FOR IMMEDIATE RELEASE:
CFPB Sues MoneyLion for Overcharging Servicemembers and Trapping Consumers in Costly Memberships
The online lender allegedly required customers to pay hefty fees to access loans and often refused to cancel memberships
WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) sued MoneyLion Technologies, an online lender, and 38 of its subsidiaries, for imposing illegal and excessive charges on servicemembers and their dependents. The CFPB alleges that MoneyLion violated the Military Lending Act by charging more than the legally allowable 36% rate cap on loans to servicemembers and their dependents, through a combination of stated interest rates and monthly membership fees. The CFPB also alleges MoneyLion required customers to join a membership program to access certain “low-APR” loans, and then did not allow them to cancel their memberships until their loans were paid. This is the CFPB’s fourth enforcement action related to the Military Lending Act in the past two years.
“MoneyLion targeted military families by illegally extracting fees and making it difficult to cancel monthly subscriptions,” said CFPB Director Rohit Chopra. “Companies are breaking the law when they require monthly membership fees to obtain loans and then create barriers to canceling those memberships.”
MoneyLion, based in New York City, is a financial technology company that offers online installment loans and other products. MoneyLion requires customers to join a MoneyLion membership program and pay monthly membership fees to access what it markets as its “low-APR” installment loan product.
The CFPB alleges that MoneyLion’s practices violated the Consumer Financial Protection Act and the Military Lending Act. The Military Lending Act protects active duty servicemembers and their dependents, including by limiting the annual percentage rate applicable to credit extended to servicemembers and their dependents to 36%. Specifically, MoneyLion allegedly harmed consumers by:
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against companies that violate consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB also has authority to enforce the Military Lending Act’s protections for servicemembers and their dependents. The CFPB is seeking monetary relief for consumers, disgorgement of unjust gains, an end to MoneyLion’s unlawful practices, and a civil money penalty.
The complaint is not a final finding or ruling that the defendants have violated the law.
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| By Edelman Combs Latturner & Goodwin, LLC