MoneyLion Sued for Charging Illegal Interest Rates

Advocate Andy

Online lender charged rates in excess of 36%, trapped consumers in memberships

The Consumer Financial Protection Bureau (CFPB) announced it is suing online lender MoneyLion for charging illegal interest rates in excess of 36% to military service members in violation of the Military Lending Act. The CFPB also alleges MoneyLion trapped customers in membership programs and refused to cancel memberships even when asked.

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.

“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.”

The CFPB is suing to enforce the Military Lending Act and is alleging MoneyLion's actions harmed consumers by:

  • Overcharging and deceiving servicemembers and military dependents: MoneyLion imposed membership fees on covered borrowers that, when combined with loan-interest-rate charges, exceeded the Military Lending Act’s 36% rate cap. MoneyLion deceived these borrowers by representing that they owed loan payments and fees that they did not actually owe because the loans were void under the Military Lending Act.
  • Refusing to allow customers to exit its membership programs and stop paying monthly fees: To access what MoneyLion markets as its “low-APR” installment loan, the company required consumers to join its membership programs and pay monthly membership fees, which ranged from $19.99 to $29. MoneyLion falsely led many consumers to believe that they could cancel their memberships at any time. In fact, MoneyLion refused customers’ requests to cancel memberships, and to stop paying membership fees, if they had outstanding loan balances. In some cases, MoneyLion refused to cancel memberships after loan payoff if consumers had any unpaid membership fees.

The CFPB is seeking monetary relief for the consumers harmed by MoneyLion's actions as well as a potential civil money penalty as punishment for the violation of the law.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN

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