Refunds to come from settlement with FTC
Personal finance app Brigit will pay $18 million in refunds to consumers as a result of a settlement with the Federal Trade Commission (FTC).
The FTC determined that Brigit deceived consumers by promising cash advances of up to $250 and then locking them into a subscription service that they couldn't cancel.
“Brigit trapped those consumers least able to afford it into monthly membership plans they struggled to escape from,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that offer cash advances and other alternative financial products have to play by the same rules as other businesses or face potential action by the FTC.”
Brigit marketed its products as an app-based short-term loan based on a customer's paycheck. The borrower would take a loan and the loan would be repaid on that borrower's next payday.
Brigit's advertising and promotions suggested the loans would carry no interest. However, in order to receive access to cash advance features, customers had to sign up for a $9.99 subscription plan. Customers were not allowed to cancel the plan if they had an open advance.
In fact, even customers without an open advance found it difficult to cancel and were often continually charged the $9.99 monthly fee.
Additionally, while Brigit promoted "instant" cash advances, the "instant" feature carried a 99 cent fee. Without paying the fee, the cash advances took three business days.
Following the payment of the settlement, the FTC will distribute refunds to impacted consumers.