MoneyLion this week disclosed investigative actions two federal and three state regulators are taking ahead of the mobile banking platform's planned $2.4 billion merger with Fusion Acquisition Corp., a special-purpose acquisition company.
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, the fintech said in a Tuesday filing with the Securities and Exchange Commission (SEC).
"The investigation is ongoing and any potential impact on our financial condition or operations are unknown at this time," MoneyLion wrote in the filing, noting that it has given the CFPB "all of the information and documents required" and that it intends to cooperate fully.
The company also received investigative subpoenas from the SEC concerning a subsidiary, the Invest in America Credit Fund 1 LLC, through which MoneyLion’s credit and payroll advance products are financed. MoneyLion said it could not predict the outcome or impact of the SEC inquiry but said it is cooperating with the investigation, which is at an early stage.
MoneyLion also disclosed Tuesday it had received a follow-up request for information from the California Department of Financial Protection and Innovation. That agency, in a 2020 report of examination, "identified certain compliance exceptions and required [the company] to take corrective actions, including customer refunds relating to legacy loan products" that it no longer offers. "We are in the process of completing the required corrective actions and have enhanced our policies and procedures for compliance … going forward," MoneyLion said.
The agency is also conducting an industrywide investigation of companies that provide earned-wage access products and services, and MoneyLion entered an agreement in February to regularly provide information on best practices concerning its Instacash product. Potential financial impacts from the investigation are unknown, MoneyLion said.
MoneyLion this year also received a report of examination from Colorado’s Consumer Protection Unit, which found faults in compliance and sought updates to record keeping and, potentially, customer refunds on some loans. "We are in the process of responding to the [agency] and intend to take all corrective actions required to maintain compliance with applicable Colorado state law going forward," MoneyLion said in Tuesday’s filing.
In somewhat of a mirror of the CFPB demands, MoneyLion this year received its third information request in as many years from the Minnesota Department of Commerce regarding a probe of its lending activity in the state and its membership program.
Fusion Acquisition Corp. is set to take MoneyLion public under a deal announced in February that would create a company valued at $2.4 billion, with more than $500 million in cash proceeds.
