Municipal Fee-to-APR Enforcement Is Coming for Commercial Lenders—Baltimore's Dave Lawsuit Shows How

The City of Baltimore has filed suit against fintech cash advance provider Dave Inc. (Nasdaq: DAVE), alleging the company's "ExtraCash" product violates the city's Consumer Protection Ordinance through deceptive marketing and fee structures that effectively exceed Maryland's 33% APR cap by multiples of ten or more.

The fee-structure enforcement theory that Baltimore is using against consumer cash advance app Dave Inc. has already been codified for commercial deals in Texas—and if you're not preparing your "Sale of Future Receivables" language to survive recharacterization arguments, you're exposed.¹²³

What happened:

• Baltimore filed suit against Dave Inc. (Nasdaq: DAVE) on December 30, 2025, alleging the company's fee structure—when annualized—exceeds Maryland's 33% APR cap by multiples of ten or more¹

• This is Baltimore's second fintech enforcement action, following its October 2025 suit against MoneyLion under the same Consumer Protection Ordinance³

• Dave faces parallel federal litigation—DOJ added CEO Jason Wilk as a defendant in December 2024, seeking civil penalties⁶

Why it matters for commercial lenders:

• Texas enacted commercial sales-based financing legislation in June 2025 that explicitly counts fees as interest for usury analysis on deals under $50K, with provider registration required by December 2026²³

• New York AG Letitia James sued both MoneyLion and DailyPay in April 2025, testing whether fees constitute "loans" under state usury law—precedent that will inform commercial enforcement⁹

• The CFPB has withdrawn 67 pieces of guidance since May 2025 and faces potential defunding, pushing enforcement to state AGs and municipalities with varying theories and risk tolerances²¹

The regulatory fragmentation is the story. You can't run a one-size-fits-all compliance shop anymore.

_{Sources
1 Mayor's Office | Mayor Brandon M. Scott Announces Baltimore City's Lawsuit Against Dave, Inc.
2 Crowdfund Insider | Baltimore Takes Legal Action Against Fintech Firm Dave Over Alleged Predatory Lending Practices
3 CBS Baltimore | Baltimore sues MoneyLion over alleged predatory loan practices
4 American Banker | Baltimore mayor sues fintech Dave for 'usurious' fees
5 Center for Responsible Lending | Escalating Debt: The Real Impact of Payday Loan Apps Sold as Earned Wage Advances
6 FTC | FTC Refers Case Against Online Cash Advance Firm Dave Inc. to Department of Justice
7 Dave Inc. | Dave Issues Statement in Response to Amended FTC Complaint
8 Mayor's Office | Mayor Brandon M. Scott Sues MoneyLion for Operating Digital-Age Payday Lending Scheme
9 NY Attorney General | Attorney General James Sues Payday Lending Companies for Exploiting Workers with Illegal Loans
10 PYMNTS | MoneyLion Accused of Misleading Customers in Baltimore Lawsuit
11 FTC | FTC Sends More Than $17 Million to Consumers Harmed by Brigit's Deceptive Claims
12 FTC | FTC Acts to Stop FloatMe's Deceptive 'Free Money' Promises
13 Consumer Finance Monitor | Maryland enacts Earned Wage Access legislation
14 Baltimore Brew | While Baltimore sues a money-lending app for preying on the poor, Maryland makes it easier for such apps to do so
15 NPR | Nearly 2 dozen states sue the Trump administration over funding for CFPB
16 NY Attorney General | Attorney General James Sues Trump Administration to Defend Critical Consumer Protection Efforts
17 Orrick | Will State-Level Consumer Protection Activity Increase Amid CFPB Shakeup?
18 NCLC Digital Library | Successful Challenges to Earned Wage Payday Loans
19 Consumer Finance Monitor | New York AG sues payday lenders MoneyLion and DailyPay
20 McGuireWoods | Indiana, Maryland Become Latest States to Enact Legislation Regulating Earned Wage Access
21 Ncontracts | June 2025 Regulatory Update: CFPB's Historic Rollback
22 Center for Responsible Lending | State Policy Recommendations for Earned Wage Advances
23 Alston & Bird | Texas Commercial Sales-Based Financing Law Poses Unique Challenges
24 DOJ | United States Files Complaint Against Dave Inc. and CEO Jason Wilk}

What Alternative Business Lenders Need to Know

The Maryland Paradox: Your Map to the New Enforcement Landscape

Here's the single most important thing to understand about regulatory risk in 2026: Maryland Governor Wes Moore allowed House Bill 1294 to become law without his signature in May 2025, creating a framework that effectively exempts compliant earned wage access providers from the state's 33% usury cap. The law took effect October 1, 2025.¹³

That same week, Baltimore filed suit against MoneyLion under its municipal Consumer Protection Ordinance, alleging the exact fee structures HB 1294 was designed to permit.⁸

This isn't a contradiction. It's the new normal. You have a state passing laws to allow high fees while a city in that same state sues over them. If you're running a sloppy, one-size-fits-all compliance shop, this is a death trap. If you're nimble enough to navigate jurisdiction-by-jurisdiction, it's an opportunity.

City Solicitor Ebony Thompson made the enforcement posture explicit: "With the federal government now abdicating its responsibilities to consumers, states and localities must pick up the slack."⁸

Why the CFPB Vacuum Means More Risk, Not Less

The CFPB has withdrawn 67 pieces of guidance since May 2025, rescinded its 2022 interpretive rule on state enforcement authority, and Acting Director Russell Vought has refused to request Federal Reserve funding—prompting 21 state AGs to sue the administration.¹⁵²¹

Don't mistake this for deregulation. It's regulatory fragmentation. Instead of one federal agency with predictable (if aggressive) enforcement priorities, you now face:

Federal: DOJ pursuing the Dave case with civil penalties and CEO personal liability⁶

State: New York AG suing MoneyLion and DailyPay under state usury law, with a federal judge remanding DailyPay to state court in September 2025⁹¹⁹

Municipal: Baltimore pursuing MoneyLion and Dave under local CPO, with pending suits against DraftKings and FanDuel using the same theories¹

Each jurisdiction has different definitions of "interest," different theories of what constitutes a "loan," and different risk tolerances. Your standard MCA agreement might work in Miami but get you sued in Maryland.

The Texas Deadline You Need on Your Calendar

Here's the concrete action item: Texas enacted commercial sales-based financing legislation in June 2025 that explicitly excludes "sales-based financing" fees from the state's commercial loan usury exemption.²³

Translation: fees and charges on revenue-based financing and MCA-style products now count as interest for usury purposes in Texas, regardless of how you label them.

The law exempts transactions over $50,000, but provider registration is required by December 2026. If you haven't prepped your "Sale of Future Receivables" documentation to survive a recharacterization-as-interest argument in Texas courts, you have 23 months to fix it.

Texas has historically been a safe harbor for alternative lenders. That's changing. The same "economic substance over form" analysis that Baltimore is applying to Dave's consumer fees is now statutory for commercial deals under $50K in Texas.

The Stacking Data Validates Your Credit Concerns

The Center for Responsible Lending study that Baltimore cites found that 53% of cash advance users borrowed from multiple lenders during their first year, with monthly loan frequency doubling from two loans to four loans within twelve months. Heavy users paid $421 in combined fees annually.⁵

This is the consumer equivalent of the UCC stacking problem you see when you pull bank statements and find three existing MCAs. The behavior in the micro-business and gig sector mirrors exactly what you're monitoring in larger commercial files.

The regulatory concern about "debt cycles" and cumulative fee extraction that animates these consumer enforcement actions will be translated to commercial contexts. When an AG looks at a small business with stacked positions paying cumulative fees that exceed cash flow capacity, they'll apply the same "predatory" framing—regardless of whether the borrower is an hourly worker or an LLC.

What the Dave Case Actually Shows

Baltimore's complaint alleges Dave's fee structure—overdraft fees, express delivery charges, subscription fees, and historically solicited tips—produced effective APRs ranging from 200% to over 2,500% on small-dollar, short-term advances.¹⁴

Dave eliminated tips and express fees in early 2025 and denies wrongdoing, calling the enforcement "government overreach."⁷ The federal case has a motion to dismiss hearing that was continued to May 2025.

The specific consumer mechanics—tip buttons, children's meal animations, $25 advances—aren't directly relevant to your book. What matters is the enforcement theory: regulators are converting non-interest fees into annualized interest rates and comparing them to usury caps. That theory doesn't care whether the borrower is an hourly worker or a business owner.

Your next step: Map your exposure by state. Texas has the clearest deadline. New York has the most aggressive AG. Maryland has the paradox. California has disclosure requirements. Build compliance to survive the most aggressive jurisdiction in your footprint, not the most permissive one.

This analysis is provided for informational purposes only and does not constitute legal advice. Lenders should consult qualified counsel regarding their specific compliance obligations.

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