A fintech peer-to-peer lender has entered into separate consent orders with California, Washington D.C., and Connecticut relating to its practice of requesting tips and donations in connection with the loans offered through its platform. The fintech’s platform offers opportunities for members to act as borrowers or lenders and facilitates loans between its members.… Continue Reading
Usury
Curiouser and Curiouser – Colorado Opt-Out Legislation, As Amended, Moves Forward, With a Carve-Out for Certain General Purpose Credit Cards
Posted in Preemption, Usury
A Colorado bill (HB23-1229) that would opt out of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDA) (codified at 12 U.S.C. 1813d), a federal law enacted to create competitive equality between state-chartered banks and national banks, was approved by both the Colorado Senate and House of Representatives, and will be sent to the Governor shortly.… Continue Reading
Opt-Out Deja Vu? Pending Colorado legislation would opt out of federal law allowing interest rate exportation by state banks
Posted in Preemption, Usury
Legislation to opt out of a 43-year-old federal law allowing FDIC-insured state banks to “export” interest on interstate loans to the same extent as their national bank counterparts is quietly, but swiftly, working its way through the Colorado legislature. The bill has passed the House and is expected to be the subject of a hearing next week before a Senate Committee.… Continue Reading
This week’s podcast episode: A close look at the recent study of the effects of Illinois’ 36% “all-In” interest rate cap on small-dollar credit availability, with special guest Tom Miller, Professor of Finance, Mississippi State University, and study co-author
By Barbara S. Mishkin on
Using data for the last quarter of 2020 and first three quarters of 2021, the study examined the effects of the 36% rate cap imposed by the Illinois Predatory Loan Prevention Act which became effective in March 2021. The study found that the cap significantly decreased the availability of small-dollar credit in Illinois. … Continue Reading
DFPI asks Court to Enjoin OppFi From Facilitating High Rate Consumer Loans in California
By Mindy Harris on
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
Study of Illinois 36% interest rate cap finds reduced access to credit
By Kaley Schafer on
Over the past few years, numerous states have imposed interest rate caps on consumer credit. In recent blog posts, we discussed the efforts of both Michigan and New Mexico to impose a 36% annual interest rate cap. Last year, Congress took up the discussion of a national 36% annual interest rate cap.… Continue Reading
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
Republican lawmakers send questions to OCC on bank-fintech partnerships
By Mindy Harris on
In a letter dated October 11, 2022 to Acting Comptroller Michael J. Hsu, Patrick McHenry, the ranking member of the U.S. House of Representatives Committee on Financial Services, and four other Republican representatives, asked Mr. Hsu to respond to pointed questions about the OCC’s planned role in support of bank-fintech partnerships. … Continue Reading
“Dormant Commerce Clause” case law continues to evolve
By Mark J. Levin on
In a recent press release, the Pennsylvania Attorney General announced that settlements have been reached with Delaware and Florida lenders who made allegedly usurious loans to Pennsylvania residents. In apparent support of the settlement, the press release cites the Third Circuit’s decision in TitleMax of Delaware, Inc. v. Weissman, in which an out-of-state lender unsuccessfully sought to enjoin the Pennsylvania Department of Banking from investigating loans made to Pennsylvania residents. … 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