In the wake of rulings
upholding federal regulators' “valid when
made” rules,
a new lawsuit serves as a reminder that state regulators
and class-action plaintiffs' lawyers may continue to
challenge the bank partnership lending model under the “true
lender” doctrine.
In early March, the fintech OppFi filed suit to stop
California's banking commissioner from enforcing the
state's interest rate caps on loans made in partnership with
FinWise Bank. See Opportunity Fin., LLC v.
Hewlett, No. 22STCV08163 (Cal. Super. Ct. Mar. 7, 2022).
According to the
complaint, the state regulator threatened enforcement on the
grounds that OppFi—and not FinWise Bank—is the supposed
“true lender” for purposes of assessing the validity of
the loans' interest rates. The interest rates on the
loans, if made by OppFi, would exceed California's interest
rate caps, including under California's
Fair Access to Credit Act (also known as AB 539), which
took effect in January 2020.
