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BALTIMORE, MD (Tuesday, December 30, 2025) – Today, Mayor Brandon M. Scott announced that the City of Baltimore filed a lawsuit against Dave, Inc. (“Dave”), a digital lending platform, for misleading marketing and usurious interest charges that trap some of the most financially precarious residents in an exploitative cycle of debt. The Mayor and City Council of Baltimore, represented by the Baltimore City Department of Law and Berger Montague, filed the lawsuit against Dave for violating Baltimore’s Consumer Protection Ordinance (CPO) by misleading and manipulating consumers into taking out high-cost, high-frequency, small-amount, short-term loans known as ExtraCash Advances.

“This lawsuit, like others we’ve filed, is about protecting Baltimore residents, especially those most vulnerable to financial scams,” said Mayor Brandon M. Scott. “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.”

“Businesses like Dave take advantage of consumers experiencing financial hardship,” said City Solicitor Ebony M. Thompson of the Baltimore City Department of Law. “My office will act to protect consumers who are being exploited.”

The lawsuit alleges that Dave characterizes ExtraCash Advances as “earned wage access” or “overdraft services,” contrasting itself to high-cost payday lenders and big banks. However, ExtraCash Advances include “overdraft” fees that do not provide overdraft protection. They also induced customers to provide “tips” to fund meals for hungry children while passing only pennies on the dollar to charitable endeavors. Adding up these costs, Dave routinely charges more than 10 times the maximum APR allowed for consumer loans in Maryland, which is 33%.

The City’s lawsuit against Dave builds on the momentum of the City’s efforts to hold fintech companies responsible for predatory practices with its October 1, 2025, action against MoneyLion. Both Dave and MoneyLion are part of a growing industry that causes a cycle of debt for consumers. Borrowing at $25, $50, or $100 at a time, consumers rack up huge costs paid to these companies. According to a recent study conducted by the Center for Responsible Lending, consumers using apps like MoneyLion and Dave see increases in overdraft fees after taking out their first loan. The same study found that nearly three-quarters of users take out more than one loan within a two-week period. These companies differ in the exact kind of fees they charge and how they characterize their products, but the result is the same for consumers: high costs and a cycle of debt.

“Dave has concealed the true nature of its product to charge consumers astounding interest,” said James Hannaway of Berger Montague. “We are proud to stand with the City of Baltimore to protect vulnerable Baltimoreans from these unfair and deceptive tactics.”

Treasury and the Community Development Financial Institutions (CDFI) Fund announced $10 billion in New Markets Tax Credit allocations last week. This round of awards represents a 20% increase in rural and non-metro community investments, according to Treasury.

Background

The New Markets Tax Credit, under IRC § 45D, is intended to encourage investment in low-income communities. Taxpayers who make qualified equity investments in certified community development entities may be entitled to claim the credit as part of the IRC § 38 general business credit.

To be a qualified equity investment, a community development entity must receive an allocation from the IRS and use substantially all cash funds from the investment for qualified low-income community investments.

The New Market Tax Credit program has an annual cap on qualifying equity investments, with the IRS and Community Development Financial Institutions Fund allocating the capped amount among qualified entities through a competitive application process. The cap (after 2019) is $5 billion per calendar year.

The New Market Tax Credit was made permanent under the One Big Beautiful Bill Act. That law also established a five-year carryforward for unused credits. Pre-OBBB, the carryforward period was through 2030 for all credits allocated in calendar years before 2026.

2024-2025 Allocation

Treasury referred to the latest round of allocations as a “double round” in a December 23 press release, because funding was provided for combined 2024-2025 calendar years. Application for the two-year allocation opened in November 2024.

According to the CFDI Fund’s Award Book, this round included 142 allocations spanning 41 states, Puerto Rico, and the District of Columbia. The bulk of the allocations – 85% – will likely be used for loans to or investments in businesses located in low-income communities. The remaining 15% is expected to be used for real estate projects in low-income communities.

And while the majority of investment areas are urban, the Award Book indicates that over $2.4 billion has been allocated to benefit rural areas. This exceeds the $1.9 billion rural investment baseline level.

The CDFI Fund also shared an overview of the allocation review process, noting that it received 216 applications requesting a total of $19.2 billion. The overview runs through the “characteristics” of high-ranking applications. The CFDI Fund looked at applicants’ business strategy, including prior performance, and their “track record” of assisting disadvantaged businesses and communities.

The CFDI Fund also assessed “community outcomes,” which include whether applicants would provide at least 85% of qualified low-income community investments in areas of “severe distress” or with multiple indicia of distress, and at least 20% to areas in “deep distress.” In addition, applicants were ranked according to how their investment would benefit low-income individuals, their tracking methodologies, and their record of “community engagement.”

Future Allocations

Though the New Markets Tax Credit is permanent, Treasury did not share details for applicants seeking funding in future rounds. It did, however, share broad principles for the next cycle.

Treasury intends to focus on “lasting job creation” now that the program is permanent – including via support for small businesses and domestic manufacturing. It also plans to prioritize applications to boost affordable housing development and rural hospital and essential community health infrastructure.

In addition, Treasury indicated it will modify allocation agreements to “ensure compliance with federal anti-discrimination laws” and President Trump’s executive orders.

For more on the New Markets Tax Credit, see Checkpoint’s Federal Tax Coordinator 2d ¶ L-17920.

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