Class Action Lawsuit Filed Against FinTech Lender Opportunity Financial for Circumventing 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 group alleging, among others, that OppFi lends money at an interest rate 130% higher than allowed by state law. Ms. Michael alleges that OppFi offers “OppLoans” in more than 30 states, through which it originates, underwrites, maintains and enforces these loans, even claiming the loans on its financial reports. However, in states where 160% APR is legal, OppFi designates itself as the lender in loan agreements, but in states where such an APR is illegal, OppFi designates a state-chartered bank instead. Utah as the alleged lender and OppFi as the lending agent. . Then, once the consumer executes the loan, OppFi buys 95% of the loan from the bank and maintains it thereafter. Ms Michael alleges that OppFi is running this ‘rent-a-bank’ program to deliberately circumvent state law, including in Texas where Ms Michael signed her loans and where the maximum interest rate caps at 30% .

Ms. Michael further notes in her complaint that the Washington, D.C. Attorney General’s office filed and later colonized legal action against OppFi for the same “rent-a-bank” program and that OppFi’s own SEC filings admit that OppFi “may be the true lender of these loans and therefore the loans may be invalid”.

Ms. Michael is asserting claims against OppFi for violation of Texas usury, unjust enrichment, and RICO violations and seeks declaratory judgment. Ms. Michael further seeks to hold OppFi “accountable for its racketeering and illegal lending in Texas” by seeking restitution, compensatory, treble and punitive damages, an injunction and a court order that OppFi is the true lender of the loans, that Texas law governs such loans, and that loan agreements, arbitration clauses, class waivers and jury waivers are all void and unenforceable.

The case is stylish Kristen Michael v Opportunity Financial, LLC, Case No. 1:22-cv-00529-LY, in the United States District Court for the Western District of Texas. A copy of the complaint can be found here.

Notably, OppFi is engaged in similar litigation in California where the California Department of Financial Protective and Innovation (“DFPI”) attempted to apply California usury law to loans made under OppFi’s partnership with FinWise. Bank alleging that OppFi is the “true lender”. on loans.

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