On June 1, 2022, plaintiff Kristen Michael filed a class action lawsuit against FinTech lender Opportunity Financial, LLC (“OppFi”) on behalf of herself and a putative class alleging, inter alia, that OppFi loans money at an interest rate upwards of 130% higher than allowed by state law.  Ms. Michael alleges that OppFi offers “OppLoans” in over 30 states, whereby it originates, underwrites, services and enforces these loans, even claiming the loans on its financial reports.  However, in states where 160% APR is legal, OppFi names itself as the lender in the loan contracts, but in states where such APR is illegal, OppFi instead names a Utah-state chartered bank as the purported lender and OppFi as the loan servicer.  Then, after the consumer has executed the loan, OppFi purchases 95% of the loan from the bank and maintains it thereafter.  Ms. Michael alleges OppFi runs this “rent-a-bank” scheme to purposefully skirt state law, including in Texas where Ms. Michael signed her loans and where the maximum interest rate caps out at 30%.

Ms. Michael further notes in her Complaint that the Washington, D.C. Attorney General’s Office filed and later settled a lawsuit against OppFi for the same “rent-a-bank” scheme and that OppFi’s own SEC filings concede OppFi “may be the true lender on these loans and that the loans may therefore be invalid.” 

Ms. Michael asserts claims against OppFi for violations of Texas usury laws, unjust enrichment, and RICO violations and seeks declaratory relief.  Ms. Michael further seeks to hold OppFi “accountable for its racketeering and illegal loans in Texas” by requesting restitution, compensatory, treble, and punitive damages, injunctive relief, and a judicial determination that OppFi is the true lender on the loans, that Texas law governs these loans, and that the loan contracts, arbitration clauses, class waivers and jury waivers are all void and unenforceable.

The case is styled Kristen Michael v. Opportunity Financial, LLC, Case No. 1:22-cv-00529-LY, in the United States District Court for the Western District of Texas.  A copy of the Complaint may be found here.

Notably, OppFi is engaged in similar litigation in California where the California Department of Financial Protective and Innovation (“DFPI”) has attempted to apply California usury law to loans made through OppFi’s partnership with FinWise Bank by alleging that OppFi is the “true lender” on the loans.