WASHINGTON, D.C. – Attorney General Karl A. Racine today announced that predatory online lender, Opportunity Financial, LLC (OppFi), will pay $1.5 million to refund over 4,000 District consumers who were charged exploitive interest rates by the company, waive over $640,000 in interest owed by those consumers, and pay $250,000 to the District. The company will also be required to limit its lending to rates that are below the District’s legal cap and cease engaging in misleading business practices.
“In the District of Columbia, it’s illegal to charge any DC resident an interest rate over 24%—also known as an ‘usury rate,’” said AG Racine. “So-called financial services companies that operate in the District of Columbia—either brick-and-mortar or via the internet—cannot lawfully charge DC consumers above that 24% rate. Companies that do, are violating DC law and will be held accountable.”
The settlement resolves 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. Most states protect their residents from predatory lenders through state laws that prohibit charging exploitative interest rates. In the District, relevant interest rates are capped at 24%.
OppFi is an online lender that uses a rent-a-bank scheme to try to skirt state and local laws limiting high interest rates loans. Its business model is focused on lending to consumers with below-average credit. Though OppFi is not a licensed moneylender in the District of Columbia, it advertised, offered, provided, and serviced loan products, called OppLoans, to thousands of District residents. OppFi partners with FinWise Bank a state-chartered bank in Utah to provide OppLoans, but OppFi ultimately controls these loans, taking on the risks and reaping the profits.
The District’s Consumer Protection Procedures Act (CPPA) prohibits a broad range of deceptive and unfair business practices, including charging unconscionable interest rates and violating other District laws.
As part of the settlement agreement, OppFi will be required to:
- Pay a total of $1.5 Million in restitution to refund impacted District consumers: The funds will compensate District consumers who paid interest on their loans in an amount greater than they would have paid had the interest due on any loan been calculated at a 24% APR.
- Pay a total of $250,000 to the District.
- Waive over $640,000 in past due interest owed by District consumers who took out loans from OppFi. OppFi will be immediately providing this debt forgiveness to District consumers that paid interest over what OppFi was legally permitted to charge.
- Follow District law that protects consumers: OppLoans will not on its own, or working with third parties such as banks, engage in any act or practice that violates the CPPA in its offer, servicing, advertisement, or provision of loans to District consumers.
- Cease charging rates above the District’s legal cap: OppLoans will not provide loans to District consumers at an interest rate above 24% APR, the cap in the District.
- Accurately represent its company to consumers: OppLoans will not represent that it is permitted to offer loans in the District without possessing any required District money lender license.
Combatting Predatory Lending
In January 2021, AG Racine joined a multistate lawsuit against the Trump administration’s True Lender Rule, which made it easier for lenders to bypass state interest rate caps. In August 2020, he joined a coalition of attorneys general in filing suit against the Federal Deposit Insurance Corporation for issuing a rule that would dramatically expand preemption of state interest-rate caps to non-bank entities. In June 2020, he sued Elevate Credit Inc., another rent-a-bank lender that deceptively offered high-interest loans to vulnerable District consumers. Previously, AG Racine led a comment letter opposing the Trump administration’s efforts to eliminate rules protecting consumers from abusive payday and vehicle title loans and led a coalition of 14 states urging the Federal Deposit Insurance Corporation to protect borrowers from abusive lending practices. He also secured more than $3 million in refunds and debt forgiveness for District residents through a lawsuit against another exploitative lender that attempted to get around DC law.
How to Report Illegal or Unfair Business
To report unfair business practices, scams, or fraud, you can submit a consumer complaint to OAG by:
- Texting “COMPLAINT” to 202-738-5212 and following the prompts
- Messaging OAG using the chat feature at: oag.dc.gov/consumer
- Submitting a complaint online at: https://oag.dc.gov/consumer-protection/submit-consumer-complaint
- Calling (202) 442-9828
- Emailing firstname.lastname@example.org