US CFPB settles with MoneyLion as enforcement activity winds down

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By Jonathan Stempel

NEW YORK (Reuters) -The U.S. Consumer Financial Protection Bureau reached a $1.75 million settlement with MoneyLion to settle charges that the online lender overcharged military personnel on loans, in possibly one of the agency’s final actions as it winds down enforcement activity.

MoneyLion, a unit of Gen Digital, had been accused in a September 2022 lawsuit filed during the Biden administration of imposing more than the legally permitted 36% on loans to active service members and their families.

The CFPB said the overcharges combined interest rates and membership fees for a program to access low-cost loans, and MoneyLion did not let borrowers cancel memberships until their loans were paid off.

According to a Friday filing in Manhattan federal court, the payout will be distributed, mostly pro rata, to borrowers between December 1, 2017 and October 11, 2024.

MoneyLion also agreed to let borrowers cancel memberships even if they had unpaid loan balances or membership fees.

It did not admit or deny wrongdoing in agreeing to the settlement, which requires court approval.

“While we disagree with the CFPB’s allegations, we are glad to put this matter behind us and focus on continuing to help Americans improve their financial lives,” MoneyLion said in a statement.

The Trump administration has been trying to shut down the CFPB, which during Democratic presidencies was an aggressive watchdog over alleged financial misconduct.

Though a federal judge blocked a dismantling in March, acting director Russell Vought has halted most of the CFPB’s work as the White House starved the agency of cash needed to operate.

The CFPB is seeking to move its remaining enforcement cases to the U.S. Department of Justice, four people with knowledge of the matter said this week.

(Reporting by Jonathan Stempel in New York; Additional reporting by Douglas Gillison in Washington, D.C.; Editing by Bill Berkrot)