The City of Baltimore has initiated legal proceedings against MoneyLion, accusing the company of deceptive marketing practices and imposing substantial charges on consumers.

Representatives from the Baltimore City Department of Law and Berger Montague filed the lawsuit, arguing that MoneyLion’s actions violate the Consumer Protection Ordinance (CPO) by misleading residents into taking out costly, frequent, short-term loans known as Instacash Advances.

Officials claim that MoneyLion employed unethical strategies targeting vulnerable community members, trapping them in a borrowing cycle from which it becomes increasingly difficult to extricate oneself, thereby complicating basic financial needs like paying bills and purchasing groceries. The city asserts its commitment to holding MoneyLion accountable, as it has done with other entities found guilty of exploiting residents.

MoneyLion’s Contested Practices

While presenting itself as a provider of earned wage advances and an alternative to traditional payday lenders, MoneyLion reportedly levies fees and interest that exceed tenfold the maximum allowable APR for consumer loans in Maryland, which is 33%. The lawsuit alleges that these charges are concealed and misrepresented, forcing consumers to collect additional tips.

These practices allegedly create a perpetual debt cycle for consumers. As costs accumulate, borrowers have less money available to cover essential expenses like utilities, rent, and food. When funds run low, users often turn to further Instacash Advances, leading the cycle to perpetuate.

Berger Montague, a law firm known for its work in consumer cases, emphasizes its role in partnering with the City of Baltimore to protect consumers from deceptive practices and safeguard financially vulnerable residents.