CFPB sues digital lender MoneyLion for allegedly overcharging customers
The US Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against MoneyLion Technologies and 38 of its lending subsidiaries.
The regulatory body alleges that the money lender has imposed “illegal and excessive” charges on service members and their dependents.
The Military Lending Act (MLA) protects active duty service members and their dependents, which the CFPB claims has been violated by the fintech firm.
According to the CFPB, MoneyLion has been charging “more than the legally allowable 36% rate cap on loans” to service members and their dependents, through a combination of stated interest rates and monthly membership fees.
It also alleges the company required customers to join a membership programme to access certain “low-APR” loans, and then did not allow them to cancel their memberships until their loans were paid.
CFPB director Rohit Chopra says companies are “breaking the law” when they set up monthly membership fees to obtain loans and then create barriers to cancelling those memberships.
However, MoneyLion calls the allegations “meritless” and intends to defend itself against “false allegations” to “set the record straight”.
“MoneyLion has cooperated in good faith with the CFPB for over three years regarding our membership offering,” it says. “Our innovative membership programme helps service members and other customers save, invest, build credit and improve their overall financial lives.
“Despite our cooperation, the Bureau has chosen the sensationalist route of prioritising headlines instead of engaging in constructive dialogue to address their questions and to achieve better consumer outcomes.”
Founded in 2013 and based in New York City, MoneyLion offers customers personalised financial content, products such as online instalment loans, and advice.