Latino borrowers are prime target for predatory lenders who hide transparency | Opinion
As California leaders continue to devote time and attention to the question of how to address racial and wealth disparities across the state, it is important that they pay attention to the business models of particular predatory lenders whose business models focus in on some of the Golden State’s most vulnerable populations.
In recent years, the state has attempted to root out predatory lending; yet one lender in particular remains extremely active in California, and a major concern for those in the Latino community.
Raúl Vázquez billed himself as a hero. He would rescue the Latino immigrant community from the perils of debt and make his company, Oportun, a better alternative to the gouging of payday lenders. Instead, the results of Vázquez’s Silicon Valley-based subprime lender, now operating in a dozen states, have been just as inhumane to both its customers and employees.
Oportun charges exorbitant interest rates to naïve, financially illiterate customers. And the biggest obstacle to being treated fairly isn’t even the language barrier, but the lack of transparency. One investigation found that, including all charges, Oportun has racked up APRs of close to 66.99% in California.
The company says it’s not offering loans over 36%, but because they are guilty of “loan packing” – selling additional add-on products to the customer of little value – even that claim is beyond dubious. What Oportun seems to be currently doing is arguing for 36% APR caps, which is great and all if title security isn’t taken and you only borrow what you asked for.
However, if they push you to secure a $10,000 debt at 36% APR when you wanted an unsecured loan of $2,000 at 36% APR, it makes a huge difference.
The company also often takes title over borrowers’ cars. 36% APR is a high price for secured debt like this.
Across the state, predatory lenders are targeting the vulnerable, and people in the most need who have no other options. The lenders dole out money, often more than the customer requested at exorbitant interest rates. Then the companies keep borrowers trapped in a cycle of debt indefinitely, so many aren’t even denting the principle loan amount.
Michael J. Hsu, acting comptroller of the Currency in Washington, DC said that “Oportun has weaponized the legal system as their debt collector with zero regard to the impact on the Latino community that they purport to serve.”
Oportun is also one of the leading filers of small claims in California. At one point, the company accounted for over 15% of all small claims filings in the entire state where small claims courts do not permit legal counsel, nor do they require interpreters.
Those factors, combined with the tenuous nature of many defendants regarding their citizenship status, are a recipe for intimidation. And, if defendants don’t show up to court, it’s an automatic victory for Oportun.
The string of lawsuits always goes a step too far. In June of 2023, Josue Samano had his car seized before his required payment date. He then had to pay fees to retrieve his car, and Oportun nonetheless reported the car repo to credit reporting agencies – which destroyed Mr. Samano’s credit score. Thanks, Oportun!
Pablo Ocegueda didn’t fare much better. The company repeatedly violated the Telephone Consumer Protection Act and the Rosenthal Fair Debt Collection Practices Act and engaged in Intrusion Upon Seclusion with him. In fact, Mr. Ocegueda was bombarded with over 125 phone calls even AFTER he revoked his consent to be called.
Jorge Hernández was called over 250 times after explaining he could not repay his debt at this moment. To say that this practice is abusive is an understatement.
Credit reviewing websites, such as Nerd Wallet, have warned consumers about Oportun’s lack of transparency and to seek out other higher-ranked companies from which to borrow. The site’s reviewers believe that there are too many red flags surrounding Mr. Vázquez’s company and that there is a bevy of more honest choices.
In the meantime, Oportun continues to prey on the most vulnerable people. The company doesn’t require a Social Security number so that they can capitalize on the undocumented immigrant population. An I.T.I.N. is more than enough info for Oportun to control your life.
Working for the company doesn’t seem much better. The employees are limited to 39 hours so that no benefits have to be paid and morale is low.
Before you even consider borrowing money, do yourself a favor and research the choices.
Oportun professes to help Latino communities. However, the only thing they help is their bottom line. If Oportun were a box of cereal, its first two ingredients would be prone to lawsuits and misleading.
According to a former employee, “I think we all know what management’s mission is, and it’s not brown... it’s pure green.”
Lending practices in underserved communities must be overhauled to ensure that financial products are designed with the consumers’ best interests in mind, promoting financial literacy and inclusion rather than debt traps.