MoneyLion Charged Military Members Excessive Interest, Feds Charge
The Consumer Financial Protection Bureau (CFPB) is suing MoneyLion Technologies, an online lender, and 38 of its subsidiaries, alleging that it imposed illegal and excessive charges on armed service members and their dependents.
“MoneyLion targeted military families by illegally extracting fees and making it difficult to cancel monthly subscriptions,” said CFPB Director Rohit Chopra. “Companies are breaking the law when they require monthly membership fees to obtain loans and then create barriers to canceling those memberships.”
The CFPB alleges that MoneyLion violated the Military Lending Act by charging more than the legally allowable 36% rate cap on loans to service members and their families by using a combination of stated interest rates and monthly membership fees. The CFPB also alleges 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.
Specifically, MoneyLion allegedly harmed consumers by:
- Overcharging and deceiving service members 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.
- 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. 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.
This is the CFPB’s fourth enforcement action related to the Military Lending Act in the past two years.
MoneyLion, based in New York City, is a financial technology company that offers online installment loans and other products.
The CFPB alleges that MoneyLion’s practices violated the Consumer Financial Protection Act and the Military Lending Act. The Military Lending Act protects active duty service members and their dependents, including by limiting the annual percentage rate on loans to applicable to 36%.
Consumers, including service members and their families, can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
Employees who believe their companies have violated federal consumer financial protection laws, including the Military Lending Act, are encouraged to send information about what they know to [email protected]