Paycheck Living and Predatory Practices

The issue Brigit’s settlement highlights is part of a larger problem affecting approximately 61% of Americans who live paycheck-to-paycheck and are vulnerable to predatory lending practices. Government agencies, including the FTC and Consumer Financial Protection Bureau, are intensifying their efforts to combat such practices.

Consumer Protection Advice

The FTC advises consumers to remain vigilant against scams and misleading claims, urging them to document cancellation attempts and to contact their financial institutions if charges persist after cancellation. The FTC also provides resources for consumers to navigate free trials, auto-renewals, and to avoid “negative option” billing situations.