OppFi Charges Unlawful Interest Rates on Loans in Illinois, Class Action Lawsuit Alleges

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A proposed class action lawsuit claims online lender Opportunity Financial (OppFi) has violated federal and state laws by issuing loans with excessive interest rates to Illinois residents.

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The 17-page lawsuit was filed by an Illinois resident who says he took out a $4,000 OppFi loan earlier this year with an interest rate of 159.56 percent. The suit contends that the loan’s annual percentage rate far exceeds the 36-percent interest rate cap established under Illinois’ Predatory Loan Prevention Act (PLPA), rendering the loan null and void.

The case alleges that the defendants—which also include OppFi CEO Todd G. Schwartz and CFO Pamela D. Johnson—have attempted to dodge state interest rate caps by partnering with banks to arrange consumer loans. As the complaint tells it, OppFi claims to function as an agent for its bank partners, including FinWise Bank, First Electronic Bank and Capital Community Bank, which operate under federal law and are thus exempt from state usury laws like Illinois’ PLPA.

However, the filing claims that OppFi is truly responsible for the allegedly illegal lending operations, as it markets, brokers, facilitates and services the loans and handles every other material step of the transactions.

“Opportunity Financial, LLC pays Capital Community Bank a small, guaranteed fee for each loan originated,” the lawsuit shares. “Capital Community Bank stands to lose virtually nothing if a loan goes bad and stands to gain practically nothing if a loan is repaid.”

In addition, the fraud suit alleges that the lender has tried to evade the PLPA’s regulations by including an arbitration provision in its loan agreements that requires an arbitrator to apply Utah law, which does not limit interest rates. However, the case contests that this provision is invalid and attempts to impermissibly waive consumer protections under the PLPA.

The OppFi lawsuit looks to represent any Illinois residents for whom the company arranged a loan at more than 36 percent interest.

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