WASHINGTON—The Consumer Financial Protection Bureau is suing MoneyLion Technologies, an online lender, and 38 of its subsidiaries, for imposing what it said are illegal and excessive charges on servicemembers and their dependents.
The CFPB alleges 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 is also alleging 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.
The Bureau said this is its fourth enforcement action related to the Military Lending Act in the past two years.
MoneyLion, based in New York City, is a fintech 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 explained.
The Allegations
The CFPB alleges MoneyLion’s practices violated the Consumer Financial Protection Act and the Military Lending Act and that it 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,” the CFPB said.
- 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, the CFPB said. “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 said.
The CFPB said it 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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