MoneyLion (ML) sued by CFPB for overcharging service members
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Today, the Consumer Financial Protection Bureau (CFPB) sued MoneyLion Technologies (NYSE:ML), an online lender, and 38 of its affiliates for charging illegal and excessive fees to service members and their dependents. The CFPB alleges that MoneyLion violated the Military Loans Act by charging more than the legally permitted 36% cap on loans to military members and their dependents, through a combination of reported interest rates and fees. monthly membership. The CFPB also alleges that MoneyLion forced customers to join a membership program to access certain “low APR” loans and then did not allow them to cancel their membership until their loans were repaid. This is the CFPB’s fourth enforcement action related to the Military Loans Act in the past two years.
“MoneyLion has targeted military families by illegally collecting fees and making it difficult to cancel monthly subscriptions,” CFPB Director Rohit Chopra said. “Companies are breaking the law when they charge monthly membership fees for loans and then create barriers to canceling those memberships.”
MoneyLion, based in New York, is a fintech company that offers online installment loans and other products. MoneyLion requires customers to join a MoneyLion membership program and pay a monthly membership fee 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 Loans Act. The Military Loans Act protects active-duty military members and their dependents, including limiting the annual rate on credit extended to military members and their dependents to 36 percent. Specifically, MoneyLion allegedly harmed consumers by:
Overcharging and deceiving military and military dependents: MoneyLion imposed membership fees on covered borrowers that, combined with interest charges on loans, exceeded the law’s 36% cap on military loans. MoneyLion deceived these borrowers by stating that they owed loan payments and fees that they did not actually owe because the loans were void under the Military Loans Act.
Refusing to allow customers to leave its membership programs and stop paying monthly fees: To access what MoneyLion markets as its “low APR” installment loan, the company asked consumers to join its programs membership and pay a monthly membership fee, which ranged from $19.99 to $29. MoneyLion has falsely tricked many consumers into believing that they can cancel their membership at any time. In fact, MoneyLion refused customer requests to cancel memberships and stop paying membership fees if they had outstanding loan balances. In some cases, MoneyLion refused to cancel memberships after loan repayment if consumers had outstanding membership fees.
Under the Consumer Financial Protection Act, the CFPB has the power 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 the authority to enforce Military Loans Act protections for service members and their dependents. The CFPB is calling for monetary relief for consumers, restitution of unfair winnings, an end to MoneyLion’s illegal practices, and a civil monetary penalty.
The complaint is not a final finding or determination that the defendants violated the law.