The City of Baltimore has announced that it has filed a lawsuit against MoneyLion, alleging that the company conducted misleading marketing and applied high charges to consumers.
The Mayor and City Council of Baltimore, represented by the Baltimore City Department of Law and Berger Montague, filed the lawsuit against the company over reportedly violating the Consumer Protection Ordinance (CPO) by misleading consumers into taking out high-cost, high-frequency, short-term loans known as Instacash Advances.
According to officials, MoneyLion used unlawful tactics on vulnerable residents, placing them in borrowing cycles that made it harder for them to pay for their daily expenses and needs. They added that the City is committed to holding MoneyLion accountable, similar to what it had done with other corporations trying to ill-treat residents.
MoneyLion’s alleged wrongdoings
The City of Baltimore’s lawsuit reports that MoneyLion operates as a modern-day payday lender. The company markets itself as an earned wage advance provider and an alternative to payday lenders, with it underlining that consumers benefit from instant access to zero-interest loans through Instacash Advances. Despite this, the solution includes fees and tips that add up to more than ten times the maximum APR allowed for consumer loans in Maryland, which is 33%. The lawsuit mentions that MoneyLion hides and misrepresents these fees and makes consumers collect tips.
Furthermore, the City of Baltimore explains how these actions lead to a cycle of debt for consumers and, as these costs add up, borrowers have less money to pay for utility bills, rent, and food. When these users do not have enough funds to pay for their expenses, they take out more Instacash Advances, and then the cycle repeats.
Representatives from Berger Montague, a US-based law firm that represents clients in antitrust, securities, consumer, and environmental cases, highlighted that, by working with the City of Baltimore, the company aims to safeguard consumers from misleading tactics and protect financially vulnerable residents.
