Usury

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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

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

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

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

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 that OppFi is the “true lender” on the loans.… Continue Reading

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 making claims that the bank, rather than the non-bank, is the lender.” … Continue Reading

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 Assembly Bill 539, passed in 2019, which caps the annual interest rate at 36% plus the federal funds rate for consumer loans of at least $2,500 but less than $10,000 made by lenders licensed under the California Financing Law. … Continue Reading

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. … Continue Reading

In response to the complaint filed by Opportunity Financial, LLC (OppFi) seeking to block the California Department of Financial Protection and Innovation (DFPI) from applying California usury law to loans made through OppFi’s partnership with FinWise Bank (Bank), the DFPI has filed a cross-complaint seeking to enjoin OppFi from collecting on the loans and to have the loans declared void.… Continue Reading

A divided panel of the U.S. Court of Appeals for the Tenth Circuit has ruled in Walker v. BOKF, National Association that the extended overdraft fees charged by BOKF were not “interest” under the National Bank Act (NBA).  The Tenth Circuit’s ruling on what it called “an issue of first impression in this circuit” follows similar rulings by the First and Fifth Circuits.… Continue Reading