Spangenberg Shibley & Liber Files Lawsuit against Fifth Third for Payday Loan Abuse

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The Spangenberg Law Firm files a lawsuit against Fifth Third Bank, alleging that the bank's "payday" loans were usurious, provided false interest rate disclosures and violated Ohio law.

A class action lawsuit filed in the Northern District of Ohio (Case # 1:12-cv-2007, Northern District of Ohio, US District Court) alleges that “payday” loans offered by Cincinnati, Ohio-based Fifth Third Bank were usurious, provided false interest rate disclosures and violated Ohio law. According to court documents, plaintiffs William Klopfenstein and Adam McKinney brought the lawsuit on behalf of a class of all individuals who received “Early Access” loans from Fifth Third and repaid those loans within 30 days. The individual plaintiffs and the class are represented by Cleveland, Ohio-based Spangenberg Shibley & Liber, Tycko & Zavareei in Washington, DC, and Barnow and Associates of Chicago, IL. All three firms have previously been involved in consumer class action lawsuits against banks, including the successful prosecution and settlement of claims related to fraudulent overdraft fees charged by banks.

In recent years, Ohio has passed law protecting consumers from predatory payday loans.

“Because the problem of payday lending was primarily associated with small storefront operations in economically disadvantaged areas, the law was not made applicable to large state-chartered banks like Fifth Third,” said Daniel Frech, an attorney for the Plaintiffs. “Fifth Third, however, seized upon the fact the new laws put most small payday lenders out of business and slid in to fill the void.“

Many federal bank accrediting and auditing entities, including the FDIC, who is “deeply concerned” about the practice, have spoken out against consumer banks engaging in payday lending. In fact, The Officer of the Comptroller of Currency, who regulated Fifth Third at the time, ordered banks to “stay the hell away” from payday loans in 2003.

Fifth Third discloses an Annualized Percentage Rate (APR) of 120 percent, based on the loan’s maximum possible duration of 30 days. However, unlike short term loans from traditional payday lenders, the amount owed to the bank is automatically deducted from a customer’s account once a direct deposit sufficient to cover the amount owed occurs. As such, a vast majority of the loans are paid back far more quickly. This resulted in Klopfenstein paying an APR over 1000 percent on several occasions and McKinney paying, in one instance, an APR over 3000 percent. The plaintiff’s complaint alleges that these excessive interest rates are usurious and breached the loan terms the consumers agreed to.

Ohio law restricts the maximum interest rate that banks can charge on loans to 25 percent. Fifth Third claims that all interest paid on Early Access loans is actually a “transaction fee,” which the bank believes allows it to comply with Ohio law while charging APRs, in some cases, 100 times higher than that allowed by the statute. The complaint alleges that the “fees” charged by Fifth Third are, in fact, finance charges and that the interest rate the bank charges is therefore far in excess of the statutory maximum rate of 25 percent.

The complaint asks that all excessive interest charges be disgorged from Fifth Third and paid back to the customers.

About Spangenberg Shibley & Liber
Spangenberg Shibley & Liber handles a broad range of business litigation, dangerous drug, personal injury, medical malpractice, nursing home and elder abuse and civil rights cases. The firm also litigates a variety of property damage and insurance coverage cases. For more information, please contact marketing manager Miranda Miller at 216.696.3232 or visit

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