Customer's Duty to Inspect Bank Statements

Commerce Bank of Delaware v. Brown

2007 WL 1207171 (Del. Com. Pl. 2007)

Facts: Plaintiff, Commerce Bank/Delaware North America ("Commerce") initially filed a civil complaint against defendant Natasha J. Brown ("Brown") on October 28, 2005. Commerce seeks judgment in the amount of $4.020.11 plus costs and interest and alleges that Brown maintained a checking account with Commerce and has been unjustly enriched by $4,020.11....

The defendant, Brown...denied all allegations of the complaint. As an affirmative defense Brown claims the transaction for which plaintiff seeks to recover a money judgment were made by means of an ATM Machine using a debit card issued by the defendant. On January 16, 2005 Brown asserts that she became aware of the fraudulent transactions and timely informed the plaintiff of the facts on January 16, 2005. Brown asserts that she also requested Commerce in her answer to investigate the matter and to close her account. Based upon these facts, Brown asserts a maximum liability on her own part from $50.00 to $500.00 in accordance with the Electronic Fund Transfer Act ("EFTA") 15 U.S.C. 1693(g) and regulation (e), 12 CFR 205.6. [Commerce Bank withdrew its complaint at trial, leaving only the defendant's counter-claim in issue.]

Defendant Brown asserts [that] defendant failed to investigate and violated EFTA and is therefore liable to the plaintiff for money damages citing [EFTA].

Brown was the only witness called at trial. Brown is twenty-seven years old and has been employed by Wilmington Trust as an Administrative Assistant for the past three years. Brown previously opened a checking account with Commerce and was issued a debit/ATM card by Commerce which was in her possession in December 2004. Brown, on or about January 14, 2005 went to Commerce to charge a $5.00 debit to the card at her lunch-break was informed that there was a deficiency balance in the checking account. Brown went to the Talleyville branch of Commerce Bank and spoke with "Carla" who agreed to investigate these unauthorized charges, as well as honor her request to close the account. Defendant's Exhibit No.: 1 is a Commerce Bank electronic filing and/or e-mail which details a visit by defendant on January 16, 2005 to report her card loss.

On the back of defendant's Exhibit No.: 1 were 26 separate unauthorized transactions at different mercantile establishments detailing debits with the pin number used on Brown's debit card charged to Commerce Bank. The first charge was $501.75 on January 13, 2005....Brown asserts at trial that she therefore timely gave notice to Commerce to investigate and requested Commerce to close the debit checking account on January 16, 2005.

At trial Brown also testified she "never heard" from Commerce again until she received a letter in December 2005 citing a $4,000.00 deficiency balance....

On cross-examination Brown testified she received a PIN number from Commerce and "gave the PIN number to no other person." In December 2004 she resided with Charles Williams, who is now her husband. Brown testified on cross-examination that she was the only person authorized as a PIN user and no one else knew of the card, 'used the card,' or was provided orally or in writing of the PIN number. Brown spoke with Carla Bernard at the Commerce Bank at the Talleyville branch. Although Brown did not initially fill out a formal report, she did visit Commerce on January 16, 2005 the Talleyville branch and changed her address with Carla. Brown does not recall the last time she ever received a statement from Commerce Bank on her checking account. Brown made no further purchases with the account and she was unaware of all the "incidents of unauthorized debit charges on her checking account" until she was actually sued by Commerce Bank in the Court of Common Pleas.

The Court found that defendant in her counter-claim proved a preponderance of evidence damages in the amount of $1,000.00 plus an award of attorney's fees. Commerce failed to investigate the unauthorized charges pursuant to 15 U.S.C. 1693(h). Nor did Commerce close the account as detailed in Defendant's Exhibit No. 1. Instead, Commerce sued Brown and then withdrew its claim at trial. The Court found that $50.00 was the appropriate liability for Brown for the monies charged on her account because she timely notified, in person, Commerce on January 16, 2005. Brown also requested Commerce to close her checking account. Based upon the trial record, defendant had proven by a preponderance of the evidence damages of $1,000.00 as set forth in the above statute, 15 U.S.C. 1693(m).

Case Questions

1. Whyapparentlydid the bank withdraw its complaint against Brown at the time of trial?

1. Why does the court mention Ms. Brown's occupation, and that she was at the time of the incident living with the man who wasat the time of trialher husband?

1. What is the difference between the United States Code (USC) and the Code of Federal Regulations (CFR), both of which are cited by the court?

1. What did the bank do wrong here?

1. What damages did Ms. Brown suffer for which she was awarded $1,000? What else did she get by way of an award that is probably more important?