OppFi Keeps Breakin' the Law
It seems they can't stop, won't stop their payday predator ways
On the surface, OppFi seems like a pretty nice outfit. Sure, they like to use commas. But, well, who doesn’t?
From their “About” page:
OppFi is a tech-enabled, mission-driven specialty finance platform that broadens the reach of community banks to extend credit access to everyday Americans. Through best-in-class customer service, transparency, responsible lending and financial inclusion, the Company supports consumers, who are turned away by mainstream options, to build better financial health.
And in the category of “value to customers,” OppFi says it offers:
Opportunity to build financial health
Hmm.
That sounds nice.
Not mentioned on the OppFi site is how the company repeatedly finds itself on the wrong side of the law.
You see, OppFi operates using a so-called “rent-a-bank” scheme. OppFi simply “facilitates” the loans - using a third party as the “true lender.”
Why is OppFi doing this? So they can charge triple-digit interest rates on short-term loans to distressed borrowers.
One report notes that in Texas, OppFi was sued for issuing loans with interest rates of 130% APR, despite the Texas cap of 30%.
In California, OppFi sought a court’s permission to charge 160% interest, despite California having a 36% rate cap.
And, they ran into trouble in Washington, DC:
The DC settlement resolved a lawsuit filed by the Office of the Attorney General (OAG) against OppFi for misrepresenting its high interest loans as fast and easy cash and falsely claiming that its loans would help struggling consumers build credit. Instead, from at least 2018 until May 2020, OppFi provided loans to most District residents at a 160% APR — more than seven times the District’s 24% rate cap.
Now, Chicago-based OppFi faces trouble in its home state.
An Illinois economic justice watchdog produced loan documents showing OppFi issuing loans in the state at 160% APR - in direct violation of Illinois’ Predatory Lending Prevention Act (PLPA) which caps interest rates at 36%.
An analysis by Woodstock indicates OppFi is using a complicated "rent-a-bank" scheme to import loan rates legal in other states but illegal in Illinois. However, state law prohibits such a scheme.
“The true lender in Kesha’s case is OppFi. Putting their loan contract on a bank’s letterhead is insufficient to turn its predatory products into a bank loan,” said Brent Adams, Senior Vice President of Policy & Advocacy at Woodstock Institute and the former head of the Illinois Department of Financial & Professional Regulation (IDFPR), which licenses companies like OppFi.
When asked for comment, the Illinois Attorney General’s Office confirmed they’ve received complaints about OppFi’s loans:
Specifically, a spokesperson for the Attorney General said their office has received 15 complaints about OppFi loans since April of 2022.
When asked what consumers should do about this illegal activity, the spokesperson said:
"We strongly encourage Illinois residents to do their research before taking out or agreeing to any loan terms. For instance, potential borrowers should thoroughly evaluate loan terms to make sure they meet Illinois interest rate caps. A loan not meeting the interest rate caps adopted by the state of Illinois is a good indication you should avoid that loan."
The Illinois Department of Financial and Professional Regulation (IDFPR) said it could not confirm or deny receipt or investigation of complaints about OppFi due to confidentiality rules.
IDFPR does allow consumers to file complaints via a form on its website.
When asked what could be done to stop OppFi’s persistent bad acts, Woodstock’s Adams said the Attorney General and/or IDFPR could take action by:
Issuing a disciplinary order, finding that all loans that exceed the cap are null and void, ordering restitution to all current and former IL borrowers, and declaring that all existing IL borrowers are relieved of repayment obligations. IDFPR could also issue a fine and cease and desist order.
Texas. California. Illinois. DC. OppFi is operating a multi-state scheme to prey on the most vulnerable borrowers. The beneficiaries of this scheme are OppFi and its predator-adjacent bank partners.
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The typical libertarian response.. it is the consumers responsible to make sure the loan you’re taking out isn’t breaking state or federal law!
This reminds me of a Propublica article about a tribe allowing finance companies to operate from their land so they could use the sovereign status of the tribal land to charge interest rates that are illegal in most states. I understand OPPFI is working as a third party but I don't understand why or how that gives them ability to charge more than the banks they're partnering with would be allowed to charge without violating state laws? Obviously they ARE getting some consequences but the fact that they feel like it's a safe enough bet to keep it up and the partner banks go along with it is really demonstrative of the level of respect for the law and care for consumers they have.
https://www.propublica.org/article/wisconsin-lac-du-flambeau-tribe-predatory-lending-lawsuit-sovereign-immunity