Baltimore City Sues Fintech Company Dave, Inc. Over Alleged Deceptive Lending Practices

According to a press release from the City of Baltimore, Mayor Brandon M. Scott announced that the city has initiated legal action against Dave, Inc., a digital lending platform. The lawsuit, filed by the Baltimore City Department of Law and Berger Montague, alleges that Dave engaged in unfair and deceptive practices by misleading consumers with its ExtraCash Advances, leading to exploitative debt cycles for financially vulnerable residents. The city contends that Dave’s practices violate Baltimore’s Consumer Protection Ordinance.

The core of the city’s legal challenge centers on Dave’s marketing of its ExtraCash Advances. The lawsuit claims that Dave misrepresents these advances as “earned wage access” or “overdraft services” to distinguish itself from traditional high-cost lenders. However, the complaint asserts that these advances include “overdraft” fees that do not provide actual overdraft protection. Furthermore, the city alleges that Dave has induced customers to make “tips” for charitable causes, with only a fraction of these funds reaching their intended philanthropic goals. When all associated costs are factored in, the city claims that Dave regularly charges interest rates exceeding ten times the maximum annual percentage rate (APR) permitted for consumer loans in Maryland, which is 33%.

This legal action against Dave follows a similar move by the City of Baltimore on October 1, 2025, against another fintech company, MoneyLion, for alleged predatory practices. Both companies are identified as part of a growing industry that financial experts say can trap consumers in a cycle of debt. Consumers often borrow small amounts, such as $25, $50, or $100, but the cumulative costs paid to these companies can become substantial. Research cited by the city indicates that users of apps like MoneyLion and Dave experience an increase in overdraft fees after taking out their first loan. The same study suggests that a significant majority of users, nearly three-quarters, take out more than one loan within a two-week period. While the specific fee structures and product descriptions may vary between these companies, the outcome for consumers is often the same: high costs and an ongoing cycle of debt.

Article by Mel Anara, based upon information from the City of Baltimore.

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