Klover told a federal judge that its cash advances are not loans because users are not legally required to repay them. On March 5, 2026, the judge declined to end the case on that argument. In Moss v. Klover Holdings, Inc., No. 1:25-cv-05758 in the U.S. District Court for the Northern District of Illinois, Judge Joan B. Gottschall denied Klover’s motion to dismiss and held that the complaint states claims under both the Truth in Lending Act (TILA) and the Military Lending Act (MLA). The ruling does not decide that Klover broke either law. It means a proposed class action claiming that Klover cash advance fees and tips are really the cost of credit goes forward.
Status: motion to dismiss denied March 5, 2026 in the Northern District of Illinois; case proceeding | No settlement — no class certified, nothing to claim yet
How the Case Got Here
The named plaintiff, an active-duty U.S. Army staff sergeant, filed the case on April 18, 2025 in the Circuit Court of Cook County, Illinois, as No. 2025CH04354. Klover removed it to federal court on May 22, 2025. Klover is a Chicago-based app that advances users small sums before payday and collects the money back from their bank account on the scheduled date.
How a Klover Advance Works, According to the Complaint
- Klover markets access to up to $200 before payday under its “Klover advance” and “Balance Advance” products.
- Users must authorize a debit from the account where their paycheck lands, scheduled for the next payday, and the app allegedly offers no way to cancel it.
- An account that is not repaid is suspended until it is.
- Users who do not want to wait up to three business days pay an express fee, which the complaint puts at $1.99 to $19.99.
- Klover also asks for a tip on each advance and, the complaint says, uses behavioral design techniques to push users to leave one.
- “Klover Points” reward users for sharing personal data and viewing ads, and those ads often promote other cash advance apps, nudging users to borrow from several providers at once.
The plaintiff’s argument is that for people short on cash before payday, the express fee and tip are optional only on paper.
The Rate Math Behind the Military Claim
Counting express fees and tips as finance charges, the complaint calculates that the effective annual rate on the plaintiff’s advances often exceeded 300%, and that one advance topped 1,200%. The MLA caps the annual rate on consumer credit to covered service members and their dependents at 36%.
On that basis, the lawsuit alleges Klover’s agreements with service members violate the MLA by exceeding the 36% cap, omitting required credit disclosures, including a class action waiver and a mandatory arbitration clause in the agreements, and using access to the borrower’s bank account as security. It separately alleges Klover gave none of the loan-cost disclosures TILA requires. These are allegations; Klover has not been found liable.
Klover’s Two Defenses, and Why They Did Not End the Case
“Our advances are non-recourse.” Klover argued its terms say users are not legally obligated to repay, so it extends no “credit,” and its tips and express fees are not finance charges. The court found that “debt” in the lending statutes is broader than the contract-law definition Klover proposed. It relied on Consumer Financial Protection Bureau staff commentary treating a cash advance repaid by a scheduled debit from the consumer’s account as a payday loan, and found it plausible that the tips and express fees are finance charges.
“The CFPB says earned wage access isn’t credit.” After briefing closed, Klover pointed to a December 23, 2025 CFPB advisory opinion stating that certain earned wage access products are not credit under Regulation Z. The judge noted the opinion covers only providers that, among other conditions, do not assess individual users’ credit risk. The complaint alleges Klover uses a third-party underwriting service to analyze users’ bank transaction history daily and adjust how much they can get, which the court found enough, for now, to place Klover outside the opinion.
The court also adopted the reasoning of other federal district courts that had ruled on similar apps.
Two Proposed Classes
| Military Lending Act class | Active-duty service members and their dependents who agreed to use a Klover advance, or a substantially similar product, on which Klover was paid a finance charge such as an express fee or tip |
| Truth in Lending Act class | Anyone in the United States who agreed to use a Klover advance, or a substantially similar product, on which Klover was paid an express fee, tip or other finance charge |
The lawsuit asks the court to declare the service members’ agreements in violation of the MLA, to award MLA class members actual damages of at least $500 per violation plus punitive damages, to award actual and statutory damages to the TILA class, and to bar the practices going forward. None of that has been awarded, and neither class has been certified.
One of a Dozen Similar Rulings
The National Consumer Law Center’s April 2026 issue brief counts twelve rulings involving Brigit, Cleo, Dave, EarnIn, FloatMe, Grant Money, Klover, MoneyLion and Tilt (formerly Empower), each rejecting at the early stages the argument that these advances fall outside TILA, the MLA or state credit laws. As of the Klover ruling, no federal appeals court had decided the question, though appeals involving Dave and Empower were pending in the Ninth Circuit. Related matters include the New York Attorney General’s suit against MoneyLion and DailyPay, FTC refunds to Brigit customers, and, for service members who took pawn loans, the FirstCash Military Lending Act settlement.
Klover has been sued before. Pierce v. Klover Holdings, Inc., No. 2:24-cv-00665, a 2024 proposed class action in the Western District of Pennsylvania, ended when the named plaintiffs and Klover stipulated to dismiss their claims with prejudice on July 1, 2024. No class was certified.
What Comes Next
With the motion denied, the case moves to Klover’s answer, discovery and eventually a motion for class certification. No settlement had been announced as of September 25, 2026. The OpenClassActions.com Klover lawsuit page will note any class certification ruling or settlement.
Frequently Asked Questions
Did the judge rule that Klover’s cash advances are loans?
Not on the merits. On March 5, 2026, Judge Joan B. Gottschall ruled only that the complaint’s allegations, taken as true at this early stage, plausibly describe credit and finance charges under the Truth in Lending Act and the Military Lending Act. Klover has not been found liable and can still contest the facts.
Is there a Klover settlement or claim form?
No. No class has been certified and no settlement had been announced as of September 25, 2026. If the case settles or a class is certified, class members would be notified and any claim process would be announced then.
Why does the Military Lending Act matter here?
The Military Lending Act caps the annual rate on consumer credit to covered service members and their dependents at 36% and bars covered creditors from requiring those borrowers to arbitrate. If Klover’s advances count as consumer credit, both rules could apply. Whether they count is the central disputed question.
I am not in the military. Am I covered?
Possibly. The complaint proposes a separate Truth in Lending Act class of anyone in the United States who agreed to use a Klover advance, or a substantially similar product, on which Klover was paid an express fee, tip or other finance charge. It has not been certified.
Has Klover been sued like this before?
Yes. A 2024 proposed class action in the Western District of Pennsylvania, Pierce v. Klover Holdings, Inc., ended in July 2024 when the named plaintiffs and Klover stipulated to dismiss their claims with prejudice. No class was certified in that case.
Sources
- Memorandum Opinion and Order denying motion to dismiss, Moss v. Klover Holdings, Inc., No. 1:25-cv-05758 (N.D. Ill. Mar. 5, 2026)
- Moss v. Klover Holdings, Inc. docket via Justia
- Class action complaint, Circuit Court of Cook County No. 2025CH04354 (filed Apr. 18, 2025), removed May 22, 2025 (N.D. Ill. Dkt. No. 1-2)
- Stipulation of Dismissal with Prejudice, Pierce v. Klover Holdings, Inc., No. 2:24-cv-00665 (W.D. Pa. July 1, 2024)
- National Consumer Law Center, “Courts Reject Claims that Payday Loan Apps Don’t Offer Loans” (April 2026)
- OpenClassActions.com: Klover Cash Advance App Class Action Moves Forward
Source and credit: this report builds on our sister site’s coverage — OpenClassActions.com: Klover Cash Advance App Class Action Moves Forward — which follows the case and is updated as new filings, orders and payment news come in.
Legal Disclaimer
This article is for informational purposes only and is not legal advice. OpenClassActions.org is a consumer news site, not a law firm, and is not affiliated with any party to the matters described. Allegations are allegations until a court rules on them, and court schedules and outcomes can change.