Class action lawsuit filed against FinTech lender financially avoids usury laws in Texas State
On June 1, 2022, plaintiff Kristen Michael filed a class action lawsuit against FinTech lender Opportunity Financial, LLC (“OppFi”) on behalf of herself and an alleged class claiming: blue, that OppFi lends money at an interest rate of up to 130% higher than the state legislation allows. Ms. Michael claims that OppFi offers “OppLoans” in over 30 states, whereby they create, guarantee, operate and enforce these loans, and even require the loans in their financial reports. In states where 160% APR is legal, however, OppFi designates itself as the lender in the loan contracts, but in states where such APR is illegal, OppFi instead designates a Utah state-chartered bank as the alleged lender and OppFi as the lending service. . So, after the consumer has made the loan, OppFi buys 95% of the loan from the bank and then maintains it. Ms Michael claims OppFi operates this “rent-a-bank” scheme to purposefully violate state laws, including in Texas where Michael signed his loans and where the maximum interest rate is 30%.
Michael further notes in his complaint that the Attorney General in Washington, DC filed and later settled a lawsuit against OppFi for the same “rent-a-bank” scheme, and that OppFi’s own SEC filings admit that OppFi “may be the true lender of these loans and that the loans may therefore be invalid. ”
Ms. Michael claims claims against OppFi for violations of Texas usury laws, unfair enrichment and RICO violations and seeks declaratory relief. Michael further seeks to hold OppFi “responsible for its extortion and illegal loans in Texas” by seeking redress, compensatory, triple and punitive damages, injunctions and a court ruling that OppFi is the true lender of the loans, such as Texas. law regulates these loans, and that the loan contracts, arbitration clauses, class waivers and jury exemptions are all invalid and unenforceable.
The case is styled 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.
In particular, OppFi is involved in similar lawsuits in California where the California Department of Financial Protective and Innovation (“DFPI”) has sought to apply California’s usury laws to loans granted through OppFi’s partnership with FinWise Bank by claiming that OppFi is the “true lender” of the loans. .
