NEW YORK :Cleo AI agreed to pay $17 million to settle U.S. Federal Trade Commission charges that the cash advance company deceived consumers about how much money they could obtain and how long it would take, the regulator said on Thursday.
The FTC said almost no one received anything close to the maximum $250 and $500 that Cleo advertised for customers of its Cleo Plus and Cleo Builder subscription services, with some advances totaling just $20.
Cleo was also accused of falsely promising advances “instantly” or “today,” and charged fees for such guarantees – and even then the advances might arrive the next day.
The FTC said Cleo also made canceling subscriptions hard, because the New York-based company required customers to first repay outstanding advances, and kept charging $5.99 or $14.99 monthly fees despite repeated requests to cancel.
Cleo offers advances through mobile apps on Apple and Google stores, and according to court papers, uses an artificial intelligence risk classifier scoring system.
The FTC lawsuit in Manhattan federal court included several complaints from consumers, including one who accused Cleo of “preying on the poor people that need a helping hand.”
Thursday’s settlement requires Cleo to improve disclosures, obtain informed consent before charging for subscriptions and make canceling easy. The $17 million would be refunded to customers.
Cleo denied wrongdoing in agreeing to the settlement, which requires a judge’s approval.
Colin Jones, Cleo’s general counsel, said in a statement that the FTC claims were “inaccurate and reflect a fundamental misunderstanding of our business.”
He nonetheless called settling “the best move to keep our focus where it belongs – improving the financial lives of millions of Americans.”
