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Quick Answer: Yes, MoneyLion is a legit and safe way to access a range of personal finance services including loans up to $1,000 with 0% APR.
MoneyLion can function as a valuable personal finance tool, providing you with credit tips, credit monitoring, and money management tools for your success2. Its Instacash feature lets you get cash advances for up to $500 with no interest and no mandatory fees.
The app also has multiple products including a robust credit builder program and even some fully fledged loans.
To use MoneyLion, you’ll have to give them some pretty sensitive information, as well as access to your bank account and data. So, before you head to your favorite app store and hit ‘download’, here’s what you should know regarding MoneyLion’s safety and legitimacy.
Is MoneyLion a legitimate company?
MoneyLion was founded in 2018 in New York City and has since grown to an impressive 10 million + user base. MoneyLion is a publicly traded company on the NASDAQ stock exchange, that is currently valued at over $700 million
The wide array of banking services offered by MoneyLion is provided by their partner Pathward, which is a national bank with decades in the business. This means your RoarMoney deposits are insured by the FDIC for up to $250,0003.
This should let you feel comfortable allowing MoneLion to handle your information and funds, but it doesn’t mean that their financial services are perfect.
Some users on social media have accused MoneyLion of being a scam. Let’s see if there’s any validity to this claim.
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Is MoneyLion a scam?
If you make a Google search asking if MoneyLion is a scam, you’ll quickly come across many posts on social media alleging that it is, with posters talking about how they lost money to the app in one way or another.
Some of the most common complaints by users regarding MoneyLion include cases of people losing their money to identity thieves, as well as unauthorized charges and confusion around repayments for cash advances and loans.
On the Comparably website, there is even a review from someone (anonymously) claiming to be a former company employee accusing the company of profiting from identity theft.
Of course, just because someone says something on the internet doesn’t mean it’s true. Yet, as it turns out, MoneyLion does have some history of alleged business malpractices.
In 2022, the Consumer Financial Protection Bureau (CFPB) sued MoneyLion for violations of the Consumer Financial Protection Act (CFPA) and the Military Lending Act.
The first allegation in the lawsuit had to do with the fact that MoneyLion didn’t allow its users to cancel their subscriptions until their loans were fully paid, which is against consumer laws. Curiously, this is the same reason why another similar app, Brigit, was also fined by the FTC.
The second allegation was that MoneyLion overcharged servicemembers and their dependents more than the 36% rate cap allowed by the law.
As of today, this lawsuit is still pending. Yet, MoneyLion’s stock value, which fell after the lawsuit was issued, saw a sharp recovery in the last year.
This doesn’t mean that MoneyLion is a scam, however, it does show that the company has had some challenges complying with financial regulations. They weren’t as transparent as they should’ve been regarding subscription canceling and loan interest.
Is my personal information safe with MoneyLion?
Another common concern among MoneyLion’s users has to do with privacy and data security.
This is a valid concern for any app, but especially so for MoneyLion, given that the company suffered a well-documented security breach in 2021.
In the security breach, the company’s systems themselves were not compromised, but the app suffered a credential-stuffing attack that led to many of its users’ credentials being leaked and published.
According to a letter sent by a MoneyLion representative to the New Hampshire Attorney General notifying the issue, only a few accounts may have been affected by the breach. Still, it was serious enough to raise concerns about identity theft, leading the company to notify its users and tighten its security.
Ever since the 2021 incident, MoneyLion has taken serious steps to tighten its security. The company employs high-grade encryption protocols and two-factor authentication to keep information out of the reach of potential hackers and even its own employees.
Furthermore, there are standard steps that apps like MoneyLion take to protect their users’ privacy and sensitive information. For example, those applying for a MoneyLion loan must pass an internal identity check process.
The reality is that breaches can happen even to the most secure companies, and MoneyLion took the proper steps to deal with the situation: promptly notifying its users and locking down compromised accounts, among others.
In truth, your information is as safe with MoneyLion as with any other financial app. The odds of your data being leaked exist, but they’re extremely low. If you want to go deeper into MoneyLion’s privacy measures, you can always take a look at their Privacy Policy.
Does using MoneyLion hurt my credit?
One of MoneyLion’s selling points is that it can let you borrow money regardless of your credit score, whether through its Instacash cash advances or its credit-builder loans.
MoneyLion doesn’t perform a credit check for Instacash advances, and there is no hard credit pull if you apply for a credit builder loan, so it shows up as a hard inquiry on your credit report, which can affect your credit score.
When you fail to repay MoneyLion a cash advance or a credit builder loan, the app simply waits for your registered bank account to get funds and deducts them to repay the debt.
MoneyLion won’t report you to credit bureaus for late payments or non-payments on Instacash, nor charge you any interest or late fees. However, your ability to borrow from the app can be affected if you fail to pay.
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Does MoneyLion have hidden fees?
MoneyLion doesn’t have hidden fees. The app does charge fees for many of its financial products, but these are clearly disclosed and explained on its website.
Instacash cash advances charge a turbo delivery fee that you’ll need to pay if you want your funds within minutes. Otherwise, you can get a cash advance with no fee but the funds will be sent within 5 business days.
Personal loans and credit builder loans (which are different products from Instacash) do have an APR, but no hidden fees. MoneyLion even lets you calculate the exact APR that you’ll pay for any amount loaned on their website.
Other products may charge monthly subscriptions or administrative fees, and these fees are also fully disclosed. For example:
- RoarMoney – $1/Month
- Managed Investment Accounts – $1 – $5/Month
- MoneyLion WOW – $9.99/Month
- Credit Builder Plus – $19.99/Month
View MoneyLion’s full pricing policies here.
Can I trust electronic debits?
Some users have reported having unauthorized charges from the MoneyLion app. A few of them had terrible consequences for their personal finances.
Keep in mind, however, that these types of charges aren’t made by the company itself, but are more likely the result of identity theft from third parties.
Although apps like MoneyLion usually take all the possible measures to keep their users safe, these cases may occur as a result of a user’s information being leaked and stolen through other means.
As long as you do your due diligence in keeping your own information safe, rest assured that MoneyLion will never take more money than it should via automated clearing house (ACH) payments.
To avoid problems and surprises, make sure that you’re fully aware of the amount coming out of your account. With a MoneyLion loan, payments and terms are fixed, with bi-weekly payments scheduled on Fridays.
If you absolutely don’t want an ACH direct-payment transaction, it is possible to set up an alternative payment. You can contact MoneyLion by email at [email protected].
So, is MoneyLion safe?
All in all, you can rest assured knowing that MoneyLion is a legitimate company and, despite some shortcomings that are relatively common in these types of apps, the app is safe to use.
You will surely find no shortage of user complaints if you search hard enough, but the truth is that this is the case for almost every other app. More often than not, these problems are either caused by the users’ inattentiveness to MoneyLion’s terms or their data being accessed by third parties.
As far as MoneyLion’s business practices go, the fact that there is still a lawsuit in progress against them is worth keeping in mind.
However, if user scores on Play Store and App Store are anything to go by, it can be said that most users are satisfied by the company’s services, as it boasts an impressive 4.5/5 and 4.7/5 respectively.
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Watch our MoneyLion cash advance app review
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- As of February 13, 2024. Offers may change and may not be available to all users. Eligibity requirements apply. See KashKick's Terms of Service for full details.
- Instacash is an optional service offered by MoneyLion. Your available Instacash Advance limit will be displayed to you in the MoneyLion mobile app and may change from time to time. Your limit will be based on your direct deposits, account transaction history, and other factors as determined by MoneyLion. See Instacash Terms and Conditions for more information and eligibility requirements.
- MoneyLion is a financial technology company, not a bank. RoarMoney℠ demand deposit account provided by, and MoneyLion Debit Mastercard® issued by, Pathward®, National Association, Member FDIC. RoarMoney is a service mark of MoneyLion. Funds are FDIC insured, subject to applicable limitations and restrictions when MoneyLion receives the funds deposited to your account.
