OppFi and the 160% Interest Rate Loan
Fintech case in California has broad industry implications
I’ve written before about shady fintech lender OppFi and their insistence that they should be allowed to charge interest rates of 160% in California. This is because they use a so-called “rent-a-bank” model and “borrow” the interest rate from Finwise, based in Utah.
Jason Mikula of Fintech Business Weekly offers an update on the OppFi/Finwise model. So far, the courts are allowing a case to proceed that could result in OppFi being forced to comply with California’s usury law.
Mikula cites legal analysis that explains that what happens in the OppFi case has broad implications for others in the fintech/rent-a-bank space:
After reviewing numerous California decisions, the court characterized the demurrer as a request by OppFi for the court “to ignore the substance of the loan transactions as alleged in the cross-complaint.” It then recited various characteristics of the Program alleged by the DFPI in its cross-complaint and stated that “[a]s…
