Investors Bail on MoneyLion as Lender Faces Lawsuits and Quarterly Losses
Posted on 01/22/2022
New York-based MoneyLion Inc is a fintech app founded in 2013 that went public via SPAC. When the SPAC deal with Fusion Acquisition Corp. was announced in February 2021, the combined firms shared an expected valuation of US$ 2.9 billion. At January 21, 2022, MoneyLion had a market capitalization at market close of US$ 607,870,000, wiping out hundreds of millions of equity value. In the nine month ended September 30, 2021, MoneyLion lost US$ 132.878 million versus losing US$ 11.153 million in the previous period of September 30, 2020. MoneyLion faced consumer financial fraud lawsuits before going public, yet investors were hungry for fintech apps and consumer lending products.
To make matters worse, in September 2021, law firm Labaton Sucharow LLP revealed it started 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 permitted under most state laws. MoneyLion advertised the Credit Builder Loan as having a 5.99% APR. However, when membership fees and other required payments are included, MoneyLion’s rates could be higher than allowed by federal and state laws. This could entitle consumers to relief under federal law and certain state laws.
MoneyLion has disclosed that the Consumer Financial Protection Bureau (CFPB) sent MoneyLion civil investigative demands in three successive years – 2019 through 2021 – concerning its membership model and the company’s compliance with the Military Lending Act. MoneyLion this year also received a report of examination from Colorado’s Consumer Protection Unit and its third information demand from the Minnesota Department of Commerce.
Key Institutional Investors
Some of the largest institutional investors in MoneyLion from September 30, 2021 filing data are StepStone Group (Greenspring Associates), Atalaya Capital Management LP, Macquarie Group, Soroban Capital Partners LP, and Apollo Management Holdings, L.P.
