{"id":30254,"date":"2022-09-29T21:43:22","date_gmt":"2022-09-29T21:43:22","guid":{"rendered":"https:\/\/one.sightlinemg.com\/federaltimes\/uncategorized\/2022\/09\/29\/feds-allege-online-lender-overcharged-and-deceived-troops-families\/"},"modified":"2026-08-08T14:46:42","modified_gmt":"2026-08-08T14:46:42","slug":"feds-allege-online-lender-overcharged-and-deceived-troops-families","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/federaltimes\/govcon\/2022\/09\/29\/feds-allege-online-lender-overcharged-and-deceived-troops-families\/","title":{"rendered":"Feds allege online lender \u2018overcharged and deceived\u2019 troops, families"},"content":{"rendered":"\n

[Editor\u2019s note: This story has been updated to include MoneyLion\u2019s response to the federal lawsuit.]<\/i><\/p>\n\n\n\n

Federal authorities are suing an online lender for allegedly overcharging and deceiving service members and their families.<\/p>\n\n\n\n

The Consumer Financial Protection Bureau<\/a> filed the lawsuit Thursday in federal court in the Southern District of New York, against MoneyLion Technologies, and 38 of its subsidiaries, including MoneyLion operations in 37 states.<\/p>\n\n\n\n

CFPB alleges MoneyLion imposed \u201cillegal and excessive charges\u201d on troops and their families, in violation of the Military Lending Act. Among other things, that law limits the amount of interest that can be charged to service members to 36% annual percentage rate, to include fees charged on the loans.<\/p>\n\n\n\n

But MoneyLion calls the CFPB claims<\/a> \u201cwithout merit,\u201d and stated they will \u201cvigorously defend against these false allegations to set the record straight,\u201d in a response to Military Times. Despite their cooperation with CFPB for over three years, they stated, \u201cthe Bureau has chosen the sensationalist route of prioritizing headlines instead of engaging in constructive dialogue to address their questions and to achieve better consumer outcomes.\u201d<\/p>\n\n\n\n

Officials at CFPB said this is the fourth enforcement action related to the Military Lending Act<\/a> in the past two years.<\/p>\n\n\n\n

According to CFPB, since 2017, MoneyLion has offered loans that consumers can\u2019t get unless they enroll in a \u201cmembership program,\u201d and pay monthly membership fees. They offered 12-month installment loans of $500, with an annual percentage rate of 5.99%. However, they also required customers to pay a $29 monthly membership fee \u2014 which adds up to $348 over a year\u2019s time for a $500 loan.<\/p>\n\n\n\n

\u201cMoneyLion targeted military families by illegally extracting fees and making it difficult to cancel monthly subscriptions,\u201d said CFPB Director Rohit Chopra, in an announcement of the legal action. \u201cCompanies are breaking the law when they require monthly membership fees to obtain loans and then create barriers to canceling those memberships.\u201d<\/p>\n\n\n\n

The claims made by the CFPB about the membership offering \u201care without merit,\u201d said MoneyLion officials in their statement to Military Times, noting that the claim \u201cis isolated to one of the company\u2019s many product offerings.\u201d<\/p>\n\n\n\n

\u201cWe will vigorously defend against these false allegations to set the record straight as we continue to deliver innovative financial products that help our customers,\u201d they stated.<\/p>\n\n\n\n

\u201cMoneyLion has cooperated in good faith with the CFPB for over three years regarding our membership offering. Our innovative membership program helps service members and other customers save, invest, build credit and improve their overall financial lives.<\/p>\n\n\n\n

\u201cMoneyLion has the highest regard for its military and veteran customers and are committed to working with this important community to help them achieve better financial health,\u201d according to the satatement. \u201cMoneyLion is honored to serve this important segment of its customer base.\u201d <\/p>\n\n\n\n

MoneyLion\u2019s customer service line includes an option for hearing a recorded disclosure regarding the Military Lending Act. It informs customers that the law provides certain protections to service members and their families, with a 36% cap on the annual percentage rate, to include costs associated with the origination or application fees, annual interest, and other costs.<\/p>\n\n\n\n

\u201cYour current loan will consist of bi-weekly payments in equal amounts until the loan is paid in full,\u201d the recording states. Further information was not available about whether a membership fee is still required.<\/p>\n\n\n\t