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Latino-Focused Lender Oportun Scraps Bank Charter After CFPB Probe

Oportun, a specialist in low- to moderate-income lending, which services many Latinos, has withdrawn its application for a bank charter.

The withdrawal was voluntary, and a report from the company says the CFPB was looking into claims that Oportun had violated consumer protection laws with its collection practices, especially those which centered around hardship treatments that the company gave during the pandemic.

Per the report, almost two dozen consumer advocacy groups had written Acting Comptroller Michael Hsu to request that the OCC wait until the CFPB finished its probe before going forward with the charter.

“We have forged a constructive relationship with the OCC since filing our initial application nearly a year ago,” Oportun said in its statement Friday. “We remain committed to pursuing a bank charter with the OCC and plan to amend elements of our charter application to reflect changes to our business.”

Oportun is not the only company to recently withdraw its banking charter application. Monzo, the British challenger bank, backed out of its effort to go after a U.S. banking license because it saw the OCC wasn’t likely to approve it.

And other FinTechs have withdrawn charter applications and then refiled or somehow recalibrated.

Square, for example, filed for an industrial loan company charter with the FDIC, but withdrew its application in July 2018. Then it refiled and was approved as of March 2020.

Oportun has courted controversy as of August 2020. ProPublica and the Texas Tribune reported that the company was suing thousands of low-income Latinos in order to collect COVID-19-era debts from the early pandemic days.

The company said it would be dropping the debt claims and suspending the filing of new ones, in addition to capping its interest rate at 36 percent, in response to the criticism.

However, Oportun has remained a target of criticism from advocacy groups, saying the company has “weaponized the legal system as their debt collector.”

PYMNTS writes that Oportun was one of many firms applying for national bank charters in 2020 as digital banking has grown into more of a trend.

Read more: Digital Shift Lures More FinTechs To Pursue Banking Licenses

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