In a major crackdown on fintech fraud, the U.S. Federal Trade Commission (FTC) has ordered Cleo AI, a cash advance app, to pay $17 million in penalties over misleading financial practices. The Cleo AI scandal has left thousands of struggling Americans feeling deceived, as the company allegedly baited users with fake loan promises and locked them into difficult-to-cancel subscriptions.
According to the FTC, Cleo AI lured users by advertising instant cash advances ranging from $250 to $500. However, many borrowers received only a fraction of that amount, sometimes as little as $20. Worse still, the so-called “instant” advances often arrived a day late, despite customers paying additional fees for expedited transfers.
But the deception didn’t stop there. The FTC revealed that Cleo AI charged unsuspecting users between $5.99 and $14.99 per month for premium subscriptions, even after multiple cancellation attempts. In some cases, customers were forced to repay small advances before they were even allowed to exit the service—essentially trapping them in a cycle of unexpected fees.
FTC Chair Lina Khan condemned the company’s actions, calling them not just misleading but outright predatory. “They took advantage of people at their most desperate moments,” she stated.
The lawsuit, filed in a Manhattan federal court, revealed that Cleo AI used an AI-driven risk scoring system to determine loan eligibility. However, the company failed to properly disclose key limitations or the fine print, leaving financially vulnerable individuals in the dark about the true terms of the service.
For many, the impact was devastating. One user, struggling to make ends meet, expressed their frustration:
“They prey on the poor. I was counting on that money to feed my kids.”
Despite denying any wrongdoing, Cleo AI has agreed to the settlement, promising to overhaul its practices. The company’s general counsel, Colin Jones, defended the decision, saying it was made “to keep our focus on helping users, not fighting lawsuits.”
This landmark fine serves as a stark warning to fintech companies: deceptive tactics targeting low-income Americans will not go unpunished. As regulatory scrutiny increases, digital lenders will need to ensure transparency and fairness—or risk facing serious consequences like the Cleo AI scandal.
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