Mr. Sims is a retired veteran living on a fixed income in California.  Last year, he " "responded to online marketing" on a website maintained by OppLoans, a Delaware limited liability company with an Illinois address.  Mr. Sims entered into a loan agreement for a $1,500 loan at 160% annual rate of interest.   The loan agreement preamble stated "The words 'Lender' 'We' and 'us' mean FinWise Bank, an FDIC-insured bank located in Utah, or any of its direct or indirect assignees."   Apparently unhappy with the arrangement, Mr. Sims filed an action challenging the arrangement as being, among other things, a "rent-a-bank" scheme designed to evade the California Financing Law.

The CFL prohibits anyone from engaging in the business of finance lender or broker unless licensed by the Department of Financial Protection & Innovation, except when an exception applies.  Cal. Fin. Code § 22100(a).  U.S. District Court Judge Phyllis J. Hamilton dismissed Mr. Sims' lawsuit with prejudice.  With respect to the CFL, Judge Hamilton pointed out that Section 22050(a) provides:

"This division [California Financial Code §§ 22000-22780.1] does not apply to any person doing business under any law of any state . . . relating to banks . . ."

Finding that there is no question that FinWise is a bank, Judge Hamilton found that ". . . California Financial Code § 22050(a) exempts the loan agreement from any condition set forth in California Financial Code §§ 22000-22780.  Sims v. Opportunity Fin., LLC, 2021 U.S. Dist. LEXIS 71360, 2021 WL 1391565.