Did You Take Out a Pay Day Loan?
Last Updated on January 11, 2022
Attorneys working with ClassAction.org are no longer investigating this matter. The information here is for reference only. A list of open investigations and lawsuits can be viewed here.
At A Glance
- This Alert Affects
- Consumers who borrowed a so-called deposit advance loan from the Bank of Oklahoma or its affiliates (listed below). This product may have been marketed under the name "FastLoan."
- Overdraft charges, the need for additional loans, other financial losses.
- Bank of Oklahoma or its affiliates, which include Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Texas, and Colorado State Bank and Trust.
- Additional Details
- Also known as a payday advance, a payday loan is a small, short-term loan intended to cover the borrower's expenses until his or her next paycheck or deposit of public benefits.
If you borrowed a so-called deposit advance loan from any of the banks listed below, you may be entitled to financial compensation. We are currently investigating allegations that these and other financial institutions are charging excessive rates and engaging in unfair deceptive business practices when offering and administering these products, which essentially function as payday loans.
- Bank of Oklahoma
- Bank of Albuquerque
- Bank of Arizona
- Bank of Arkansas
- Bank of Kansas City
- Bank of Texas
- Colorado State Bank and Trust
It is believed that this product is being marketed under the name "FastLoan." We are looking to determine whether consumers who took out these loans may be able to file a class action lawsuit to recover compensation for their financial losses and need to hear from consumers to assist in our investigation.
What’s the Problem with These Loans?
While these products may have innocent-enough sounding names, they are structured just like a loan from a payday loan storefront, carrying a high-cost (with annualized interest rates that can reach 270% or possibly more) combined with a short-term balloon repayment. For customers with direct deposit of wages or public benefits, the bank will advance the pay in increments for a fee. The bank deposits the loan amount directly into the customer’s account and then repays itself the loan amount, plus the fee, directly from the customer’s next incoming direct deposit.
If direct deposits are not sufficient to repay the loan within a certain amount of days, the bank repays itself anyway, even if the repayment overdraws the consumer’s account, triggering more costs through overdraft and insufficient fund fees. The bank offers these types of loans without any underwriting and borrowers have fallen into a recurring cycle of taking advances to pay off the previous advance taken. Simply put, these short-term, high cost loans lead to repeat loans that not only leave borrowers’ needs unmet but leave them affirmatively worse off than before the lending began.
Investigation into Payday Loans
In the past, these types of loans were only offered by non-banking institutions, such as shops which cash checks and money orders; however, over the past several years, banks began to offer payday loans to their customers. In early 2013, five lawmakers urged regulators to stop a number of prominent financial institutions from offering these high-interest, short-term loans, calling these products “unsafe and unsound.” Several months later, reports surfaced that the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency were planning to impose strict limits on these deposit advance loans, which function very similarly to payday loans.
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