Banking

Cleo AI Faces Class Action Lawsuit Over Alleged Usurious Loans

Updated on
Published on
Cleo AI Faces Class Action Lawsuit Over Alleged Usurious Loans

In a recent class action lawsuit, plaintiffs Karen Hoover, Tom Baker, and Vera Beckford are alleging that Cleo AI Inc., the operator of a lending app called 'Cleo', has violated multiple consumer protection laws. The app, which provides cash advances to borrowers, is in hot water over claims of unfair trade practices, loan interest and protection law violations, and more.

What Laws Did Cleo Allegedly Violate?

The lawsuit alleges that Cleo AI Inc. has violated several laws, including the Unfair Trade Practices and Consumer Protection Law (UTPCPL), Loan Interest and Protection Law (LIPL), Consumer Discount Company Act (CDCA), Truth-in-Lending Act (TILA), and Electronic Funds Transfer Act (EFTA). These laws are designed to protect consumers from deceptive practices, usurious interest rates, and unauthorized electronic funds transfers.

According to the plaintiffs, Cleo has not only violated these laws but also misled borrowers by advertising its advances as 'free', 'no interest', and '0% interest'. However, the company allegedly charges hidden monthly fees and 'Express Fees' for quick access to cash advances, resulting in costly cash advances with triple-digit annual percentage rates (APRs).

How Did the Plaintiffs Fall into Cleo's Alleged Trap?

The plaintiffs claim that Cleo's lending practices are harmful to Pennsylvania borrowers. They argue that the company's practices create a cycle of reborrowing and transferring funds from the community to Cleo. The plaintiffs also allege that Cleo does not disclose the APRs of its advances before, during, or after the transaction, misleading borrowers into believing the advances are 'free' or 'no-interest'.

Borrowers are initially limited to $20.00 to $70.00 cash advances, which can increase up to $100.00 over time. To be eligible for these advances, borrowers must meet Cleo's underwriting criteria and link a bank account to the app. The plaintiffs argue that these practices are deceptive and violate Pennsylvania law.

Who Are the Class Members?

The class action lawsuit is brought on behalf of the plaintiffs themselves and others similarly situated. This means that the class members are likely to be individuals who have used the Cleo app and have been charged for cash advances in a manner similar to the plaintiffs. The exact number of class members is not specified, but it could potentially include thousands of Cleo app users in Pennsylvania.

How Much is the Plaintiff Seeking?

The plaintiffs are seeking damages, including actual, statutory, and treble damages. They are also asking for restitution, attorneys' fees, and all other available relief. The exact dollar amount has not been specified, but it is likely to be a significant sum, given the number of potential class members and the severity of the alleged violations.

What Could Be the Next Steps in the Case?

As the case progresses, the court will need to determine whether Cleo's practices indeed violate the laws as alleged by the plaintiffs. If the court finds in favor of the plaintiffs, Cleo could be required to pay substantial damages and change its lending practices. However, it's also possible that the case could be settled out of court. The plaintiffs have requested a jury trial for all claims, indicating their intent to pursue the case vigorously.

Case Facts

  • Status:
    Lawsuit Filed
  • Case Number:
    3:23-cv-01067
  • Filing Date:
    June 27, 2023
  • Jurisdiction:
    U.S. District Courts
  • State:
    Pennsylvania
  • Court:
    Pennsylvania Middle District
  • Plaintiff:
    Vera Beckford; Tom Baker; Karen Hoover
  • Defendant:
    Cleo AI, Inc.
  • Plaintiff Firm:
    East End Trial Group LLC
  • Defendant Firm:
  • Claims Administrator:
Contributors
Will Gendron
Will Gendron
Editor in Chief
Weekly newsletter

Stay up to date with new class action settlements you may join.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Complaint

This browser does not support inline PDFs. Please download the PDF to view it: Download PDF

Related class action lawsuits

Read more to get notified about updates to each case.

Layma, LLC in Hot Water: Lawsuit Seeks Damages for Predatory Lending
Banking

Layma, LLC in Hot Water: Lawsuit Seeks Damages for Predatory Lending

Lawsuit alleges Layma, LLC used 'rent-a-tribe' scheme to evade state usury laws and engaged in predatory lending practices.
Wahido Lending Faces Lawsuit Over Alleged 400% Interest Rates
Banking

Wahido Lending Faces Lawsuit Over Alleged 400% Interest Rates

Lawsuit alleges Wahido Lending, CreditServe, and Eric Welch violated Indiana's consumer protection laws and RICO, by charging predatory interest rates and using a 'rent-a-tribe' scheme.
MaxLend Faces RICO, Usury Lawsuit Seeking Treble Damages
Banking

MaxLend Faces RICO, Usury Lawsuit Seeking Treble Damages

Indiana resident Mary Hanafi alleges MaxLend and others made predatory, unlawful loans, violating Indiana's usury laws and RICO.
Bank of America Faces Class Action Lawsuit Seeking Damages and Relief
Banking

Bank of America Faces Class Action Lawsuit Seeking Damages and Relief

Bank of America is accused in a class-action lawsuit of violating multiple laws, including the FCRA and TILA, by allegedly misusing customer information.
MinnCo Credit Union Faces Class Action Lawsuit: Tischlers for Truth in Lending Act Violations
Banking

MinnCo Credit Union Faces Class Action Lawsuit: Tischlers for Truth in Lending Act Violations

Michael and Samantha Tischler allege MinnCo Credit Union violated TILA for misrepresentations and failure to make required disclosures
Big Picture Loans Class Action Lawsuit over Predatory Lending Practices
Banking

Big Picture Loans Class Action Lawsuit over Predatory Lending Practices

Lawsuit alleges Big Picture Loans and its controlling entities violated Illinois laws by making predatory and unlawful loans to residents.
Cleo AI Faces Class Action Lawsuit Over Alleged Usurious Loans
Banking

Cleo AI Faces Class Action Lawsuit Over Alleged Usurious Loans

Class action lawsuit alleges Cleo AI Inc. misled borrowers with hidden fees and triple-digit APRs, violating multiple consumer protection laws.
Cascade Spring Credit Class Action for Alleged Predatory Loans
Banking

Cascade Spring Credit Class Action for Alleged Predatory Loans

Cascade Spring Credit is facing a class action lawsuit alleging it made illegal loans to Illinois residents, violating various consumer protection laws.