MoneyLion to pay $1.75M to settle CFPB lawsuit

Core Insights - MoneyLion has agreed to pay $1.75 million to settle a lawsuit from the Consumer Financial Protection Bureau (CFPB) regarding alleged violations of the Military Lending Act by charging interest rates exceeding the 36% cap for loans to service members [1] Group 1: Settlement Details - The settlement reduces the number of active litigation cases the CFPB is handling to 12, with 22 enforcement actions dismissed this year [2] - MoneyLion is prohibited from extending consumer credit at rates higher than 36% for borrowers covered by the Military Lending Act, which includes various fees and charges associated with loans [3] - The settlement mandates that MoneyLion must submit a compliance report to the CFPB detailing the number of borrowers who received redress and the amounts paid, covering loans from December 2017 to October 2024 [6] Group 2: Membership Program Issues - The CFPB's lawsuit highlighted that MoneyLion required customers to join a membership program with monthly fees ranging from $19.99 to $29 to access lower interest rate loans, and borrowers were not allowed to cancel memberships until loans were paid [4] - The settlement prohibits MoneyLion from preventing borrowers from canceling their memberships and from engaging in collections for unpaid membership fees [5] - MoneyLion cannot penalize borrowers' credit scores due to unpaid membership fees, ensuring that borrowers can pay off loans using funds from their credit reserve accounts [5]