MoneyLion and the Membership You Just Can’t Cancel

One writer compares the neobank to Columbia House

Andy Spears


Photo by Mick Haupt on Unsplash

I wrote recently about MoneyLion being sued by the Consumer Financial Protection Bureau (CFPB)for offering loans with effective interest rates in excess of 36% in violation of the Military Lending Act.

Jason Mikula of Fintech Business Weekly compares the predatory lender to Columbia House — the company that would send you 8 CDs for one penny as long as you signed up for a “club membership” and kept getting some pretty expensive CDs you didn’t actually want.

Here’s more on the membership MoneyLion offered — and the lack of benefits provided to “members.”

An early version of of MoneyLion’s membership program, the “ML Plus Membership Program,” offered consumers the chance to take out a 12-month, $500 installment loan at a 5.99% APR — if they paid a $29 per month “membership fee.”

In addition to their monthly loan payment (approximately $43) and $29 membership fee, users were required to pay an additional $50 into an “investment account,” which was used to partially secure the loan (eg, MoneyLion would tap this for repayment if users defaulted.)

Altogether, a user of this $500 loan product would be paying about $122 per month for 12 months — a total of $1,464 over a year, though they would get $600 of that back upon successful repayment of the loan.

Around 2019, MoneyLion redesigned and rebranded the product as its “Credit Builder Loan.” For $19.99 per month, users could access a 12-month installment loan from $500 — $1,000 at APRs from 5.99% to 29.99%. Borrowers would receive half the loan proceeds upfront and half would be held in escrow, which borrowers would receive upon fully paying off the loan.

So, one, these “memberships” are a pretty expensive way to access credit.

Two, according to the CFPB, the memberships and fees provided no real benefits AND were nearly impossible to cancel.



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .