In a terse but decisive order, a New York federal judge has shut down a push by consumer advocacy groups to inject clarifying language into the CFPB's MoneyLion Deal, the recently approved $1.75 million settlement between the agency and MoneyLion Technologies Inc. despite growing alarm that the agreement could be misused as a legal shield.

U.S. District Judge John P. Cronan declined the request Thursday, stamping it at the bottom of a letter filed a day earlier by several national consumer law firms. The judge noted the groups never formally sought to intervene and that both the Consumer Financial Protection Bureau and MoneyLion objected to any changes.

“Non-parties seek to amend a final consent judgment,” Cronan wrote, emphasizing the advocates' own admission that they did not seek to alter its substantive terms. “The parties oppose this request, and the court declines to entertain it.”

A Settlement With High Stakes for Military Borrowers

Last month’s settlement brought closure to a Biden-era enforcement action accusing the fintech lender of overcharging service members in violation of the Military Lending Act, which caps annual percentage rates at 36% for military consumers.

The deal requires MoneyLion to issue redress payments but imposes no civil penalty and does not demand an admission of wrongdoing. It also codifies a controversial carve-out: MoneyLion may still charge certain membership fees, so long as the fees are “clearly and prominently disclosed” and military borrowers can cancel within a brief window.

How the Alleged Overcharging Worked

The CFPB’s 2022 lawsuit argued MoneyLion tied its loans to paid memberships, and once membership fees were factored into the loans’ cost, the effective rate sailed past the MLA’s 36% threshold.
Under the settlement, those fees may be exempt from the cap if properly disclosed — a provision critics fear could be wielded as a “safe harbor”.

Advocates Sound the Alarm

The letter to the court came from the same firms litigating a separate class action against MoneyLion, accusing the lender of exploiting military borrowers.

The advocates urged the court to clarify that the settlement:

• does not interpret the Military Lending Act,

• cannot be used as a legal defense,

• and creates no safe harbor for disputed membership fees.

They argued the CFPB’s own settlement language contradicts the MLA’s broad definition of “interest,” which includes “all cost elements associated with the extension of credit.” Regulations also require inclusion of “[a]ny fee imposed for participation in any plan or arrangement for consumer credit” when calculating the military APR.

“Deeply Troubling,” Says National Consumer Law Center

Shennan Kavanagh of the National Consumer Law Center said the group is reassured only by the judge’s confirmation that the ruling carries no precedential weight.

“The CFPB’s settlement attempts to carve out exclusions Congress never authorized,” she said. “It is deeply troubling that the agency charged with protecting military families would endorse language that weakens those protections.”

Where the Money Is Going

The settlement dedicates $1.75 million to military borrowers with MoneyLion loans issued between December 2017 and October 2024 who either paid membership fees or were barred from canceling their memberships.

• $1.72 million is earmarked for borrowers who paid the fees.

• The remainder goes to those who attempted and failed to cancel.

Restrictions Imposed on MoneyLion

Under the agreement, MoneyLion is:

• Barred from issuing credit to covered borrowers with APRs above 36%.

• Prohibited from blocking membership cancellations, even when loans remain outstanding.

• Forbidden from collecting on old unpaid membership fees.

• Prevented from reporting negative credit information tied to unpaid fees — and must take “reasonable” steps to scrub existing reports.

The Lawyers Behind the Battle

The National Consumer Law Center is represented by Shennan Kavanagh.
Pearson Warshaw LLP: Melissa Weiner and Ryan Gott.
Varnell & Warwick PA: Janet Varnell and Christopher Brochu.
East End Trial Group LLC: Kevin Abramowicz.
The CFPB: David Dudley and Miriam Lederer.
MoneyLion: James Kim of Cooley LLP.