The neobank MoneyLion charged service members excessive fees for loans and often refused to cancel paid memberships, according to a lawsuit filed Thursday by the Consumer Financial Protection Bureau.
The CFPB is accusing MoneyLion of violating the Military Lending Act by charging above a 36% rate cap on loans to service members and their families, through a combination of interest rates and monthly membership fees.
“MoneyLion targeted military families by illegally extracting fees and making it difficult to cancel monthly subscriptions,” CFPB Director Rohit Chopra said in a statement announcing the lawsuit. “Companies are breaking the law when they require monthly membership fees to obtain loans and then create barriers to canceling those memberships.”
MoneyLion went public last year through a SPAC deal and is worth about $227 million after its shares fell almost 18% today. Ahead of its public debut, the company's leadership disclosed that it had received investigative demands from the CFPB related to its membership model.
The company did not immediately respond to a request for comment Thursday.
The lawsuit cites a pair of personal loan products, including one focused on credit building, that require a membership for access, with recurring fees between $19.99 and $29 each month.
The CFPB said that MoneyLion refused customers’ requests to cancel memberships if they had outstanding loan balances. The company also refused to cancel memberships even after the loan was paid off if the customer still owed previous membership fees, according to the agency.
Through the lawsuit, the CFPB is seeking monetary relief for customers, an "end to MoneyLion's unlawful practices," and a civil money penalty.
The lawsuit is the fourth enforcement action the CFPB has taken related to the Military Lending Act in the past two years, the agency said.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE