In late December 2025, the City of Baltimore initiated a lawsuit against Dave Inc. (Nasdaq: DAVE), a Los Angeles-based financial technology company, accusing it of engaging in deceptive marketing and imposing exorbitant fees that effectively function as illegal high-interest loans. The action, announced by Mayor Brandon M. Scott, targets the company’s popular “ExtraCash” advance feature, which provides short-term cash infusions marketed as an alternative to traditional overdrafts or payday loans.
The complaint alleges that Dave misrepresents its product as a benign service for avoiding bank overdrafts or accessing earned wages early, while in reality, it saddles users—particularly those in financial distress—with costs far exceeding Maryland’s legal limits.
State law caps consumer loan interest at 33% annual percentage rate (APR), yet the city’s calculations show Dave’s combined charges often result in effective rates reaching hundreds or even thousands of percent.
For instance, a small $40 advance repaid quickly could incur a 5% “overdraft” fee (minimum $5), express delivery charges, and a prorated portion of the $1 monthly subscription, pushing the APR beyond 2,500% in some scenarios.
Further scrutiny focuses on Dave’s past practice of soliciting “tips,” which the lawsuit claims were presented as voluntary contributions to feed hungry children but were largely retained by the company, with only minimal amounts donated to charity.
Although Dave discontinued tip solicitations in early 2025, the suit argues these tactics, alongside non-optional fees, manipulated vulnerable consumers into repeated borrowing.
A study by the Center for Responsible Lending highlighted similar patterns across such apps, noting that users often face increased bank overdrafts and take multiple advances within weeks, deepening debt cycles.
Mayor Scott emphasized the suit’s role in safeguarding residents from exploitative fintech models, stating that such practices deliberately ensnare individuals in ongoing financial hardship.
City Solicitor Ebony M. Thompson echoed this, pledging to combat entities preying on economic vulnerability.
The litigation, filed under Baltimore’s Consumer Protection Ordinance with assistance from external counsel Berger Montague, follows a similar October 2025 case against another fintech, MoneyLion, signaling a broader municipal push against digital lenders evading traditional regulations.
Dave has responded by affirming its commitment to transparency and asserting full compliance with laws, while noting it is reviewing the allegations.
This local challenge aligns with ongoing federal scrutiny, including a prior Federal Trade Commission action referred to the Department of Justice, which raised comparable concerns about hidden fees and misleading claims.
As fintech apps proliferate, offering quick cash to millions, cases like Baltimore’s underscore tensions between product development and consumer protection.
By targeting small-dollar, high-frequency advances disguised as conveniences, the city aims to curb what it views as modern equivalents of predatory payday lending, potentially setting precedents for other jurisdictions.
