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:
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does not interpret the Military Lending Act,
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cannot be used as a legal defense,
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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.
