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.