DC Attorney General Karl Racine announced Monday that he has taken legal action against online lender Opportunity Financial, accusing him of deceptively marketing loans with interest rates of up to 198 %.
The DC attorney general announced Monday that he has taken legal action against an online lender, accusing it has deceptively marketed loans with interest rates of up to 198%.
Attorney General Karl Racine’s office said Opportunity Financial loaned money to more than 4,000 residents in the district, saying the loans would help people build credit. Racine said they did the opposite.
“OppFi lures vulnerable borrowers with bogus promises and then forces them to pay interest rates that far exceed what’s allowed in the district,” Racine said in a statement. “This scheme traps OppFi victims in cycles of debt.”
The interest limit on DC loans is 24%. Racine accused OppFi of what is called a “bank rental” system. According to documents from National Center for Consumer Law provided by the Racine office, most banks can ignore state interest limits. A bank rental system occurs when a non-bank lender arranges a loan between a borrower and a bank and then purchases the loan from the bank and thus can charge whatever interest rate they want.
In a statement, Opportunity Financial called the allegations “unfounded” and said they “disregard well-established and long-standing federal banking and lending laws.”
The statement continued, “OppFi enables state-regulated and FDIC-insured banks to provide simple, affordable and secure loans to millions of everyday consumers, who do not have access to traditional credit products.”
The company said its practices “are unambiguously legal under federal law, and it agrees with the rationale of federal authorities and other regulators for supporting this long-standing policy.” It “intends to vigorously defend itself against these baseless allegations for which the OppFi believes it has good defenses.”
Racine is seeking the cancellation of Opportunity Financial loans which she describes as fraudulent and prohibiting the company from engaging in deceptive practices. The lawsuit also seeks consumer restitution, civil penalties, costs and legal fees.
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