The customer held an account with the bank, which he managed through the bank’s online platform and mobile app. The bank allegedly allowed thirteen unauthorized transfers of funds from the customer’s account by third-party criminal use of “AnyDesk” to gain access. The bank did not flag or stop any of the transactions, undertake remedial measures, or investigate the customer’s dispute. As a result, the customer filed suit asserting three claims. Under the Electronic Funds Transfer Act (EFTA), 15 U.S.C. § 1693, and 12 C.F.R. 205 (Regulation E), the customer claimed violations arising from the bank’s refusal to investigate, reimburse, or credit him. Second, the customer sued for exploitation of a vulnerable adult under S.C. Code § 43-35-87, alleging that his age qualified him for the statute’s protections. The third claim alleged violations of South Carolina’s Uniform Commercial Code (UCC) for failure to meet the standards of good faith and commercially reasonable banking set forth in S.C. Code Ann. §§36-4A-202 and 211. The bank responded that the customer failed to state an EFTA claim because the transfers in question did not fall under the EFTA pursuant to statutory and Regulation E exclusions. In response to the second claim, the bank responded that the statute did not create a cause of action against banking institutions and that the customer did not sufficiently plead his status as a vulnerable adult.
In Walling v. Bank of Am., N.A., No. 8:24-cv-05223-BHH, 2025 WL 1392278, 2025 U.S. Dist. LEXIS 93399 (S.D. S.C. May 8, 2025) (opinion not yet released for publication), the court granted in part and denied in part the bank’s motion to dismiss. For the EFTA claim, the court assessed the plain language of the code to determine that “a funds transfer must be initiated by one bank using a payment order directed to another bank to then transfer funds to the beneficiary of the payment order.” The court distinguished between a consumer-initiated electronic payment order and a subsequent interbank wire transfer, holding that the former may fall under the EFTA even if the latter is excluded. Applying traditional tools of statutory construction, the court interpreted subsection (7)(B)’s plain text to exclude only interbank payment orders, not consumer-facing electronic transfers. In accepting the bifurcated approach urged by the customer, the court distinguished payment orders and wire transfers from one integrated transfer. Accordingly, the court denied the motion to dismiss on the EFTA claim, finding an electronic payment order fell within the scope of the statute. On the second claim, the court declined to decide whether the customer fit the vulnerable adult classification or whether S.C. Code Ann. § 43-35-87 created a private cause of action. However, the court dismissed the vulnerable adult claim because the plaintiff failed to plausibly allege the bank’s participation in, or material aid to, the alleged exploitation. However, the court decided that the customer did not plausibly allege that the bank “(1) participated in or materially aided the financial exploitation of Plaintiff through the (2) improper, unlawful, or unauthorized (3) use of the funds (4) of a vulnerable adult by a person (5) for the profit or advantage of that person or another person.” Because the customer did not point to where the statute obligated the bank to take protective measures, the court granted the motion to dismiss for failure to state that claim. Third, the court dismissed the UCC claim because S.C. Code Ann. §§36-4A-108 excluded from the chapter any transfers governed by the EFTA. The court also rejected the bank’s assertion that a payment order is indistinguishable from a wire transfer, finding that Article 4A contemplates distinct stages within a transfer. Because the court found the transfers governed by the EFTA, and Article 4A excludes such transfers, the UCC claim failed as a matter of law.
By Taylor O’Brien [email protected]
Edited By Callighan Ard [email protected]
Edited By Hayden Mariott [email protected]