BALTIMORE — The city of Baltimore has sued fintech lender Dave, accusing the company of misleading marketing and charging usurious interest rates that city officials say harmed some of Baltimore’s most financially vulnerable residents.
Mayor Brandon Scott announced the lawsuit last week, saying Dave’s business model was designed to trap consumers in cycles of debt.
“Dave’s business practices are intentionally designed to trap individuals in cycles of debt,” Scott said in a statement. “It’s not just unfair; it’s illegal, and we’re committed to holding the company accountable for the damage they’ve caused.”
The lawsuit alleges that Dave violated Baltimore’s Consumer Protection Ordinance through its ExtraCash Advances product, which the Los Angeles-based fintech markets with the promise: “Up to $500 in five minutes or less.”
Just One-in-10,000
According to the city, few customers ever received the maximum $500 advance. Citing data from the Federal Trade Commission and the Department of Justice, Baltimore said only about one in 10,000 consumers obtained that amount.
The city is also challengingnges the fees tied to ExtraCash Advances. Court documents state that a $40 advance could include a $5 overdraft fee, a $0.60 express processing fee and a $3 membership fee, amounting to an annual percentage rate of roughly 2,500%. The lawsuit says Dave encouraged customers to take out multiple advances within short periods, sometimes within two weeks.
‘Hundreds of Times Higher’
“Dave’s APRs are routinely tens or hundreds of times higher than the maximum 33% interest rate allowed for consumer loans under Maryland law,” the city alleged.
In an emailed response, Dave spokesperson Dan Ury called the lawsuit “baseless.”
Baltimore has previously targeted other fintech lenders. In October, the city sued MoneyLion, alleging it functioned as a modern-day payday lender by charging high interest on loans advertised as zero-interest.
Analysts noted the legal action comes as cities and states increasingly pursue enforcement cases amid a sharp pullback in litigation by the Consumer Financial Protection Bureau.
“We are pleased that the City of Baltimore’s elected leaders are enforcing their consumer protection laws and pursuing justice for Baltimore families exploited by high-cost, predatory lenders masquerading as financial saviors,” said Whitney Barkley-Denney of the Center for Responsible Lending in an emailed statement to Banking Dive.
Also Sued by FTC
The FTC sued Dave in November 2024 over its ExtraCash product, alleging deceptive practices. Dave later revised its fee structure, eliminating optional tips and express fees. CEO Jason Wilk at the time described the federal lawsuit as government overreach, according to Banking Dive.
Baltimore’s lawsuit seeks to halt Dave’s ExtraCash product in the city, require refunds of tips, fees and principal to affected consumers, and force changes in how cash-advance products are marketed. The city characterizes the advances as high-frequency, small-dollar, short-term loans and alleges Dave also misled customers into providing “tips,” sometimes framed as charitable contributions, with little money ultimately going to charity.
