In a motion for a preliminary injunction and accompanying memorandum of points and authorities, the California Department of Financial Protection and Innovation (DFPI) is asking a California state court to order fintech Opportunity Financial LLC (OppFi) to stop facilitating loans to California borrowers from its partner FinWise Bank at interest rates above the interest rate cap (generally 36% plus the Federal Funds Rate) imposed by the California Financing Law (CFL).… Continue Reading
CADFPI
Texas federal court enforces arbitration agreement and dismisses class action lawsuit filed against fintech company for evading Texas usury limit; company continues to face “true lender” challenge from California DFPI
By Michael R. Guerrero & Ronald K. Vaske on
A Texas federal court has dismissed a class action lawsuit against Opportunity Financial, LLC (“OppFi”) alleging OppFi violated Texas usury law by charging interest on loans it made through a partnership with a state-chartered bank at rates above the maximum rate permitted by Texas law. The plaintiff alleges that the partnership was a “rent-a-bank” scheme to evade state law and that OppFi, rather than its bank partner, was the “true lender” on the loans.… Continue Reading
California DFPI releases modified proposed Student Loan Servicing Act regulations
On September 9, 2022, the California Department of Financial Protection and Innovation (DFPI) proposed to amend its student loan servicing regulations, which we previously covered here. After reviewing public comments, on January 6, 2023, the DFPI released a Notice requesting an additional round of public comments on a modified set of regulations. … Continue Reading
California expands co-signer notice requirement
By John L. Culhane, Jr. & Chad Jimenez on
Posted in CADFPI, Regulatory and Enforcement
On August 15, 2022, the California governor signed SB 633 into law, expanding the obligations of creditors obtaining the signatures of more than one person on a consumer credit contract, including a motor vehicle lease, who do not receive any of the money, property, or services that are subject to the consumer credit contract.… Continue Reading
Advocacy group files lawsuit challenging California regulations requiring consumer-like disclosures for commercial transactions
On December 2, a non-profit advocacy organization filed a lawsuit in a California federal district court seeking to enjoin the California Department of Financial Protection and Innovation (DFPI) from enforcing the final regulations (Regulations) issued by the DFPI to implement California’s commercial financing disclosure law. SB 1235, which was signed into law in 2018, requires consumer-like disclosures to be made for certain commercial financing products, including small business loans and merchant cash advances. … Continue Reading
OppFi asserts true lender doctrine is “underground regulation” DFPI cannot enforce
By Mindy Harris on
Posted in CADFPI, Regulatory and Enforcement
Opportunity Financial LLC (OppFi) has filed a cross-complaint against the Commissioner of California’s Department of Financial Protection and Innovation (DFPI), asserting that the DFPI’s reliance on the so-called “true lender doctrine” in order to subject OppFi to interest rate limitations under the California’s Financing Law (CFL) constitutes adoption and enforcement of an “underground regulation”, which is impermissible under California’s Administrative Procedure Act (APA). … Continue Reading
California court rejects OppFi’s attempt to block DFPI’s “true lender” challenge to loans made through bank partnership
A California state court has overruled the demurrer filed by Opportunity Financial, LLC (OppFi) to the cross-complaint filed by the California Department of Financial Protection and Innovation (DFPI) in which OppFi asked the court to reject the DFPI’s “true lender” challenge. In its cross-complaint, the DFPI alleges that California usury law applies to loans made through OppFi’s partnership with FinWise Bank (Bank) because OppFi, and not the Bank, was the “true lender.”… Continue Reading
California DFPI issues proposed rules implementing Student Loan Servicing Act
By Lisa Lanham & John Georgievski on
On September 9, 2022, the California Department of Financial Protection & Innovation (the “DFPI”) released a Notice of Proposed Rulemaking Action that proposes to adopt regulations implementing the Student Loan Servicing Act (section 28100, et seq.) and the Student Loans: Borrower Rights Law (Civil Code section 1788.100, et seq.). … Continue Reading
Bill to extend the California Debt Collection Licensing Act’s grace period provisions sent to Governor
By Lisa Lanham & John Georgievski on
On August 31, 2022, the California Senate voted to approve House Assembly Bill 156, and sent the bill to Governor Newsom for consideration and potential signature. If it becomes law, the bill would amend the existing California Debt Collection Act (the “DCLA”) in three ways.
First, the bill would amend provisions of Cal.… Continue Reading
California DFPI issues draft text for second rulemaking under Debt Collection Licensing Act
By Lisa Lanham on
As discussed in an earlier blog post, the California Department of Financial Protection and Innovation (“DFPI”) issued an Invitation for Comments on the Proposed Second Rulemaking under the Debt Collection Licensing Act (“DCLA”) on August 19, 2021. The Commissioner is now considering draft regulations related to the DCLA’s scope, annual report, and document retention requirements, and has issued an “Invitation for Comments on Draft Text for Proposed Second Rulemaking Under the Debt Collection Licensing Act.”… Continue Reading