Outcome: $1,800,000 Settlement
Small v. BOKF N.A., Case No.: 1:13-cv-01125 in the United States District Court for the District of Colorado
In March 2016, Tycko & Zavareei LLP won final approval for a settlement with BOK Financial Corporation in Small v. BOKF N.A., a case about BOK’s deceptive advertising of their “FastLoan” cash advances. BOK’s FastLoans were short-term payday loans with a $10 fee for each $100 borrowed. Because BOK had access to borrowers’ checking accounts, it would repay itself from the borrower’s next direct deposit. BOK advertised these loans as having an APR of 120% and listed the loans as having an Annual Percentage Rate (APR) of 120% in borrowers’ account statements. Tycko & Zavareei argued that this rate was incorrect for the majority of borrowers.
To understand how BOK’s rate was misleading, is important to understand what APR is and how it is calculated. APR (Annual Percentage Rate) is the cost of borrowing money, expressed as a percentage. A higher APR means that borrowers are paying a higher rate of interest for their loan, while a lower APR means a lower rate of interest and a better deal for borrowers.
The number of days until the loan is repaid changes the APR. For example: a customer borrows $100, and BOK charges them a $10 fee. If the loan is repaid 30 days later, the APR is approximately 121.66%.
However, because most jobs pay employees every two weeks instead of every thirty days, it was extremely unlikely that BOK would wait thirty days before repaying itself from the borrower’s next direct deposit. If a borrower took out a $100 loan the day after payday (fourteen days before their next payday), their APR calculation would result in a 260.71% APR.
And if they took out that loan two days before payday, the APR calculation would be 1,825%.
Tycko & Zavareei won an $1,800,000 settlement for borrowers whose loans had a higher APR than the 120% that BOK advertised. This settlement, negotiated only five days before the trial was scheduled to begin, provided 90% of the maximum statutory damages for class members without the delay of a lengthy trial. The settlement agreement also required BOK to pay attorneys’ fees and administrative costs separately, allowing the entire $1,800,000 to go to class members. With this settlement, Tycko & Zavareei won restitution for victims of predatory lending practices and stood up for truth in banking.