Federal and state regulators, along with class action plaintiffs, are challenging OppFi’s business model of using a bank charter loophole to charge borrowers annual interest rates of 195-200%, far exceeding state usury limits. The legal strategy centers on a “true lender” theory: even though OppFi partners with FinWise Bank (a Utah-chartered institution) to originate loans, OppFi allegedly functions as the actual lender and should therefore comply with state interest rate caps rather than federal export regulations. For example, in the District of Columbia, OppFi charged borrowers up to 198% APR on personal installment loans of $500-$5,000, while DC’s usury limit stands at just 24%—meaning rates were charged at 8.25 times the legal maximum.
In California, OppFi’s typical loan APRs far exceed the state’s 36% usury cap. Multiple class actions have been filed in recent years, resulting in major settlements and ongoing litigation across multiple states.
Table of Contents
- How OppFi Uses a Bank Charter to Circumvent State Usury Laws
- The Usury Violation at the Heart of the Class Actions
- The District of Columbia Settlement and What It Revealed
- The “True Lender” Legal Theory and Multi-State Litigation Strategy
- Arbitration Clauses and the Collapse of Class Action Viability
- Center for Responsible Lending Report and National Scope
- The Ongoing Legal Challenge and Future Outlook
How OppFi Uses a Bank Charter to Circumvent State Usury Laws
OppFi operates through what regulators and consumer advocates call the “rent-a-bank” model. Rather than originating loans directly as OppFi, the company partners with FinWise Bank, a Utah-chartered bank that holds a federal banking license. The legal argument OppFi makes is straightforward: because FinWise Bank is the official lender on paper, federal law allows that bank to “export” the interest rates of its home state (Utah) to borrowers in other states, effectively bypassing each state’s local usury cap. This arrangement allows OppFi to charge rates that would be illegal if OppFi itself originated the loans under state law. In California’s March 2, 2026 ruling, the Los Angeles County Superior Court sided with OppFi, finding that FinWise Bank—not OppFi—was indeed the true lender and therefore entitled to export Utah rates under federal law.
However, this legal victory does not settle the broader national debate. multiple states argue that OppFi performs substantially all of the lending function: underwriting, customer acquisition, pricing decisions, and loan servicing. If OppFi is deemed the actual lender rather than merely a servicer, the federal exportation privilege would not apply, and OppFi would be liable for violating state usury laws. The limitation of this model, from a borrower’s perspective, is that federal courts have increasingly enforced the “rent-a-bank” arrangement when it is properly structured. The Ninth Circuit’s May 2024 decision upheld arbitration clauses in OppFi loan agreements, which prevents many borrowers from joining class actions. Only in certain jurisdictions—like Washington, D.C., which settled with OppFi in 2021—have regulators achieved enforcement victories through direct settlement negotiations rather than class litigation.
The Usury Violation at the Heart of the Class Actions
State usury laws cap the interest rates that lenders can charge to protect consumers from predatory lending. These caps vary significantly: california allows 36% APR, Washington, D.C. caps rates at 24%, and Texas sets similar limits. OppFi charges APRs of 195-200% on personal installment loans, according to the Center for Responsible Lending. This means borrowers on OppFi loans pay rates 5 to 8 times higher than their state’s legal maximum. A borrower in Washington, D.C. who took out a $1,000 OppFi loan at 198% APR would owe approximately $1,980 in interest alone over one year, compared to $240 in interest under D.C.’s 24% usury limit.
This represents a $1,740 difference on a single small loan. The scale of the problem becomes evident when multiplied across thousands of borrowers. The 2021 D.C. settlement involved 4,000+ consumers who had been charged rates 8 times higher than the law permits, and the settlement waived $640,000 in interest that borrowers had already paid. However, if the borrower had signed an arbitration clause in their loan agreement (which OppFi uses), that borrower might not have been able to join a class action at all. Instead, they would be limited to individual arbitration, which is more expensive and less effective than a class proceeding. This is why the enforceability of arbitration clauses—confirmed by the Ninth Circuit in May 2024—is so critical to determining which borrowers can actually recover damages.
The District of Columbia Settlement and What It Revealed
In 2021, Washington, D.C.’s Attorney General announced a $1.5 million settlement with OppFi, which also included $640,000 in waived interest charges for approximately 4,000+ District residents. This settlement provided direct evidence of the scale and scope of OppFi’s usury violations. Borrowers in D.C. had been charged rates up to 198% APR—nearly 9 times the district’s 24% usury cap—on installment loans ranging from $500 to $5,000. The D.C. settlement represented a significant enforcement victory for consumer protection regulators, demonstrating that OppFi’s business model could be successfully challenged at the state level.
However, it covered only D.C. residents and did not establish a nationwide precedent that would bind courts in other states. More recent litigation, such as the California case decided on March 2, 2026, has gone in OppFi’s favor based on the “federal export” doctrine, showing that the legal landscape remains contested. The settlement reveals an important limitation: state-level enforcement actions move slowly and result in partial compensation. Even 4,000+ affected consumers received only $1.5 million in total relief, plus waived interest—approximately $375-$400 per consumer on average, before legal fees. Most consumers still bore the burden of having overpaid interest during the years before the settlement.
The “True Lender” Legal Theory and Multi-State Litigation Strategy
The “true lender” doctrine forms the basis of most class actions against OppFi. The argument is that, regardless of whether FinWise Bank holds the formal loan note, OppFi functions as the actual lender because it performs substantially all lending activities: evaluating creditworthiness, setting terms and pricing, acquiring customers, and servicing the loan. Under this theory, state usury laws should apply to OppFi as the true lender, and federal export rules should not shield the company. Multiple states have pursued this strategy. Texas filed multiple class actions starting in June 2022, alleging that OppFi charged rates 130% above Texas’s usury limits. Washington state, California, and others have also brought enforcement actions based on similar theories.
These coordinated multi-state efforts created momentum for a potential nationwide settlement or precedent. However, the March 2, 2026 California court ruling—which explicitly rejected the “true lender” theory—represents a major setback for consumer advocates pursuing this strategy. The comparison is stark: plaintiffs in D.C. achieved a settlement through direct regulatory negotiation, while plaintiffs in California went through the courts and lost on summary judgment. This divergence suggests that regulatory settlements may be more achievable than class litigation, especially in states where state attorneys general are willing to negotiate. Texas’s June 2022 lawsuits remain pending, so the outcome of that litigation could provide a crucial test of whether the “true lender” theory has remaining viability.
Arbitration Clauses and the Collapse of Class Action Viability
A critical legal development occurred on May 13, 2024, when the Ninth Circuit Court of Appeals upheld OppFi’s arbitration clauses, ruling that borrowers cannot pursue class actions but must instead proceed through individual arbitration. This decision severely limited the ability of class action plaintiffs to pool their claims and pursue relief collectively. Individual arbitration is typically more expensive, less transparent, and far less likely to result in significant compensation for consumers. The arbitration ruling explains why many OppFi lawsuits have been dismissed or transferred to arbitration panels rather than resolved in court.
Borrowers in states covered by the Ninth Circuit’s jurisdiction (including California and the Pacific Northwest) face particular difficulty in joining class actions as a result of this ruling. This creates a two-tiered enforcement landscape: in states where arbitration clauses are less enforceable or where regulatory authorities negotiate directly (like D.C.), some compensation is possible; in other states where arbitration is enforced, individual borrowers have minimal practical recourse. However, arbitration clauses may not apply to all borrowers or all circumstances. Some states restrict the enforceability of arbitration agreements, and certain defenses (like unconscionability or fraud in the inducement) might still void the clause in a particular case. Consumers who believe they were misled about the arbitration clause, or who lived in a state with strong public policy against arbitration, should seek legal counsel to determine whether they have a claim that bypasses arbitration entirely.
Center for Responsible Lending Report and National Scope
The Center for Responsible Lending published a detailed report finding that OppFi charges Americans nearly 200% APR while “evading most state lending laws.” This research quantified the national scope of OppFi’s business model and provided comprehensive data showing that the practice is not limited to isolated cases but reflects OppFi’s standard operating procedure across multiple states. The CRL report became a key resource for regulators and plaintiffs pursuing enforcement actions.
OppFi’s market reaches thousands of consumers nationwide, and the 195-200% APR is not an outlier but the company’s typical rate for most borrowers. This widespread practice affecting tens of thousands of customers means that even a single settlement like D.C.’s $1.5 million recovery covers only a fraction of total harm inflicted across the country.
The Ongoing Legal Challenge and Future Outlook
As of early 2026, OppFi faces ongoing litigation in multiple states, including Texas, alongside the newly favorable California court decision. The legal landscape remains highly fragmented: some jurisdictions (D.C., some state attorneys general) have pursued settlements; others (California courts) have sided with OppFi; and still others (Texas, pending actions) remain unresolved.
This creates uncertainty about whether a nationwide precedent or settlement will emerge, or whether OppFi’s bank charter model will continue to survive legal challenges in most jurisdictions. Federal regulators and Congress may eventually intervene to clarify whether federal bank export rules apply to fintech lenders using partner banks, or whether state usury protections should override federal export privileges. Until then, the outcome of pending cases in states like Texas and the potential for further regulatory action at the federal level remain the most consequential developments for borrowers.