OppFi Defeats DFPI in California True Lender Ruling
A California court rejected the DFPI's four-year campaign to dismantle bank-fintech lending partnerships, and every alternative lender using a bank charter should pay attention.
On February 24, 2026, the Los Angeles County Superior Court (Hon. Gary D. Roberts) issued a tentative decision granting summary judgment to Opportunity Financial (OppFi), rejecting the California Department of Financial Protection and Innovation's "true lender" doctrine.1
The setup: OppFi partners with FinWise Bank, a Utah state-chartered bank, to originate personal installment loans of $500 to $4,000 at APRs up to 160%. FinWise Bank originates the loans under its own charter, then OppFi purchases receivables. California's rate cap under the California Financing Law (CFL) is 36%.6
The DFPI's theory: The regulator filed suit in 2022 (Case 22STCV08163), arguing OppFi was the "true lender" because it maintained the lending platform, purchased over 90% of receivables, and bore the predominant economic interest. If OppFi was the lender, not FinWise, then the loans violated California's usury cap.4
The court's response: The judge found OppFi produced "overwhelming evidence" that FinWise Bank was the lender at inception. Specifically:
FinWise performed underwriting from its Utah offices and had sole authority to approve or reject every loan application2
FinWise independently reviewed and approved changes to underwriting models; OppFi could not alter criteria unilaterally2
FinWise held title to every loan, retained a minimum 5% receivable interest throughout each loan's life, and received origination and servicing fees3
OppFi did not supply loan capital and had no possessory or beneficial interest in FinWise's funding accounts2
The 90% receivable purchase was "consistent with the bank's right under Section 27 of the Federal Deposit Insurance Act"3
The DFPI failed to raise a genuine dispute of material fact. OppFi now has 30 days to submit a proposed final statement of decision. If the judgment is entered, the DFPI may appeal to the California Court of Appeal for the Second District.1
Sources
1 California Court Grants Summary Judgment to OppFi, Rejects DFPI "True Lender" Theory
2 Ballard Spahr / JDSupra | California Court Grants Summary Judgment to OppFi
3 National Law Review / Allen Matkins | Court Ruling Deals Blow to DFPI's "True Lender" Theory
4 Banking Dive | Fintech OppFi Challenges California Regulator's "True Lender" Theory
5 American Banker | California Wants to Block OppFi From New High-Cost Loans
6 NCLC | High-Cost Rent-a-Bank Loan Watch List (Updated Feb 26, 2026)
7 Consumer Finance Monitor | Court Denies DFPI Motion for Preliminary Injunction Against OppFi
8 Vindication for the CFPB But Lack of Guidance on True Lender Issues
9 LoanMart Agrees to End Bank Partnership Lending Program Following DFPI Inquiry
10 GetOutOfDebt | Supreme Court Lets $134 Million CashCall Judgment Stand
11 Banking Dive | Elevate Pays $3.75M+ to End DC Interest Rate Suit
12 OppFi Investor Relations | Q4 2025 Earnings Call Scheduled for March 11, 2026
13 Seeking Alpha | OppFi: Collapsing Multiple, Exploding Profits
14 OppFi Asserts True Lender Doctrine is "Underground Regulation" DFPI Cannot Enforce
Does This Ruling Protect My Bank Partnership?
It depends on your arrangement. The court did not issue a blanket ruling that all bank-fintech partnerships are valid. It ruled that this specific partnership met the standard for genuine bank involvement. The court applied California's usury principles: a contract must be usurious "in its inception," and a loan that is non-usurious when made does not become usurious due to subsequent events like a receivable sale.2
If your bank partner originates the loan, controls underwriting, holds title at inception, retains receivable interest, and receives fees for its services, this ruling supports your structure. If the bank is signing paperwork while you make every lending decision, this ruling provides no cover.
What Does "Genuine Bank Participation" Actually Mean After This Ruling?
The court outlined a clear checklist based on what FinWise Bank demonstrated:3
Underwriting control: The bank performs final underwriting from its own offices, with sole authority to approve or reject applications
Model governance: The bank independently reviews and approves any changes to the underwriting model, and the fintech cannot alter criteria without bank approval
Risk retention: The bank retains at least partial receivable interest (5% in this case) throughout the loan's life
Financial participation: The bank receives origination fees and servicing fees, not just a flat rental payment for its charter
Capital independence: The fintech does not supply the loan capital and has no interest in the bank's funding accounts
If any of these elements are missing from your partnership, regulators now have a clear framework for arguing the bank is a "mere dummy" and your arrangement is a sham.
Can California or Other States Still Challenge Bank Partnerships?
Yes. This ruling is a trial court decision, not an appellate precedent. The DFPI can appeal, and there is no indication they will not.1 Other states pursuing "true lender" theories include Colorado, which in November 2025 won a Tenth Circuit ruling allowing it to enforce interest rate caps on out-of-state banks through its DIDMCA opt-out provisions.
The NCLC's rent-a-bank watch list, updated February 26, 2026, tracks nine high-cost consumer lenders operating through five bank partners: FinWise Bank, Capital Community Bank, First Electronic Bank, TAB Bank (all Utah), and Republic Bank & Trust (Kentucky).6 Consumer advocacy groups and state regulators are not backing down.
Meanwhile, the DFPI has already forced one surrender: auto title lender LoanMart agreed to stop its bank partnership lending program with Capital Community Bank for 21 months following a separate "true lender" investigation.9
How Should I Audit My Current Bank Partnership Structure?
Based on the court's reasoning, a practical audit checklist:
Underwriting role: Can you demonstrate the bank makes final credit decisions from its own facilities, by its own employees?
Model governance: When underwriting criteria change, does the bank sign off independently, or does your team push changes that get rubber-stamped?
Risk retention: Does the bank retain receivable interest after sale? The 5% figure in the OppFi case may not be a minimum, but zero retention is a red flag.
Capital source: Does the bank fund loans from its own capital, or does your company effectively supply funds through collateral arrangements or prefunded accounts?
Fee structure: Is the bank earning origination and servicing fees reflecting genuine participation, or a flat "charter rental" fee?
What Happens If the DFPI Appeals?
OppFi has 30 days from the tentative decision to submit a proposed final statement of decision and judgment. Once the judgment is entered, the DFPI can appeal to the California Court of Appeal for the Second District.1
An appeal would extend legal uncertainty for 12 to 24 months. During that period, the summary judgment stands unless overturned. For the DFPI, losing at the appellate level would establish binding precedent in California that their "true lender" theory lacks factual and legal basis where genuine bank participation exists.
For context, the CFPB won a $134 million judgment against CashCall for using a tribal lending entity as a facade, and the Supreme Court declined to hear the appeal.10 But the Ninth Circuit explicitly stated its ruling had no implications for "more traditional bank partnerships."8 The OppFi ruling is the first major decision addressing the bank partnership model on its merits.
Does This Affect MCA and Revenue-Based Financing Models?
Indirectly, yes. While MCA and RBF are typically structured as purchase agreements rather than loans (and may not trigger usury analysis), many MCA providers use bank partnerships for related loan products, lines of credit, or installment products. The principle here, that a bank which genuinely controls underwriting and retains risk is the true lender regardless of downstream receivable sales, strengthens the legal foundation for any fintech using a similar structure.
OppFi reported record 2025 performance: revenue guidance of $578 to $605 million and adjusted net income of $125 to $130 million, with Q4 results due March 11.12 A company generating that revenue through a bank partnership model that survived judicial scrutiny sends a clear message: the model works when the partnership is real.
Our Opinion
This ruling matters, but it is not a license to cut corners.
The court did not rule that bank partnerships are inherently legitimate. It ruled that OppFi's partnership with FinWise Bank was legitimate because the bank genuinely participated in lending decisions, retained risk, and earned fees commensurate with its role. The DFPI lost because it could not produce evidence contradicting those facts.
That distinction is critical. The same court, presented with a partnership where the bank stamps approvals and collects a flat fee, could rule the other way. The LoanMart settlement proves California's regulators pursue weaker arrangements successfully.9
For alternative lenders, the action item is documentation, not celebration. If your bank partner cannot demonstrate the five factors the court cited (underwriting control, model governance, risk retention, financial participation, capital independence), you are exposed. The DFPI will appeal, other states will bring cases, and advocacy groups are tracking every rent-a-bank arrangement.6
Use this ruling as a blueprint, not a shield. Audit your partnership, document the bank's genuine involvement, and build the paper trail that would survive discovery.
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