Investors bail out MoneyLion as lender faces lawsuits and quarterly losses
Published on 01/22/2022
New York-based MoneyLion Inc is a fintech app founded in 2013 that went public via PSPC. When the SPAC agreement with Fusion Acquisition Corp. was announced in February 2021, the combined companies shared an expected valuation of US$2.9 billion. As of January 21, 2022, MoneyLion had a market cap at market close of $607,870,000, wiping out hundreds of millions of net worth. In the nine months ended September 30, 2021, MoneyLion lost US$132.878 million compared to US$11.153 million in the previous period September 30, 2020. MoneyLion faced consumer financial fraud lawsuits before to go public, but investors were hungry for fintech apps and consumer finance products.
To make matters worse, in September 2021, law firm Labaton Sucharow LLP revealed that it had begun pursuing claims on behalf of MoneyLion customers who were charged excessive interest on loans disguised as fees. MoneyLion is accused of violating consumer rights by charging annual interest rates much higher than the rates allowed by most state laws. MoneyLion announced that the Credit Builder Loan has an APR of 5.99%. However, when membership fees and other required payments are included, MoneyLion rates may be higher than permitted by federal and state laws. This could entitle consumers to a remedy under federal law and certain state laws.
MoneyLion revealed that the Consumer Financial Protection Bureau (CFPB) sent civil investigation requests to MoneyLion in three successive years – from 2019 to 2021 – regarding its membership model and the company’s compliance with the law on military loans. MoneyLion also received an investigation report from the Colorado Consumer Protection Unit this year and its third information request from the Minnesota Department of Commerce.
Main institutional investors
Some of MoneyLion’s largest institutional investors as of September 30, 2021 are StepStone Group (Greenspring Associates), Atalaya Capital Management LP, Macquarie Group, Soroban Capital Partners LP and Apollo Management Holdings, LP