Payday Loans
Mayor and City Council of Baltimore v. Dave Inc.
Date: Jan. 30, 2026
Issue: Whether Dave Inc. engaged in deceptive marketing and imposed excessive fees that effectively functioned as an illegal high-interest loan.
Case Summary: The City of Baltimore sued Dave Inc. in the Circuit Court of Baltimore City, alleging it engaged in deceptive marketing and imposed excessive fees that effectively functioned as illegal high-interest loans.
Dave Inc. is a fintech operating banking-style services through a mobile app. Through its “ExtraCash” product, Dave Inc. advances small-dollar, short-term funds that consumers repay from their next paycheck. Dave Inc. markets ExtraCash as a fast, interest-free option that can deliver up to $500 within minutes, with no credit check or late fees. To obtain an advance, users must link a debit account and enroll in a paid membership. Dave Inc. then charges several fees, including a mandatory “overdraft fee” based on a percentage of the advance and optional express processing fees for immediate access to funds. Although Dave Inc. labels ExtraCash as an overdraft service or earned wage advance, the product operates as a short-term loan that Dave Inc. automatically collects on the user’s next payday.
Baltimore alleged Dave Inc. operates as an unlicensed payday lender in Maryland, marketing ExtraCash as “not a payday loan” and interest-free while charging fees that allegedly generate APRs far above the state’s 33% cap—sometimes exceeding 2,500% on short-term advances. Baltimore contends that ExtraCash advances qualify as loans under the Maryland Consumer Lending Law, or function as a device to collect unlawful interest, and that Dave issued them without the required license.
Baltimore also alleged Dave Inc. engaged in deceptive and unfair trade practices by misrepresenting the nature and cost of its ExtraCash product and by violating Maryland lending laws. Dave Inc. allegedly marketed ExtraCash as a non-loan overdraft service with zero interest and instant access to up to $500, while failing to disclose key facts about the product’s legality and enforceability. Moreover, Baltimore alleged Dave Inc. engaged in unfair trade practices by operating as an unlicensed consumer lender: Maryland law requires a license to make personal loans of $25,000 or less, and Dave Inc. issued such loans without a license. According to Baltimore, these practices caused substantial consumer harm that borrowers could not reasonably avoid, and that provided no countervailing benefit.
Baltimore seeks the maximum statutory penalties available under the Baltimore City Code. Baltimore also requests injunctive relief that requires Dave Inc. to stop exploiting Baltimore consumers by trapping them in a cycle of debt. In addition, Baltimore asks the court to declare the unlawful ExtraCash advances void and unenforceable and to order Dave Inc. to return all principal, fees, and tips collected from Baltimore consumers. Baltimore further seeks an order requiring Dave Inc. to reform its business practices and to accurately describe the true nature and cost of ExtraCash advances.
Bottom Line: Baltimore plans to move to remand the case to the Circuit Court for Baltimore City. The U.S. District Court for the District of Maryland granted the parties’ joint motion and extended Dave Inc.’s deadline to respond to the complaint until 30 days after the court rules on the remand motion.
Document: Complaint
