The Consumer Financial Protection Bureau (CFPB) has filed suit against online lender MoneyLion. The federal agency alleges that the lender, which offers interest-free cash advances and other financial products and services, misled service members and their families, charged excessive fees, and also lied about customers’ ability to cancel their memberships.
MoneyLion and CFPB
The CFPB decided to take legal action against the online lender and mobile banking platform for violating the Military Loan Act and the Consumer Financial Protection Act. According to the federal agency, the lender, which offers 0% APR cash advances, construction loan credit, banking and securities services, and more, operates in the following areas:
- Overcharging and misleading members of the military community: In addition to loan interest, the lender charged membership fees that exceeded the 36% interest rate cap set by the Military Loan Act. As a result, the loans were annulled, but MoneyLion continued to state that borrowers owed payments and fees.
- Declining Membership Cancellations: Lender requires consumers to join a membership program to redeem their installment loan with a monthly fee ranging from $19.99 to $29. MoneyLion also led customers to believe they could cancel their membership at any time, but would refuse cancellations if the member had an outstanding credit balance. In other cases, the lender has denied termination requests when the client has paid off the loan but has not paid the membership fees.
In a press release, CFPB Director Rohit Chopra stated, “Companies are breaking the law when they require monthly membership fees to obtain credit and then create barriers to canceling those memberships.”
The suit names MoneyLion Technologies and 38 of its subsidiaries as defendants. You can read the full complaint on the CFPB website.