WASHINGTON, D.C. – Attorney General Karl A. Racine today filed a lawsuit against Opportunity Financial, LLC (OppFi), a predatory online lender, for deceptively marketing illegal high-interest loans to District consumers.
The Office of the Attorney General (OAG) alleges that OppFi violated District law by misrepresenting its high interest loans as fast and easy cash and falsely claiming that its loans would help struggling consumers build credit. Instead, OppFi charged over 4,000 District residents exorbitant interest rates of up to 198%—more than eight times the District’s 24% rate cap. OAG is seeking a court order voiding loans improperly made to District residents and barring OppFi from engaging in misleading business practices in the future. The lawsuit also seeks restitution for consumers, and civil penalties, fees and costs.
“OppFi lures vulnerable borrowers in with false promises, and then forces them to pay interest rates that far exceed what is allowed in the District,” said AG Racine. “This scheme traps OppFi’s victims in cycles of debt. Our office will continue to stand up to bad actors like OppFi, stop them from violating the law, and work to protect District residents from financial harm.”
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 a state-chartered bank in Utah to provide OppLoans, but OppFi ultimately controls these loans, taking on the risks and reaping the profits.
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%. 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.
From at least 2018 until May 2020, OppFi provided high-interest loans to more than 4,000 District consumers. These loans typically ranged from $500 to $4,000 and carried interest rates of up to 198%. In its lawsuit, OAG alleges that OppFi violated District law by:
- Illegally lending money to vulnerable consumers at interest rates far above the District’s limit: OppFi is not licensed to loan money in the District but, using its rent-a-bank scheme, still made loans, and it charged interest rates of up to 198%, more than eight times the District’s cap on interest rates. As a result, District residents who took out these loans have been charged millions of dollars in unlawful interest.
- Deceptively marketing financial products: OppFi falsely markets OppLoans as fast and easy cash, misrepresenting their benefits and failing to disclose important details about their costs and risks to borrowers. OppFi also misleadingly pushes consumers to refinance existing loans even though such activity is more expensive for consumers and only benefits OppFi.
- Misrepresenting that its loans will help consumers build credit: OppFi advertises that taking out an OppLoan will help consumers build their credit history, when in reality, OppFi’s credit reporting harms the majority of its customers. The company’s own underwriting model anticipates that up to one third of their borrowers will be unable to repay their loans and default. Many other consumers fall behind on payments, and OppFi reports negative information about consumer payments to consumer reporting agencies over three times as frequently than it reports positive information.
OAG is asking the court to declare the loans OppFi provided to District residents void and unenforceable, and to order the company to compensate District residents for their payments of unlawful interest. OAG is also seeking a permanent injunction, monetary penalties for breaking District law, and costs associated with this litigation.
A copy of OAG’s legal complaint against OppFi is available here.
Combatting Predatory Lending
This lawsuit is part of a broader OAG effort to protect District residents from 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 June 2020, he sued Elevate, 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 email@example.com