While acknowledging that governments have “sought to protect desperately poor people from the consequences of their own desperation” by prohibiting usurious loans, a federal judge dismissed the claims of a class of “payday loan” borrowers—who were charged interest as high as 1,200 percent—against a bank that processed the transactions.

Eastern District Judge Arthur Spatt (See Profile) ruled in Costoso v. Bank of America, 14-cv-4100, that Jeanette Costoso was bound by her account agreement with Bank of America, which “expressly insulates the defendant from liability for permitting withdrawals from the plaintiff's account.”

Costoso had argued that the agreement—and common law principles of unjust enrichment, conversion, and unconscionability—required Bank of America to reject the automated debits she had authorized her lenders to make to repay the short-term loans.