CINCINNATI — A federal jury has sided with Fifth Third Bank in a 10-year-old lawsuit that alleged the bank overcharged customers on Early Access loans.
The jury ruled that Fifth Third breached its loan agreements but customers were not entitled to damages because of the voluntary payment doctrine. That’s a legal defense to contract claims that states a party cannot recover money voluntarily paid with full knowledge of the facts.
“We will ask the judge for a verdict notwithstanding the verdict,” said Hassan Zavareei, an attorney representing Fifth Third customers. “If that is denied, we will appeal.”
Bank attorneys referred questions to Fifth Third, which released a statement.
“We appreciate the time spent on this matter by the court and jury. We are putting this matter behind us and will continue our focus and attention of putting the customer at the center of everything we do.”
The lawsuit sprang from a short-term loan product that Fifth Third created in 2008 to give its customers an alternative to payday loans. It offered customers an advance on their next payroll deposit in exchange for a 10% flat fee. It ended up as a breach of contract lawsuit because Fifth Third’s original loan agreements included an APR disclosure that estimated customers would pay 120% interest on an annual basis.
During the trial, the jury heard evidence that 477,000 Fifth Third customers paid off their Early Access loans in an average of ten days, translating to an average annual interest rate of 332%. Plaintiffs sought $443 million in damages, which was the difference between what customers actually paid in fees compared to what they would have paid if their annual interest was capped at 120%.
Fifth Third countered with arguments that its APR estimate was not a “payment term” in the contract. It also argued customers expressed full knowledge of the 10% fee arrangement by repeatedly agreeing to pay $1 for every $10 they borrowed on ATM and online banking screens.
The jury agreed with the plaintiffs that Fifth Third breached its Early Access loan agreement. But it also agreed with the bank that customers entered into the 10% fee arrangement with full knowledge of the facts. So, it answered “N/A” to the question of what dollar amount they would award in damages.
