OppFi Legal Investigation: Take Action Over OppLoans’ Interest Rates

Attorneys working with ClassAction.org are gathering consumers who took out loans from Opportunity Financial (OppFi) in light of claims the company is charging excessive and illegal interest rates, sometimes assessing an APR as high as 160 percent.

Allegations have surfaced – both from class action lawsuits and state governments – that OppFi is essentially exploiting a loophole to levy interest rates well beyond what’s permitted by state law while maintaining that it’s all above board.

Specifically, it’s been alleged OppFi is engaged in what’s known as a rent-a-bank scheme, which occurs when a nonbank lender “partners” with a bank so it’s not limited on how much it can charge in interest. While many states set limits on maximum allowable interest rates, exceptions exist for banks that permit them to exceed these caps.

Proposed class action lawsuits have claimed that these agreements are just an attempt to circumvent the law and that OppFi is the true lender and should therefore have its interest rates capped.

OppLoans Class Action Lawsuits

Multiple proposed class action lawsuits have been filed alleging OppFi broke state and federal laws by operating an illegal rent-a-bank scheme in which it contracted with banks in a state without interest caps to issue high-interest loans. These loans allegedly list the bank on paper as the purported lender; however, once the paperwork is signed, Opportunity Financial buys 95 percent of the loan from the bank “and goes about business as usual,” the lawsuits claim, calling the company’s attempt to disguise itself as a loan servicer a “sham.” The suits allege OppFi is the true lender – and therefore subject to state interest rate caps – because it holds “predominant economic interest”; bears the risk of loss; handles all acquisition, marketing, underwriting and service; and bears all responsibilities under the loan contracts.

Indeed, the lawsuits claim that in states where a 160 percent APR is legal, OppFi names itself as the lender – but lists a bank as the lender in states where it’s not.

A handful of the proposed OppLoans class action lawsuits have been ordered to arbitration since their filing, with OppFi arguing their loan agreements contain enforceable language that requires disputes to be handled outside the courtroom. For instance, in October 2023, the docket for one OppLoans lawsuit was updated to show that an order was granted to compel arbitration and put the case on hold.

It’s for this reason attorneys working with ClassAction.org are now looking to handle this matter as a mass arbitration, which involves hundreds or thousands of consumers filing individual arbitration claims against the same company, at the same time and over the same issue, as opposed to a class action lawsuit against OppFi.

In general, arbitration is a form of alternative dispute resolution through which two parties resolve a disagreement outside of court before a third-party arbitrator instead of a judge or jury.

OppFi, OppLoans Lawsuits: States Allege Predatory Lending Tactics

In April 2021, the attorney general for the District of Columbia filed a lawsuit against Opportunity Financial, claiming the “predatory online lender” deceptively marketed illegal high-interest loans to consumers. Specifically, the case alleged OppFi levied interest rates as high as 198 percent, which is more than eight times the interest rate cap in D.C.

Months later, the attorney general’s office announced that a settlement in the OppFi lawsuit had been reached, with the company agreeing to pay $1.5 million in refunds to affected borrowers and waiving more than $640,000 in interest.

California’s Department of Financial Protection and Innovation has also filed a complaint against OppFi that alleges the company “essentially ‘rented’” a Utah-chartered bank known as FinWise to charge higher interest rates to consumers through its OppLoans program. According to the case, Utah doesn’t have a state interest rate cap, making its state-chartered banks “attractive to non-bank lenders like OppFi.”

Rent-a-bank schemes have been around since the 1990s when predatory lenders, specifically payday loan companies, began partnering with banks to evade state interest rate caps. Since then, the practice has become popular with online lenders and financial technology companies. Effectively, rent-a-bank schemes allow “high-interest loans to reach consumers in states where their rates aren’t legal,” NerdWallet writes, adding that consumer advocates caution that such loans “can leave borrowers in long-term debt that’s difficult to repay.”

Opportunity Financial Loans Complaints

The following is a sampling of complaints posted online about OppFi [sic throughout, emphasis ours]:

Please be warned not to take this loan. This company is stealing your hard earning money. I thought I was paid off on a 1300 loan paying 1551 current and thought should be through by now. This company has added another $1000 to pay back on top of this. I was not aware this. Don't believe the people praising this cause probably like me and didn't know what they were getting into.”
— Donna, Tennessee, ConsumerAffairs.com

I don't know how these companies can legally charge such high interest in these loans but yet they state they are helping people with bad credit and yet they wonder why we can't fix it or get ahead. I've already paid off my loan and then some but still owe another almost $1400.”
— Barbara, Florida, ConsumerAffairs.com

Opp loans continues to add $200 to my balance each month when I am close to paying down my loan. I inquired about it on this last week and was told by a supervisor that the loan was accruing that amount of interest every month … What I do know is that I want all my money back from being overcharged each month. No one should be paying interest like that.”
— Better Business Bureau complaint, 10/07/2022

I get it that this company is for people with not so good credit, but to apply for a loan for $1200, and having to pay back almost $4k over a 10 month span, is wayy too high of an interest rate, especially people with not the best credit!! They are quick and easy to apply but the interest rates are through the roof!!”
—  Madexx C., TrustPilot.com

OppFi Loans: Take Action Over Predatory Lending Allegations

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