The California Department of Financial Protection and Innovation (DFPI) has filed its opposition to Opportunity Financial, LLC’s (OppFi) Demurrer to the DFPI’s cross-complaint. In the Demurrer, OppFi asks the California trial court to reject the DFPI’s attempt to apply California usury law to loans made through OppFi’s partnership with FinWise Bank (Bank) by alleging
Fintech
CFPB seeking to hire technologists
The CFPB has posted new job openings for technologists to work with its supervision and enforcement teams. The CFPB is seeking experts in data science, software engineering, product design, product management, and user experience (UX). The job postings indicate that the CFPB is willing to invest significant resources in building its understanding of and capability…
This week’s podcast episode: Innovative products: Understanding the regulatory and enforcement risks
We discuss key regulatory issues for innovative products such as buy-now-pay later, longer term installment loans, delay pay, and card-based products (such as “virtual cards”). We look at the different ways these products can be structured and the impact of these differences on applicable legal requirements, such as disclosures and licensing. We also look at…
Bank/nonbank partnerships could face CFPB scrutiny
Delivering the keynote address last week at the Consumer Federation of America’s 2022 Consumer Assembly, CFPB Deputy Director Zixta Martinez indicated that the CFPB “is taking a close look” at “‘rent-a-bank’ schemes.”
Deputy Director Martinez commented that “[s]ome lenders attempt to use [relationships with banks] to evade state interest rate caps and licensing laws by…
California lawmakers urge FDIC to rein in bank partnerships
Four Democratic members of the California state legislature recently sent a letter to the Federal Deposit Insurance Corporation (FDIC) urging the agency to take action against FDIC-supervised banks that partner with non-bank lenders to originate high-cost installment loans.
Two of the letter’s authors, California Senator Monique Limon and Assemblymember Tim Grayson, were also sponsors of…
CFPB issues order terminating Upstart no-action letter
The CFPB issued an order last week terminating the no-action letter issued to Upstart Network, Inc. on November 30, 2020 for a 36-month term (NAL). The NAL was essentially a renewal of the no-action letter issued to Upstart in September 2017, which was the first no-action letter issued by the CFPB.
The NAL was issued…
Class Action Lawsuit Filed Against FinTech Lender Opportunity Financial For Evading Texas State Usury Laws
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”…
CPFB states that it did not scrap no-action letter and compliance assistance sandbox programs in connection with its overhaul of its Office of Innovation and Operation Catalyst
On May 25, 2022, my colleagues, Mike Gordon, John Culhane and Ron Vaske published a blog which reported on a press release issued by the CFPB on the prior day entitled “CFPB Launches New Effort to Promote Competition and Innovation in Consumer Finance.” The blog stated:
…In its press release, the CFPB states that “[a]fter
CFPB scraps no action letter and compliance assistance sandbox programs and creates new Office of Competition and Innovation
The CFPB announced earlier this week that as part of a new approach to innovation in consumer finance, it is replacing its Office of Innovation and Operation Catalyst with a new office, the Office of Competition and Innovation, and eliminating its No Action Letter (NAL) and Compliance Assistance Sandbox (CAS) programs. In its press release…
CFPB announces launch of new system for providing guidance and issues first Circular; FDIC issues final rule on misuse of FDIC name or logo or making misrepresentations about deposit insurance
Just one day after announcing that it was launching a new system to provide guidance to other agencies with consumer financial protection responsibilities on how the CFPB intends to enforce federal consumer financial laws, the CFPB released its first Consumer Financial Protection Circular (2022-02) addressing deceptive representations involving the FDIC’s name or logo or deposit…