The fee structure of Online Bank Dave has been updated after a complaint by the FTC was filed in federal court

What you need to know

• In response to a Department of Justice amended complaint, filed in California courts by an online bank Dave, the company changed its fee structure and attacked regulators.
• Federal Trade Commission originally charged the firm for misleading marketing. A new complaint has added Jason Wilk, co-founder and chief executive officer of the company as a co-defendant.
• Dave stated that the update was necessary because it was the primary focus of the lawsuit, which concerned what customers were required to pay.

Dave Inc. shares (DAVE), a leading online bank, fell 9% on Tuesday after the Federal Trade Commission filed its complaint about the firm with the Department of Justice. The DOJ then filed suit in California.

In the initial charge, the FTC said Dave uses "misleading marketing to deceive consumers about the amount of its cash advances, charges consumers undisclosed fees, and charges so-called 'tips' to consumers without their consent."

In the amended DOJ complaint, co-founder Jason Wilk is named as co-defendant. It said Dave and Wilk marketed the company's app "as instantly providing consumers 'up to $500' without any hidden fees," when in fact few got anywhere near that amount, if they received money at all. Officials added that customers were hit with an "express fee" in order to get immediate cash advances "that they do not clearly disclose before consumers give the app access to their bank accounts."

Dave Eliminating 'Optional Tips and Express Fees' for ExtraCash Product

In response, Dave argued that the new filing was "a continued example of government overreach and includes numerous allegations that are based on various inaccuracies." The firm added that because "optional tips seemed to be a primary focal point of the complaint," it was updating its simplified mandatory fee structure that "eliminates optional tips and express fees for the Company's ExtraCash product."

Despite today's selloff, Dave shares have skyrocketed more than 900% this year.

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