On July 8, the Center for Responsible Lending, California Reinvestment Coalition, Consumer Federation of California, National Consumer Law Center, Public Law Center, and UC Berkeley Center for Consumer Law & Economic Justice filed an amicus brief in Los Angeles County (California) Superior Court in Opportunity Financial v. Hewlett.
Opportunity Financial v. Hewlett addresses the legality of Opportunity Financial’s “rent-a-bank” scheme, whereby OppFi makes loans in California in excess of the state’s rate caps by laundering those loans through an out-of-state bank that is exempt from state rate caps. After OppFi initiated litigation against the California Department of Financial Protection and Innovation (the state’s financial regulator), the DFPI countersued to enforce the state’s rate caps against OppFi. The amicus brief provides context about rent-a-bank evasions of state usury laws and explains that California law allows courts in rent-a-bank cases to consider all relevant facts to determine which entity is the “true lender.” DFPI alleges that OppFi, and not its out-of-state bank partner, is the true lender, making it subject to California’s rate caps.