What happened
After falling sharply yesterday, shares of the fintech company MoneyLion (ML +0.00%) have jumped more than 30% as of 10:54 a.m. ET today after the company responded to a complaint filed by the Consumer Financial Protection Bureau (CFPB) yesterday.
So what
The CFPB is suing MoneyLion for allegedly charging illegal fees to members of the military and their dependents. The main accusation is that MoneyLion charged annual percentage rates on loans over the legal 36% cap.
"MoneyLion targeted military families by illegally extracting fees and making it difficult to cancel monthly subscriptions," CFPB director Rohit Chopra said in a statement. "Companies are breaking the law when they require monthly membership fees to obtain loans and then create barriers to canceling those memberships."
The CFPB plans to attempt to collect damages to repay customers for their troubles and would like MoneyLion to end these practices. This complaint is not a final ruling but an allegation.
NYSE: ML
Key Data Points
Last night, MoneyLion went on the offensive, issuing a statement saying the CFPB's allegations pertain to a product that accounts for only a small part of the company's business, and that they "are without merit."
"MoneyLion has cooperated in good faith with the CFPB for over three years regarding our membership offering," the company said in a statement.
The company added, "Despite our cooperation, the Bureau has chosen the sensationalist route of prioritizing headlines instead of engaging in constructive dialogue to address their questions and to achieve better consumer outcomes."
Now what
Either there is some kind of trading manipulation that I am just not seeing right now, or the market thinks investors overreacted yesterday.
I am not the biggest fan of MoneyLion's business model, but the fintech company has hit a lot of its projections and grown customers at a very fast clip, so I could see upside here under more favorable market conditions.
