In June 2018, Anthony Houston maintained a deposit account with Fifth Third Bank. On or about June 15, 2018, an unknown third party deposited a check in Houston’s account at one of Fifth Third’s branches. Houston has never visited that particular branch. Houston claims that the check “was altered or fictitious”
and that the endorsement signature on the check looks nothing like his own. The next day, June 16, 2018, between 9 a.m. and 10 a.m., Houston received an email from Fifth Third stating that his passcode changed. Houston promptly called Fifth Third to report that he did not authorize this passcode change and asked that Fifth Third lock his account. Houston also changed his passcode.
Houston asserts that Fifth Third should have prevented all further activity on his account at that point, but Fifth Third did not do so. Later that same day, an unknown third party again changed the passcode for Houston’s account, twice, and then withdrew \($4,030\) from Houston’s account via three withdrawals at an ATM and one electronic fund transfer through Zelle. Houston called Fifth Third multiple times that day to report the attempted fraud on his account; Fifth Third told Houston the situation would be “rectified.” Houston asserts he did not make, and received no benefit from, these transactions. Subsequently, Houston notified Fifth Third of the unauthorized transactions, and Fifth Third temporarily credited Houston \($4,030\) and sent him a letter confirming the temporary credits on June 20, 2018. But on July 3, 2018, Fifth Third sent Houston two letters reversing the credits, stating that “our research confirms that the transaction was valid.” Houston then sued Fifth Third, alleging it had violated EFTA.
JUDGE BLAKEY Plaintiff alleges that Defendant violated 15 U.S.C. § 1693f. As this Court discussed in its prior opinion, a bank may be liable for treble damages under § 1693f under the following two circumstances:
(1) the financial institution did not provisionally recredit a consumer’s account within the ten-day period specified in subsection (c), and the financial institution (A) did not make a good faith investigation of the alleged error, or (B) did not have a reasonable basis for believing that the consumer’s account was not in error; or (2) the financial institution knowingly and willfully concluded that the consumer’s account was not in error when such conclusion could not reasonably have been drawn from the evidence available to the financial institution at the time of its investigation[.]
15 U.S.C. § 1693f(e).
Plaintiff does not claim that Defendant untimely issued provisional credits, so this Court focuses only upon whether he sufficiently alleges that Defendant “knowingly and willfully concluded that [his] account was not in error when such conclusion could not have reasonably have been drawn from the evidence available to [Defendant] at the time of its investigation,” 15 U.S.C. § 1693f(e)(2).
In its prior opinion, this Court found Plaintiff’s allegations either too speculative, or directly contradicted by exhibits to his complaint, to survive a motion to dismiss. This Court now finds that Plaintiff’s SAC cures those past deficiencies.
Previously, this Court noted that although Plaintiff alleged that Defendant refused to consider evidence that Plaintiff “was not in transactions because he was trying out for a lifeguard position,” an exhibit attached to his complaint directly undermined this allegation by showing that Plaintiff was at his try-out before the transactions occurred.
The SAC, however, clarifies that Plaintiff was at try-outs for a lifeguard position between 9:00 a.m. and 10:00 a.m. at Whitney Young High School in Chicago; he then remained at the high school until his friend’s mother picked him up at 10:30 a.m. and drove him home. Plaintiff then alleges that the first two unauthorized transactions—at 10:04 a.m. and 10:24 a.m.—occurred while he waited for his friend’s mother to pick him up. He also alleges that the third and fourth transactions—at 12:11 p.m. and 12:12 p.m.—occurred while he was at his home. Plaintiff also claims that he notified Defendant that “he was not in the vicinity” of where any of the four transactions occurring on June 16, 2018 took place, yet Defendant did not view any security footage of the relevant transactions to determine who made those withdrawals.
Taking these allegations together as true, this Court finds that they plausibly support Plaintiff’s claim that Defendant knowingly and willfully concluded Plaintiff’s account was not in error, notwithstanding the evidence available to Defendant. Defendant again maintains that it did not err, arguing that Plaintiff’s own whereabouts relating to the disputed transfer remain irrelevant because Defendant determined that Plaintiff gave his debit card and PIN to a third person who ultimately executed the transactions. Whether this is true, however, remains a question of fact; if discovery reveals Plaintiff participated in the fraud, then Defendant might ultimately prevail. But now, this Court must accept Plaintiff’s allegations as true and draw inferences in his favor, and thus this Court denies Defendant’s motion as to Plaintiff’s EFTA claim.
Defendant’s motion to dismiss DENIED.
CRITICAL THINKING:
What specific information would Fifth Third Bank have needed to have been victorious in its motion to dismiss?
ETHICAL DECISION MAKING:
Take a look at the WH framework and attempt to think of an ethical justification for this ruling. What value do you think is predominate in the creation of the Electronic Fund Transfer Act?