SKN | MoneyLion to Pay $1.75 Million to Settle CFPB Lawsuit

MoneyLion has agreed to pay $1.75 million to settle a lawsuit filed by the Consumer Financial Protection Bureau (CFPB), resolving long-standing allegations that the fintech charged service members interest rates above the 36% cap allowed under the Military Lending Act (MLA). The settlement highlights intensified regulatory scrutiny on digital lenders and reinforces the government’s commitment to protecting military borrowers.

This case is particularly relevant for consumers, investors, and financial institutions as it underscores how evolving regulatory expectations affect digital banking, consumer credit, and compliance obligations across the financial sector.

Understanding the Case Against MoneyLion

The CFPB filed its lawsuit in 2022, accusing MoneyLion of violating federal lending protections for active-duty service members and their families. Under the MLA, lenders cannot charge an interest rate higher than 36%, including all finance charges, credit insurance premiums, and membership fees.

MoneyLion offered low-interest installment loans but required borrowers to enroll in a paid membership program costing up to $29 per month. According to the CFPB, the fintech also restricted borrowers from canceling these memberships until their loans were fully repaid. These practices effectively pushed the total cost of credit above the legal interest rate threshold.

With the new settlement, MoneyLion is prohibited from charging MLA-covered borrowers any fees or credit-related costs that would exceed the 36% cap. The company must also allow membership cancellations, stop collection attempts on unpaid membership fees, and refrain from reporting those fees to credit bureaus.

Impact on Borrowers and the Digital Lending Market

For affected borrowers, especially military families who often rely on small-dollar loans during financial strain, the settlement ensures financial relief and enhanced protection. MoneyLion must now submit compliance reports to the CFPB detailing redress amounts, ensuring transparency in how refunds and corrections are applied.

More broadly, the case highlights an ongoing challenge in digital banking: ensuring that innovative loan products comply with longstanding credit laws. Consumers—whether applying for personal loans, managing deposits, or accessing digital banking services—stand to benefit when oversight prevents unexpected fees or inflated interest costs.

For fintech lenders, especially those offering subscription models or embedded financial services, this case serves as a reminder that credit-related fees must be carefully calculated to avoid regulatory action.

Regulatory and Industry Implications

The settlement reinforces a tightening regulatory environment. The CFPB has renewed its focus on protecting military families and has pledged to prioritize enforcement where service members are harmed. At the same time, state regulators, such as the New York attorney general and the city of Baltimore, are pursuing parallel lawsuits involving alleged high-interest digital loans.

For financial institutions, this underscores the importance of robust compliance systems, clear disclosures, and monitoring of all credit-related fees—even those tied to memberships or digital platforms. As interest rate pressures shift and more consumers rely on digital banking tools, regulators are increasingly attentive to how fintech models interact with traditional lending laws.

Closing Insights

The MoneyLion settlement shows how digital innovation must remain aligned with consumer-protection rules. As banks and fintechs expand new credit models, transparency and compliance will define long-term trust.
Looking ahead:

• Expect stricter enforcement actions involving digital credit products.

• Fintechs must reassess membership-based loan models to avoid hidden fee risks.

• Service members and consumers benefit from more consistent and predictable lending terms.

• Regulatory clarity will continue shaping the future of small-dollar loans and digital banking services.

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