Loan company sued thousands of low-income Latinos during pandemic: report
A new investigation from ProPublica has found that the loan company Oportun Inc. sued thousands of people struggling during the coronavirus pandemic that had fallen behind on payments.
Yahoo Finance reached out to Oportun (OPRT) for comment, but didn’t receive a response by the time of publication.
The company says they ”serve the approximately 100 million people in the United States who are typically shut out of the financial mainstream because they don’t have a credit score or have limited credit history.”
Oportun, which offers personal loans and auto loans, operates in 12 states, billing itself as a friendly and more affordable option to predatory payday lenders. The company, whose name is short for “oportunidad” or “opportunity” in Spanish, has a primarily Latino immigrant client base.
As coronavirus has impacted low-income and front-line workers the most, Oportun’s client base are part of the community most vulnerable to the pandemic’s impacts on the economy.
According to the report, Oportun, based in San Carlos, Calif., sued borrowers that fell behind on their payments over 47,000 times between May 2016 and July 2020. Over 5,000 lawsuits have happened since the pandemic exploded in mid-March. On average, the report noted, that’s 30 lawsuits daily.
The high number of lawsuits makes Oportun the most litigious personal loan company in Texas and California, only rivaled by large firms like Capital One and Conn’s HomePlus.
In a recent blog post, Oportun CEO Raul Vazquez stated that the company has used “the small claims legal process as a mechanism of last resort,” to go after customers that have fallen behind in their payments “and not answered our calls, letters, texts or emails for several months to reengage with us.”
While the company is one of the most litigious, Vazquez wrote that lawsuits were filed against “less than 6% of all the loans we have originated,” continuing that a case was pursued to judgment in only about 2%.
“If a customer was unemployed and could not repay us, we also did not proceed with the case,” Vazquez stated.
The coronavirus pandemic caused over 40 million workers to lose their jobs — about a quarter of the American labor force, according to the Labor Department.
In response, Oportun launched a special hardship program that postponed payments for “one month to customers who indicated they had been economically impacted by the COVID-19 pandemic.” Oportun announced that it could consider deferrals of payments for up to 90 days.
As the pandemic continued, so did the delinquencies. Oportun reported seeing an increase of two-week delinquencies by 2.2% compared to the year prior. Month-long delays in payments by customers increased 1.5%.
In his blog post, Oportun’s CEO acknowledged the company was too litigious, and said it didn’t align with the company’s “objectives.”
“That is why, effective immediately, we are dismissing all pending cases, suspending all new filings and committing to reduce our future filings by more than 60% from current levels,” he wrote.
The ProPublica analysis found that even with a reduction of 60%, Oportun would remain one of the most litigious debt collectors in Texas, due to the high number of lawsuits.
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