Hello Digit charges a $5 monthly subscription fee for its personal finance management app designed to help people put money aside for things like vacations and rainy days.

The app uses a proprietary algorithm to make automatic transfers from the consumer’s checking account, called “auto-saves,” to an account held in Hello Digit’s name. As part of the sign-up process, customers are required to grant Hello Digit access to their checking accounts. The firm then uses its algorithm to analyse checking account data to determine when and how much to save for each person.

But, the CFPB says that the company falsely claimed it would not cause users' checking accounts to incur overdraft fees. In addition, it failed to live up to its promise that if there was an overdraft fee it would reimburse the customer.

Finally, says the CFPB, as of mid-2017, Hello Digit deceived consumers when it represented that it would not keep any interest earned on consumer funds that it was holding, when in fact the company kept a significant amount of the interest earned.

Hello Digit - which late last year was acquired by small-dollar lending firm Oportun Financial Corporation - has been ordered to pay reimbursement requests for overdraft charges that it previously denied and been fined $2.7 million.

“Hello Digit positioned itself as a savings tool for consumers having trouble saving on their own. But instead, consumers ended up paying unnecessary overdraft fees,” says CFPB director Rohit Chopra. “Companies have long been held to account when they engage in faulty advertising, and regulators must do the same when it comes to faulty algorithms.”