Fifth third to face class actions concerning lending practices
CINCINNATI – A federal judge has granted class action status to a 9-year lawsuit alleging Fifth Third Bank misled consumers about the interest rates they paid on cash advance loans.
It’s a case that could cost the bank more than $ 280 million, according to court documents. Lawsuit Alleges Fifth Third Violated Truth in Lending Rules and Violated Loan Agreements by Offering Early Access Loans, citing 120% APR for short-term loans with much higher effective interest rates .
Fifth Third declined to comment on U.S. District Judge Michael Barrett’s March 26 ruling.
Individuals who were enrolled in Fifth Third’s Early Access Lending Program from August 3, 2011 through April 30, 2013 will be eligible to claim damages for claims under the Truth in Lending Act. People suing for breach of contract can opt for class action if they signed up for early access before May 1, 2013 and have taken out at least one loan from the program.
“We are pleased with Judge Barrett’s ruling, which paves the way for a class-wide trial and the return of hundreds of millions of people in the usurious interest to thousands of fifth-third customers,” said said Hassan Zavareei, a Washington, DC attorney who successfully argued the case on behalf of the plaintiffs.
“While we cannot comment on the ongoing litigation, Fifth Third’s commitment is to put our customers first,” said Fifth Third spokesperson Ed Loyd.
As WCPO previously reported, the bank argued that its customers were aware of the fees they were paying for early access loans, which allowed people to borrow on their next paycheck when they ran out of cash.
Because the bank made it clear that borrowers would pay a fee of $ 10 on every $ 100 borrowed, Barrett initially dismissed the breach of contract claim. But he was overturned by the Sixth Circuit Court of Appeals, which ruled that the bank’s contracts included two conflicting explanations for the annual percentage rate that applied to its loans.
“The APR is designed to allow people to compare the cost of credit, and that’s exactly what it’s not doing here,” said Nathalie Martin, professor of law at the University of New Mexico, in last july. Martin predicted the case would be certified as a class action lawsuit, increasing pressure on Fifth Third to settle the case.