The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against the online lender MoneyLion. The federal agency alleges that the lender, which provides interest-free cash advances and other financial products and services, deceived and overcharged military service members and their families, and also lied about customers’ ability to cancel their membership.
- MoneyLion has violated the Military Lending Act and the Consumer Financial Protection Act, according to the CFPB.
- The federal agency has also accused the online lender of deceiving customers about their ability to cancel their memberships at any time.
- The CFPB stresses that its complaint against MoneyLion doesn’t constitute a final ruling that the lender has violated the law.
MoneyLion in Hot Water with the CFPB
The CFPB chose to take the legal action against the online lender and mobile banking platform for violating the Military Lending Act and the Consumer Financial Protection Act. According to the federal agency, the lender, which offers 0% APR cash advances, a credit-builder loan, banking and investment services and more, has engaged in the following:
- Overcharging and deceiving members of the military community: In addition to loan interest charges, the lender charged membership fees that exceeded the 36% interest rate cap set by the Military Lending Act. As such, the loans were void, but MoneyLion continued to represent that the borrowers owed payments and fees.
- Refusing membership cancellations: The lender requires consumers to join a membership program to take advantage of its installment loan, with a monthly fee of $19.99 to $29. MoneyLion also led customers to believe that they could cancel their membership at any time but refused cancellations if the member had an outstanding loan balance. In other cases, the lender refused cancellation requests if the customer paid off the loan but had unpaid membership fees.
In a press release, CFPB director Rohit Chopra stated, “Companies are breaking the law when they require monthly membership fees to obtain loans and then create barriers to canceling those memberships."
The lawsuit cites MoneyLion Technologies and 38 of its subsidiaries as defendants. You can read the full complaint on the CFPB website.