Opportun Inc., a unit of Opportun Financial Corp., a consumer finance lender that caters to Latino immigrants, disclosed yesterday that its lending and debt collection practices are being investigated by the Consumer Financial Protection Bureau as part of an apparent wider investigation into whether small dollar lenders have violated federal consumer protection laws.
Specifically, the CFPB’s Civil Investigative Demand letter asked about Opportun’s legal collection practices between 2019 and 2021 and the hardship treatments it has offered its customers during the COVID-19 pandemic, according to the company’s filing with the Securities and Exchange Commission.
Opportun said in the filing that it “believes its practices have been in full compliance with CFPB guidance and that it has followed all published authority with respect to its practices, and the Company intends to cooperate with the CFPB.” Since it just received the CID this past Wednesday, Opportun said it is “unable to predict the outcome of this CFPB investigation, including whether the investigation will result in any action or proceeding against the Company or in any changes to its practices.”
The company ran into trouble of the PR kind last year, when it was the subject of a published media report that spotlighted its filing of “tens of thousands” of collection lawsuits in Texas against individuals with unpaid debts. The company agreed to dismiss all pending lawsuits and committed to filing 60% fewer lawsuits in the future. Opportun also announced it would cap the interest rate on its new loans at 36% moving forward.
At the time, collection lawsuits were deemed to be a mechanism of “last resort,” according to company Chief Executive Raul Vazquez, who said that the company filed lawsuits on about 6% of the loans it originated.