New Jersey and other states say deal could allow online lender to sidestep state interest-rate caps and expand high-cost lending

New Jersey Attorney General Jennifer Davenport is urging federal regulators to block an online lender from acquiring a national bank, arguing the deal could allow the company to sidestep state interest-rate limits and offer loans with triple-digit annual percentage rates.

Davenport joined attorneys general from 16 other states and the District of Columbia in letters asking the Federal Reserve Board and Office of the Comptroller of the Currency to reject Opportunity Financial LLC’s application to acquire and merge with BNC National Bank.

OppFi, an online lender that gives loans to borrowers with low credit scores or financial difficulties, offers loans with annual percentage rates approaching 200%, according to the Attorney General’s Office.

The company currently works with state-chartered banks in Utah, which does not have a hard interest-rate cap, allowing it to offer loans at those rates in other states, the Attorney General’s Office said.

OppFi is seeking to acquire BNC National Bank and obtain a national bank charter, which Davenport and the coalition argue would give the company a greater ability to bypass state lending restrictions.

“Granting a bank charter to OppFi would give it a permission slip to violate our laws, and I won’t allow triple-digit interest rates on borrowers who can least afford them,” Davenport said.

New Jersey’s civil usury law prohibits written contracts for consumer loans under $50,000 with annual percentage rates above 16%, while the state’s criminal usury law applies to loans to people with interest rates above 30% annually.

The coalition argues that a national bank charter would allow OppFi to expand its high-cost lending while making it harder for states to enforce consumer protection laws. The attorneys general have sent their objections to the Federal Reserve and Office of the Comptroller of the Currency, which are reviewing OppFi’s application.

Attorneys general from Arizona, California, Connecticut, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia joined New Jersey in opposing the deal.