Harms of Opp-Fi Bank’s High-Cost Loans Recently Were Highlighted in CRL Report

Washington, DC – Federal banking regulators must not allow predatory lenders to acquire a national bank charter and expand their ability to offer high-cost loans that cause long-term financial distress for working people struggling to manage today’s affordability challenges, said the Center for Responsible Lending (CRL).

Opportunity Financial (OppFi), which offers short term loans with interest rates of 100% to nearly 200%, this week announced it is seeking approval from the Trump Administration and banking regulators to acquire national bank BNC, which would allow it to evade state interest rate limits and snare more borrowers in long-term debt traps.

Ellen Harnick, executive vice president at CRL, said the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC), should deny OppFi’s bid for a national bank.

“This national bank affiliation scheme would enrich a handful of rogue lenders looking to evade state interest rate limits so they can siphon millions of dollars in excess fees from consumers’ wallets,” said Harnick. “OppFi's business model is to evade consumer lending laws, and the OCC and Federal Reserve should deny this application.”

Harnick added that this regulatory end-run comes as high-cost lenders look to escape growing momentum in states to sustain or strengthen state consumer financial protection laws. As the federal government withdraws from consumer protection states have moved to stop debt-trap lenders like OppFi from evading state usury laws, with Colorado and Oregon passing legislation. State usury limits are the only source of these protections for most borrowers, other than active duty military families who are protected by the Military Lending Act.

Harnick noted that a CRL report from late January of this year clearly shows that OppFi’s lending does not serve community needs, and approval would allow the bank to export predatory consumer loans to many more states, putting tens of thousands of borrowers at risk of falling into extended debt traps.

For the report, CRL examined publicly available information about OppFi, borrower complaints submitted to the Consumer Financial Protection Bureau, and anonymized transactional data from a national nonprofit. The report’s key findings are:

  • OppFi charges annual percentage rates (APRs) of up to 195% on personal installment loans ranging from $500–$5,000.
  • Frequent refinancing is built into OppFi’s business model. According to a 2021 lawsuit by the District of Columbia, 75% of the lender’s pre-tax income comes from borrowers refinancing their loans. OppFi profits from borrowers who spend extended periods carrying extremely high-cost consumer debt.
  • OppFi loans fail at a staggeringly high rate. The company publicly disclosed in a recent 10-K filing a charge-off rate of 27.5%, with more than half its borrowers delinquent on their loans.
  • OppFi expects its borrowers to struggle but continues to lend to them. A 2021 lawsuit by the District of Columbia alleges that OppFi’s underwriting model anticipates that up to one-third of borrowers will default, and that 75 percent of the lender’s pretax income comes from borrowers doing repeat refinancing as they struggle over an extended period to repay loans with triple-digit interest.

Use of high-cost nonbank installment loans increased between 2021 and 2022 for Black and Latino households only — nearly tripling for Black households. High-cost lenders have long targeted these communities, and the harm they cause is well-documented: loan rollovers that trap borrowers in sustained debt, aggressive collection practices, and a net drain on household wealth in communities that can least afford it.

OppFi’s borrowers’ budgets already are stretched thin, and the company’s loans saddle them with excessive interest rates and manipulated repayment cycles that make it difficult to pay off the loans. “OppFi’s record provides the justification for rejecting its application. The OCC and Federal Reserve have the authority. The question is whether federal banking regulators will act to protect consumers or the profits of predatory lenders,” said Harnick.

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Press Contact: Alfred King alfred.king@responsiblelending.org