Minnesota Department of Commerce secures refunds to Minnesota consumers through settlement with online lender MoneyLion
NOTE: this news release was updated on Dec 30, 2021.
The Minnesota Department of Commerce announced a settlement with MoneyLion, an online lender, for violating state lending laws. The settlement requires MoneyLion to cancel or forgive certain loans and to refund $250 to certain Minnesota consumers. The settlement also imposes a $100,000 fine to the State of Minnesota.
MoneyLion is a publicly traded fin-tech company, headquartered in New York, that describes itself as “a mobile banking and financial membership platform.” Since its founding in 2013, MoneyLion says it has served 9.4 million people in the U.S.
MoneyLion violated Minnesota state law by failing to be licensed by the state when it provided Minnesota-based consumers with certain loans with excessive annual interest rates of up to 645%. The settlement includes more than 700 loans issued to Minnesota consumers between November 7, 2016 and September 15, 2017. These loans ranged from $300 to $2,000 and MoneyLion charged interest rates from 9.79% to 645%.
Minnesota law requires regulated lenders to be licensed if they are offering loans with interest rates above statutorily allowed amounts. Regulated entities are also required to provide consumers with truth-in-lending disclosures and, for payday or short-term loans, to follow additional requirements.
“As this case shows, Minnesota consumers who borrow from online lenders have protections under state law,” said Minnesota Department of Commerce Commissioner Grace Arnold. “The Commerce Department works to ensure a fair marketplace for Minnesota consumers to do business.”
If you have a problem with an unlicensed lender or questions about doing business with an online lender the Commerce Department is here to help. Contact Commerce’s Consumer Services Center by email at email@example.com or by phone 651-539-1600 or 800-657-3602.
TIPS FOR CONSUMERS ABOUT CONSUMER LOANS
It is important for Minnesota consumers, when obtaining a consumer loan, to understand who they enter into a business relationship with. The Department of Commerce offers guidance for consumers: Build Your Credit. Among the consumer tips:
Check the license status in Minnesota. Consumers can verify a license by checking Commerce’s License Lookup: https://mn.gov/commerce/consumers/tips-tools/license-lookup.jsp. If you come across a lender who is not licensed in the state but is offering loans in Minnesota, contact the Minnesota Department of Commerce.
Read the fine print. No matter who you borrow from, always get a statement that clearly explains the costs of the loan. If the lender is unwilling to provide you with the contract upfront, that’s a red flag. Be sure you know how much you will owe, when payments are due, how they will be collected and if you can afford repayment of the loan.
Consider alternatives. Try to avoid payday or short-term loans, which tend to have high fees and high interest rates. Check options such as a loan from a local bank or credit union. If you are having trouble paying bills, contact your creditors to request an extension or negotiate repayment.
Contact a local credit counseling service. Assistance is available from nonprofit groups for little or no cost to you. To find a service near you, check with the National Foundation for Credit Counseling.