During the Covid-19 pandemic, the federal government enacted the Pandemic Unemployment Assistance Program. In Maryland, the state Department of Labor administered the program with assistance from the bank. The bank provided prepaid debit cards to the program's beneficiaries as one of its responsibilities in assisting the government in administrating the program. The applicant applied for benefits through the program and received a debit card tied to an account; however, the account had no money left because someone had already charged over $14,000 to the card. After over half a year of waiting and many discussions with the bank, the bank failed to remedy the situation. The applicant sued the bank, claiming that the bank's conduct throughout the applicant's attempt to obtain a benefits card violated the Electronic Fund Transfer Act (the Act) and several state laws. The bank moved to dismiss the applicant's claims, arguing the applicant's benefits were not a “covered account” under the Act and, therefore, the applicant could not sue the bank under the Act. The district court granted the motion, and the applicant appealed.
In Mohamed v. Bank of Am. N.A., 93 F.4th 205 (4th Cir. 2024), the court held that the applicant's benefits account was a “covered account” under the Act. The Act incorporated the Consumer Financial Protection Bureau's (the Bureau) definition of “account.” The Bureau defined four categories of accounts: Subsections A, B, C, and D. A Subsection B account is "an account established by a government agency for distributing government benefits to a consumer electronically." The bank argued that the applicant failed to properly raise the issue of whether the applicant's account was a Subsection B account because the applicant's response to the bank's motion to dismiss primarily focused on the bank's claim that the applicant's account was not a Subsection C or D account. The court held that the applicant's argument that the account was a "government benefit account," both as part of his argument and in response to a question, was sufficient to find that the applicant raised the issue in trial. The court then held that the applicant's benefits were a Subsection B account. The court examined the ordinary meaning of the Bureau’s Subsection B account definition. It determined that if an account was “brought into existence through the […] instrumentality of a government agency,” it qualified as a covered account. Because the federal government brought into existence the program that created the benefit accounts and state governments carried out the program, a government agency established the applicant's benefits account. While the bank assisted in carrying out the program, it did so under the direction of Maryland's Department of Labor, a government agency. Thus, the account accordingly was a “covered account” under the Act.
By Gregory Ferrer [email protected]
Edited By Joshua Shetler [email protected]
Edited By Kristin Meurer [email protected]