Baltimore Mayor Brandon Scott has initiated a lawsuit against the fintech company Dave, claiming the firm’s marketing practices and interest charges are misleading and exploitative. The lawsuit specifically targets the ExtraCash Advances product, which promises “up to $500 in five minutes or less.” Mayor Scott argues that such offerings ensnare financially vulnerable residents in a cycle of debt that is both damaging and illegal.
The lawsuit emerges as the Consumer Financial Protection Bureau—previously a key player in regulating financial practices—faces significant cuts, raising concerns about the oversight of fintech companies. Baltimore’s investigation into various online lenders, including Dave, uncovered troubling business practices that prompted this legal action. This follows a similar lawsuit against MoneyLion filed by the city in October.
One of the contentious practices outlined in the lawsuit involves mandatory overdraft fees. Dave has recently begun imposing a fee of 5% of a loan’s principal, with a minimum fee of $5 and a maximum of $15 for each transaction. Additionally, customers who wish to expedite their loan disbursements face express processing fees. The complaint highlights that for a $40 cash advance repayable within three days, users can incur an overdraft fee of $5, an express processing fee of $0.60, and a membership fee of $3. This could result in an astonishing annual percentage rate (APR) exceeding 2,500%, far surpassing Maryland’s legal limit of 33% for consumer loans.
The lawsuit argues that customers who utilize ExtraCash Advances find themselves increasingly burdened. “As a consumer obtains one ExtraCash Advance after another, they become less able to afford essential expenses such as utility bills, rent, and food,” the complaint states. This pattern perpetuates a cycle where the need for more financial assistance grows, worsening their economic situation.
A spokesperson for Dave informed American Banker that the company is reviewing the lawsuit, asserting that they prioritize consumer transparency and believe their practices comply with applicable laws. Mayor Scott emphasized the necessity of protecting vulnerable Baltimore residents from financial exploitation, declaring, “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.”
The lawsuit also references a study conducted by the Center for Responsible Lending in September 2025, which analyzed anonymized transaction data from over 5,000 users of various lending apps, including Dave. The study revealed that the average APR for loans repaid within a week to two weeks stands at 383%, comparable to traditional payday loans.
Whitney Barkley-Denney, deputy director of state policy and senior policy counsel at the Center for Responsible Lending, praised Baltimore’s leaders for their commitment to enforcing consumer protection laws. She asserted the importance of pursuing accountability for families impacted by predatory lending practices.
The legal action against Dave mirrors growing scrutiny of fintech lenders, which have faced multiple complaints alleging deceptive practices. In November 2024, the Federal Trade Commission filed a separate complaint against Dave, accusing the company of rarely providing loans up to $500, often lending only $25 instead. This complaint included allegations about misleading charges labeled as “tips,” which the company claimed were optional but were difficult for users to avoid.
As the situation unfolds, Baltimore’s lawsuit against Dave highlights a critical moment for consumer protection in the expanding fintech landscape, raising questions about the responsibility of such companies to their users. In the face of mounting scrutiny, the outcome of this lawsuit may set important precedents for financial practices in the industry.
