Legal experts say that if California wins, it could embolden other states to take action against lenders that make high-interest loans to low-income borrowers using what critics call "rent a bank" partnerships.
Several nonbank lenders have already exited California, said Saunders, whose group tracks high-interest lenders.
In California, OppFi took the unusual step of preemptively suing to try to block the state from taking action.
Federal law allows state-chartered banks to lend across state lines at the interest rate legal in their home state.
California has urged Dillon to recognize that OppFi decides who to lend to and has a deal with the bank to purchase the loans.
Persons:
Lee Jae, Timothy Dillon, Lauren Saunders, California's, OppFi, Saunders, Dillon, Allard Chu, That's, Ron Vaske, Ballard Spahr, Jody Godoy, Andy Sullivan
Organizations:
REUTERS, California Department of Financial Protection, Los Angeles Superior, California, Federal Reserve, National Consumer Law Center, EasyPay Finance, FinWise Bank, FinWise, Thomson
Locations:
Seoul, California, Chicago, Utah, U.S, In California, Colorado, New York