San Francisco Chronicle - (Sunday)
Firm probed over how it collects loans
Luis Shomar Picazo said he didn’t even know he had been sued by Oportun Inc.
Picazo said the loan company began calling him last year, at the start of the coronavirus pandemic, to demand repayment of a $5,000 loan the San Francisco resident took out in 2018 to help cover moving costs. In July, in the midst of a health and economic crisis, Oportun took the matter to small claims court in San Francisco.
“Because of the pandemic, I didn’t have money to pay,” Picazo told The Chronicle.
This month, a federal consumer watchdog agency began investigating Oportun’s debt collection practices, which include suing thousands of lowincome borrowers in California
during and before the pandemic. The investigation comes in the middle of the San Carlos financial lender’s bid to achieve status as a national bank, answerable to one regulatory body and free from state interest rate caps.
Oportun acknowledged receipt of a civil investigative demand from the Consumer Financial Protection Bureau in a March 4 regulatory filing. The bureau asked Oportun to provide information on its “legal collection practices from 2019 to 2021 and hardship treatments offered during the COVID19 pandemic.”
In a statement, Oportun said it’s cooperating with the agency and that it believes “our practices have been in full compliance with CFPB guidance, that we have followed all published authority on these matters.”
Founded in 2005, Oportun — short for “oportunidad,” or “opportunity” in Spanish — is a community development financial institution, a federal designation for financial lenders that serve lowincome or underserved communities of color. It operates in 12 states and its retail locations sit in mostly Latino neighborhoods. In San Francisco, all three of its branches are in the Mission District, the city’s historic Latino enclave.
An investigation last summer by the Guardian revealed Oportun to be one of the most litigious debt collectors in California, filing 14,000 small claims lawsuits against its mostly Latino customers during the first half of 2020.
According to a Chronicle analysis of court records, Oportun filed nearly 2,400 small claims lawsuits in the Bay Area counties of Alameda, Contra Costa, Marin, San Francisco, San Mateo and Santa Clara through the first six months of 2020.
In San Francisco Superior Court, Oportun was responsible for 17.5% of the entire small claims docket in 2018, The Chronicle found.
Marisabel Torres, the California policy director for the Center of Responsible Lending, a nonprofit based in North Carolina, said many of Oportun’s defendants weren’t aware of the legal action being taken against them.
That’s partly because nearly all of Oportun’s collection lawsuits went through small claims courts, where access to interpreters and legal representation is unavailable. The legal process can be especially daunting for borrowers who don’t speak English or are seeking different immigration statuses, Torres said.
“They’re suing to intimidate a population they purport to help,” Torres said.
In response to reporting inquiries from the Guardian and ProPublica, Oportun announced in August that it would drop all pending lawsuits, temporarily suspend new filings, reduce new filings by 60% and cap interest rates on all loans at 36%.
But some consumer and legal aid groups say the company hasn’t kept its promise.
In San Diego County, for instance, Legal Aid Services of San Diego found that 477 of the 500 collection lawsuits Oportun filed in 2020 were still pending as of Jan. 26.
An Oportun spokesperson said the company has filed for a dismissal in all collection lawsuits, and that the delay was due to court backlogs, not the company’s inaction. On Wednesday, the Center for Responsible Lending released a report showing that Oportun filed more than 8,000 lawsuits in Los Angeles Superior Court in 2020, making the company the highest volume filer in that county last year.
More than 3,000 of the lawsuits were filed after the pandemic started in March 2020 and paused only after media coverage exposed the company’s collection practices in California and Texas, the report said, “indicating that the decision was more influenced by negative publicity than by a good faith attempt to ease repayment pressure during an unprecedented economic crisis that disproportionately impacted Latino families.”
During the pandemic, many Latinos in Southern California turned to Oportun to cover funeral costs for loved ones who died from COVID19, said Yvonne Gonzalez Duncan, California state director for the League of United Latin American Citizens in Washington, D.C.
“Many of the people were taking out loans for funerals and they couldn’t pay back the loan,” Gonzalez Duncan said. “Then Oportun would give them a bigger loan. They kept getting bigger and bigger loans.”
Latinos in Los Angeles County have been devastated by the pandemic: Even as the virus’ daily death toll declined last month, Latino residents were dying at three times the rate of white residents, according to a Los Angeles Times analysis. Benjamin Moreno Ventura of Pacifica was sued by Oportun in July 2020 for failing to pay a $9,000 loan by June 2019. He borrowed the money to pay a slew of bills, he said. “They would make harassing calls telling me I had to pay as soon as possible,” Ventura said.
Ventura filed for bankruptcy last summer, and court records show the claim was dismissed in September 2020.
In November, Oportun filed paperwork to become a bank, alarming consumer groups. The company has a pending application with the Office of the Comptroller of the Currency, a bank regulator within the U.S. Department of Treasury. According to the office’s chartering process, the agency “endeavors to make a determination regarding preliminary conditional approval within 120 days of receipt of an accepted application.”
“We would not speculate on the outcome of our review process,” a spokesperson for the comptroller’s office said through email about Oportun’s bank bid.
A decision on Oportun’s bank bid could come in the next few weeks, and advocates worry what a bank status would mean.
“If they (Oportun) have a national bank charter, they can offer their products nationwide,” said Torres, whose organization opposes the effort. “Their reach would be much, much larger — and that is worrisome.”
As for Picazo, he said he’s now working with a debt relief company to pay back a portion of what he owes. The fact that other Oportun borrowers say they weren’t given the same chance before being taken to court “isn’t right,” he said.