Lender Dismisses Collection Lawsuits, Vows to File Fewer After Practices Questioned

A consumer finance lender that caters to Latino immigrants has agreed to dismiss all pending collection lawsuits it has filed and committed to filing 60% fewer cases in the future after consumer advocates and journalists started asking the company questions about its collection practices.

Oportun also announced it would cap its interest rate on all of its new loans at 36% moving forward. The lender did not say how many collection lawsuits were currently pending against individuals with unpaid debts, but confirmed that “several thousand” cases would be impact. The lender has filed “tens of thousands” of claims in Texas alone since 2016, according to a published report.

Raul Vazquez, the chief executive of Oportun, said in a blog post published on the company’s website that collection lawsuits were a “mechanism of last resort” and that during the past five years, the lender has filed lawsuits on 6% of the loans it has originated and pursued judgments on 2% of its accounts.

“We’ve recently realized that 6% percent has become a big number, making us the largest filer of small claims in California and Texas,” Vazquez wrote. “This is a position that does not reflect our objectives as a mission-driven company.

“That is why, effective immediately, we are dismissing all pending cases, suspending all new filings and committing to reduce our future filings by more than 60% from current levels.”

To help its recovery and collection efforts, Oportun said it would develop “new tools and approaches that better reflect who we are and are more consistent with the relationships of trust and respect we have built with our customers.”

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