Baltimore Mayor Brandon Scott has initiated legal action against the fintech company Dave, accusing it of employing “misleading marketing and usurious interest charges” that exploit vulnerable residents. This lawsuit emerges at a time when the Consumer Financial Protection Bureau, which historically pursued such cases, faces significant reductions in its authority.
The lawsuit specifically targets Dave’s product known as ExtraCash Advances, advertised with the tagline, “Up to $500 in five minutes or less.” The service requires users to provide access to their bank account information, which Dave uses to assess creditworthiness and automatically withdraw funds for repayments.
In an investigation of various online lenders, the city of Baltimore identified troubling practices associated with Dave. In a parallel move, the city had previously filed a similar lawsuit against MoneyLion in October. Among the allegations in the latest complaint are mandatory overdraft fees of 5% on the principal amount of loans, with a minimum charge of $5 and a cap of $15 per transaction.
Additionally, customers seeking immediate access to their loans face express fees, while a monthly membership fee of $1 is also charged. Until February 2025, Dave allegedly manipulated consumers into providing “tips.” For instance, a borrower receiving a $40 cash advance due within three days would incur an overdraft fee of $5, an express processing fee of $0.60, and a $3 membership fee. The complaint estimates that such a transaction results in an annual percentage rate (APR) exceeding an astonishing 2,500%. This rate is significantly higher than the maximum 33% allowed for consumer loans under Maryland law.
The complaint emphasizes that customers using ExtraCash become ensnared in a cycle of debt. As they rely on successive cash advances, their ability to cover essential expenses such as utility bills, rent, and food diminishes, leading them to seek further advances. The text states, “Because of Dave, they are living day-to-day, with each day burdened with more fees.”
A spokesperson for Dave stated that the company is currently reviewing the lawsuit. “We take consumer transparency very seriously and believe that our practices have at all times been in compliance with applicable law,” the spokesperson remarked.
Mayor Scott asserted that the lawsuit aims to safeguard Baltimore residents from financial exploitation. “Dave’s business practices are intentionally designed to trap individuals in cycles of debt. It’s not just unfair; it’s illegal, and we’re committed to holding them accountable for the damage they’ve caused,” he stated.
The complaint also referenced a study conducted in September 2025 by the Center for Responsible Lending, titled “Escalating Debt: The Real Impact of Payday Loan Apps Sold as Earned Wage Advances.” This study analyzed anonymized transaction data from over 5,000 users of various lending apps, including Dave, between January 2021 and May 2025. The findings indicated that the average APR for loans repaid within seven to fourteen days was 383%, a rate comparable to traditional storefront payday loans.
Whitney Barkley-Denney, deputy director of state policy and senior policy counsel at the Center for Responsible Lending, expressed approval of Baltimore’s actions. “I am pleased that Baltimore’s leaders are enforcing consumer protection laws and pursuing justice for Baltimore families exploited by high-cost, predatory lenders masquerading as financial saviors,” she noted.
The lawsuit aligns with growing scrutiny of fintech lenders, with complaints against various companies including Earnin, MoneyLion, and SoLo Funds, alleging that they impose misleading fees and pressures on consumers. In November 2024, the Federal Trade Commission filed a complaint against Dave, which was subsequently referred to the Department of Justice. The government claimed that Dave rarely fulfilled its promise of providing loans up to $500, typically lending only $25, and imposed an express fee ranging from $3 to $25. Further, it alleged that Dave’s practice of requesting tips was deceptive, with the company reportedly donating only a fraction of those tips to charity.
According to the Baltimore lawsuit, Dave ceased its tip practice in February 2025. Aaron McPherson, principal of AFM Consulting, commented on the situation, stating, “Dave is a case of a fintech getting too creative with its business model, and getting out in front of what the law allows.”
As the legal proceedings unfold, the implications of this lawsuit could have significant effects on how fintech companies operate in the consumer lending space, particularly in regard to transparency and fair lending practices.
