MoneyLion Agrees to $1.75 Million Settlement with CFPB
MoneyLion has agreed to pay $1.75 million to settle a lawsuit filed by the Consumer Financial Protection Bureau (CFPB). The lawsuit alleged that MoneyLion charged more than the maximum 36% interest rate allowed by the Military Lending Act on loans to service members.
CFPB’s Commitment to Service Members
The settlement is part of the CFPB’s commitment to providing redress to service members, veterans, and their families. It narrows down the number of active litigation cases to 12, with the bureau dismissing 22 enforcement actions this year.
Terms of the Settlement
As part of the settlement, MoneyLion is prohibited from extending consumer credit at rates higher than 36% to borrowers covered by the MLA cap. This includes various fees and charges related to credit transactions. The case highlighted the importance of complying with the MLA regulations and ensuring fair treatment of borrowers.
MoneyLion was accused of requiring customers to join a membership program to access certain loan products and failing to allow borrowers to cancel their memberships. The settlement now bars MoneyLion from preventing borrowers from canceling their memberships and engaging in collections activities for past unpaid fees.
Additionally, MoneyLion must submit a compliance report detailing the redress provided to borrowers with outstanding loans between December 2017 and October 2024.
Changes in Management and Legal Challenges
Since the initial allegations, MoneyLion has undergone changes in management and ownership. The fintech company was acquired by Gen Digital for about $1 billion, signaling a shift in its operations and governance.
Apart from the CFPB lawsuit, MoneyLion is facing legal challenges from other entities, including New York’s attorney general and the city of Baltimore. These cases highlight the importance of transparency and fair lending practices in the financial industry.
MoneyLion’s response to the allegations emphasized its commitment to serving military and veteran customers and improving their financial health. The company expressed gratitude for the sacrifices made by service members and reiterated its dedication to this customer segment.
Conclusion
The settlement between MoneyLion and the CFPB reflects a step towards ensuring compliance with consumer protection laws and upholding the rights of borrowers, especially service members. It underscores the importance of ethical lending practices and responsible financial management in the fintech industry.
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