California Court Tentatively Rejects “True Lender” Claim in Bank-Fintech Partnership Dispute

If finalized, the decision would represent a significant development for bank-fintech partnerships.

Background
OppFi is a financial technology company that operates a consumer lending program in partnership with FinWise Bank, a Utah state-chartered bank that originates loans under the program. Although OppFi offers loan products to consumers nationwide at varying interest rates, ranging from approximately 99% to 195%, according to OppFi, the California Financing Law caps interest at 36% on certain consumer loans.

In its dispute, the DFPI alleged that OppFi, rather than FinWise Bank, was the “true lender” of the program loans and that FinWise merely “rented” its charter to OppFi in an attempt to evade California’s interest rate caps.

The court granted summary judgment to OppFi on the grounds that the DFPI failed to raise a triable issue of material fact as to whether FinWise Bank was “merely a dummy” lender.

In reaching that conclusion, the court focused heavily on the substance of the bank-fintech partnership. Among other factors, the court emphasized that FinWise retained control of core lending functions, including:

• FinWise controlled underwriting criteria, had sole authority to approve or reject loan applications, and rejected applications that failed to meet its thresholds.
• FinWise used its own funds to originate loans and held title to program loans at origination. FinWise also retained title to and a 5% interest in the receivables for such loans.
• FinWise retained ongoing economic exposure to the loans and remained entitled to origination and servicing-related fees.
• FinWise maintained approval rights over consumer-facing marketing materials, compliance policies and OppFi’s vendor relationships.
• OppFi was required to provide ongoing reporting to the bank.

The court also raised a key question under California usury doctrine as to whether the program loans were usurious at inception. Specifically, Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) permits state-chartered, FDIC-insured banks to charge the interest rate allowed by the laws of their home state when lending to borrowers nationwide. Utah law does not impose the same interest rate caps as California, meaning that, loans originated by a Utah bank, such as FinWise, may carry higher rates when extended to borrowers in other states.

Because FinWise was the lender when the loans were made and was entitled to export Utah’s interest rates under federal law, the court maintained that the program loans were not usurious at origination. The court also rejected the notion that subsequent activities like a sale, assignment or other transfer of a loan to OppFi could render a loan usurious.

Other State Challenges to Bank-Fintech Partnerships
The OppFi decision comes amid increasing state efforts to challenge bank-fintech partnerships, both through true lender claims and by targeting interest rate exportation under DIDMCA.

Section 525 of DIDMCA permitted states to opt out of the federal framework that otherwise allows out-of-state, state-chartered banks to apply their home-state interest rates to loans made to borrowers nationwide. Although most states have not exercised that authority, some are now enacting legislation attempting to do so as part of broader efforts to address high-interest consumer lending.

Colorado previously enacted legislation opting out of DIDMCA’s exportation authority for certain consumer loans made to Colorado residents. The measure prompted litigation over whether Colorado could enforce its interest rate caps against loans originated by out-of-state banks. In November 2025, the U.S. Court of Appeals for the Tenth Circuit ruled in favor of Colorado, holding that it could enforce the opt-out and apply its interest rate caps to certain loans made to Colorado borrowers by out-of-state state banks. A petition for rehearing is pending, and an injunction preventing enforcement of the opt-out currently remains in effect.

Oregon is the latest state to pursue similar legislation. On March 6, 2026, Oregon enacted H.B. 4116, which would opt the state out of Section 525 of DIDMCA for certain consumer loans. If implemented, the law would prevent out-of-state state banks from relying on their home-state interest rates when making consumer loans of $50,000 or less to Oregon borrowers. Instead, those loans would be subject to Oregon’s 36% interest rate cap. If signed by the Governor, the law will take effect in early June 2026.

Implications Moving Forward
The Los Angeles County Superior Court’s ruling in the OppFi decision is tentative. OppFi has 30 days from the tentative decision to submit a proposed final statement of decision. If the judgment is entered, DFPI will have the right to appeal the decision.

An appeal would likely present significant questions concerning interest rate exportation and frameworks for evaluating “true lender” claims in bank-fintech partnerships. Fintechs and bank lenders should continue to monitor these developments closely, as a higher-court ruling on these issues could have substantial implications for interstate lending programs.