In a move aimed at combating what is described as digital-age exploitation, Baltimore Mayor Brandon M. Scott has taken legal measures against MoneyLion Technologies Inc. Accused of trapping the city's residents in a predatory cycle of debt through deceptive marketing and excessive interest charges. A lawsuit was filed with allegations that this financial company violated the Baltimore Consumer Protection Ordinance (CPO). According to a statement from the Baltimore Mayor's office, the lawsuit accuses MoneyLion of masquerading as a convenient "earned wage advance" service while imposing hidden costs that significantly exceed Maryland's legal APR limit for consumer loans.
"MoneyLion has preyed on Baltimoreans, trapping our most vulnerable residents in borrowing cycles that made it harder and harder for them to pay bills and put food on the table," Mayor Brandon M. Scott told reporters, per the city's press release, acknowledging the struggles faced by residents roped into taking frequent, small-sum loans that appear innocuous at first glance. The lawsuit highlights that the "zero interest" Instacash Advances promoted by MoneyLion come with attached fees and "tips" that, combined, effectively breach the state's 33% APR cap. Adding torment to the perennial fight for financial survival, Baltimore's most financially insecure are left grappling with this reality.
Following the lawsuit's revelation, a recent study conducted by the Center for Responsible Lending indicates that users often succumb to higher overdraft fees post their initial loan from such apps. That same report paints a dismal picture, asserting that a significant majority of users take more than a single loan within just two weeks.
Backing Baltimore in this legal fight is the law firm Berger Montague, whose representative, according to a press release, James Hannaway, remarked, "Today, we take a first step in stopping MoneyLion from preying on Baltimore's most financially vulnerable residents."
