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Financial Services Law Insights and Observations

Ohio Court of Appeals: Ohio Consumer Sales Practices Act does not cover HELOC fraud

Courts State Issues Fraud National Bank HELOC Appellate

Courts

On April 8, the Ohio Court of Appeals affirmed summary judgment for a bank, its employees, and the plaintiff’s former husband (collectively, “defendants”), concluding, among other things, that under the Ohio Consumer Sales Practices Act (OCSPA) the defendants could not be considered “suppliers,” transactions with national banks are not covered, and bank employees were not considered “loan officers.” According to the opinion, a homeowner filed a lawsuit alleging the defendants fraudulently opened a home equity line of credit by allowing the plaintiff’s former husband to sign the homeowner’s name with the bank employees’ assistance in notarizing the signature. The homeowner alleged various claims, including that the defendants violated the OCSPA’s provision prohibiting a “supplier” from committing “an unfair or deceptive act or practice in connection with a consumer transaction.” The lower court granted summary judgment in favor of the defendants. The homeowner appealed, arguing that the bank employees were acting as “loan officers” and therefore, they qualified as “suppliers” under the OCSPA. The appellate court noted that while the term “supplier” does include “loan officer,” the statute explicitly states that “loan officer” does not include “an employee of a bank…organized under the laws of this state, another state, or the United States.” Moreover, the OCSPA provides that consumer transactions do not include transactions with financial institutions, except in certain circumstances, which are not applicable to the action. Therefore, the lower court did not err in its summary judgment ruling.

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