Defense and Compliance Attorneys
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Baltimore has filed a lawsuit against fintech company MoneyLion, alleging that its paycheck advance product “Instacash” traps residents in cycles of debt by charging excessive and misleading fees. The city claims MoneyLion violates Baltimore’s Consumer Protection Ordinance by promoting small, short-term loans branded as having “no interest,” but which in practice include fees and tips that raise costs to well above Maryland’s legal annual interest rate limit of 33%—in some cases, reportedly up to 350% APR.
Key Allegations
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The lawsuit accuses MoneyLion of operating as a modern payday lender, despite Maryland having banned payday loans more than two decades ago.
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According to officials, MoneyLion’s marketing hides or misrepresents transfer fees and “optional” tips, which are heavily encouraged by the app.
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These cumulative costs often exceed state interest rate caps, pushing vulnerable residents into repetitive borrowing and debt cycles that make it harder to afford basic needs.
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The city’s complaint asserts MoneyLion lacks a proper lending license in Maryland, and its products should legally be treated as loans rather than advances.
City’s Goals and Reactions
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Baltimore seeks court intervention to invalidate these loans and hold MoneyLion liable for deceptive practices.
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Mayor Brandon M. Scott has likened MoneyLion’s tactics to other large corporations accused of targeting city residents.
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The lawsuit partners with outside legal counsel Berger Montague to pursue consumer protection.
Broader Context
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MoneyLion’s advances typically allow access to up to $500, but with individual limits often capped at $100 per transaction, forcing repeated advances with additional fees.
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Similar lawsuits have been filed against MoneyLion in other states, including New York, with accusations of “digital-age payday lending”.
Baltimore’s legal action represents an effort to regulate emerging fintech lenders and protect consumers from what it deems as “predatory” paycheck advance products that bear strong resemblance to outlawed payday loans.
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