Todd Schwartz, the founder and CEO of Opportunity Financial LLC, a lending company that has faced legal challenges over loans that allegedly charge interest rates upwards of 160%, has been named the 2024 Freeman Distinguished Lecturer of 2024 by Tulane University.  

Schwartz and his wife Gina Schwartz donated $5 million to Tulane in 2023 in order to establish the Schwartz Family Center for Experiential Business Learning. In April, Schwartz spoke at the Goldring/Woldenberg Business Complex’s Marshall Family Commons at a seminar titled “From Pawnshop to Public Company: The FinTech Journey of OppFi.”  

OppFi, an online platform, partners with three Utah state-chartered banks — FinWise, First Electronic Bank and Capital Community Bank — to facilitate loans for so-called “subprime” borrowers, or borrowers who may have difficulty accessing credit. 

States can set interest rate caps called usury laws; Utah is one of few states that does not specify a cap. 

“These are community banks that wanted to expand their footprint and their balance sheet with lending, but also to an underserved population […] I think it’s more of a coincidence that these are the banks,” Schwartz said.  

Since its founding in 2012, the Chicago-based company has been the defendant in at least four class action lawsuits, each raising similar claims of OppFi’s alleged “rent-a-bank scheme” practices — an arrangement that may allow online lenders to circumvent state laws that limit interest rates.  

“People can claim anything. These are all allegations and [have been] proven untrue. It’s unfortunate, [when] you’re trying to do the right thing [and] you’re trying to help people,” Schwartz said.  

The civil lawsuits claim that OppFi contracts with Utah banks to issue high-interest loans before allegedly buying 95% of the loan from the banks once the paperwork is signed.  

Lauren Sanders, the associate director of the National Consumer Law Center, a nonprofit consumer rights organization based in Boston, said she believes OppFi’s practices are unethical.  

“OppFi is not a bank, and it should comply with the laws that apply to other lenders,” Sanders said.  

In these four class action lawsuits, judges found that the arbitration provision in the installment loan agreement contracts at issue was enforceable, requiring the borrower to engage in a private, binding arbitration process instead of immediately suing in court.  

Sanders said arbitration clauses are common practice in loan agreements, mandating a neutral third party to act as a judge and make a final decision about the dispute instead of going to court. 

“They deprive us of access to our system of justice, deprive us of our constitutional rights to act with the courts and are a way for companies that violate the law to avoid accountability,” Sanders said.  

District of Columbia Attorney General Karl Racine filed a lawsuit against OppFi in April 2021, claiming that OppFi is a “predatory lender.”  

According to Racine, OppFi charged over 4,000 D.C. residents interest rates of up to 198%. Racine reached a $2 million settlement with OppFi in November 2021, obtaining refunds and waiving interest for thousands of D.C. residents.  

“Sometimes in the world of business, it’s just easier to settle and exit the state than it is to fight something and have a protracted legal battle for five years,” Schwartz said. “It was a business decision to settle as opposed to fight it. We don’t think that we did anything wrong to this day.” 

In March 2022, OppFi sued California’s Department of Financial Protection and Innovation, claiming that the entity could not force OppFi to lower its interest rates in accordance with California’s interest rate caps. OppFi claimed that because their business model is protected under federal law, OppFi’s partner banks, which are located in Utah, are allowed to lend at the high rates legal in Utah to consumers across state lines. 

“I can’t imagine how a 160% [annual percentage rate] loan could do anything other than hurt somebody’s financial health, drag them down further and take advantage of them,” Sanders said.  

Schwartz said that, despite the high annual percentage rates, he believes there is still a consumer demand for OppFi’s business model.  

“There are detractors that think any [annual percentage rate] above a certain number is too high, but I think those people have never been in a position where they need $1,500 immediately to solve a really big pain point in their lives,” Schwartz said.  

The California DFPI filed a complaint against OppFi in April, seeking a preliminary injunction on OppFi’s current California operations and alleging that OppFi used its partnership with an out-of-state bank to overcharge 38,000 California consumers with an average interest rate of 153%.  

A preliminary injunction is a court order that temporarily prevents a party from taking certain legal actions or continuing allegedly harmful behavior until a final decision is made.  

A California state court denied the motion for an injunction in October 2023, finding that the DFPI did not demonstrate reasonable probability of success. 

“I certainly could lower the [interest rate] and charge a bunch of fees, but is that what’s best for the customer? No,” Schwartz said. “We’re willing to even lose money on customers […] we know we’re doing the right thing for the customer.” 

Schwartz cites his high customer ratings and A plus score by the Better Business Bureau as evidence that OppFi is “doing something right or driving value to a customer.” He also cites
OppFi’s 4.7 customer rating on Credit Karma.  

“When there’s no options out there. […] your life can start to unravel pretty quickly. It would be nice if you had a wealthy family member who could bail you out […] but that’s not always the case. There’s a large portion of people that don’t have options like that,” Schwartz said.  

In addition to the aforementioned class action lawsuits, the D.C. settlement agreement and the dismissal of the California DFPI’s preliminary injunction, a class action complaint was filed in Illinois in July. The plaintiff in Fratus v. OppFi, Schwartz, & Johnson claimed that OppFi violated Illinois law by issuing loans with excessive interest rates to Illinois residents.  

“Over the years, the R.W. Freeman Distinguished Lecture series has featured a variety of business executives whose careers and experiences are of interest to students, and we look forward to bringing more business leaders to campus this year,” Mike Strecker, vice president for news and media relations, said in a statement.