The city of Baltimore filed a lawsuit against MoneyLion Technologies Inc., accusing the financial technology company of using misleading marketing and charging excessive fees that officials said trap low-income residents in cycles of debt.

Baltimore Mayor Brandon Scott announced the lawsuit Monday, calling MoneyLion’s practices “a digital-age payday lending scheme.”

The complaint, filed by the city’s Department of Law and co-counsel Berger Montague, alleges that the company violated Baltimore’s consumer protection ordinance by promoting small, short-term “Instacash” advances with deceptive terms.

“MoneyLion has preyed on Baltimoreans, trapping our most vulnerable residents in borrowing cycles that made it harder and harder for them to pay bills and put food on the table,” Scott said in a statement. “Not only is that wrong, it’s illegal. We’re committed to holding MoneyLion accountable.”

MoneyLion didn’t immediately respond to a request for comment.

MoneyLion markets its Instacash product as a “zero-interest” alternative to payday loans, according to the lawsuit, offering people instant access to cash advances.

However, city officials said, the program includes optional tips and fees that push borrowing costs to more than 10 times Maryland’s legal annual interest rate limit of 33%. The city claims the company hides or misrepresents those costs and pressures users into paying tips, resulting in what the suit calls “usurious” interest charges that violate state and local laws.

The complaint cites research from the Center for Responsible Lending showing that users of apps like MoneyLion often incur more overdraft fees and take out multiple advances within weeks. The city argues that those patterns demonstrate how consumers become trapped in recurring debt.

“We are proud to partner with the City of Baltimore to protect Baltimore consumers from these predatory and misleading tactics,” James Hannaway of Berger Montague said in a statement. “Today, we take a first step in stopping MoneyLion from preying on Baltimore’s most financially vulnerable residents.”

WJZ is a media partner of The Baltimore Banner. See the original report.