Fraudulent transfers
Georgian v. Bank of America
Date: Aug.18, 2025
Issue: Whether plaintiffs have pleaded adequately (1) breach of contract based on the alleged failure of Bank of America (BofA) to maintain the “safety and security” of plaintiffs’ online banking; and (2) “fraudulent” trade practices under California consumer protection law.
Case Summary: A North Carolina federal court partially sustained Bank of America’s objections to a magistrate judge’s recommendation allowing a proposed class action over alleged Zelle fraud to proceed, determining the lawsuit fails to plausibly plead claims under any state consumer protection statutes.
In 2022, five BofA account holders (plaintiffs) sued BofA alleging it violated the Electronic Fund Transfer Act by not responding properly when hackers fraudulently withdrew funds from their accounts. Plaintiffs alleged that in similar instances, they received phone calls from individuals posing as BofA employees. These callers claimed they were investigating suspicious transactions but deceived plaintiffs into providing account information to protect themselves from fictitious fraud.
Immediately afterward, funds ranging from $850 to $3,500 were transferred out of their accounts via Zelle. Plaintiffs reported the fraudulent transfers to BofA, but alleged the bank investigated and concluded the transactions were not unauthorized, refused to provisionally credit plaintiffs’ accounts and failed to reimburse them for the losses.
Along with their EFTA claim, plaintiffs accused BofA of breaching its contract and the implied covenant of good faith and fair dealing. They also alleged false advertising, consumer fraud and unfair competition under the laws of New York, New Jersey, South Carolina and California. BofA moved to dismiss, arguing plaintiffs failed to state a valid claim, noting that each state law required proof that BofA’s alleged deceptive statements caused their harm.
Judge Timothy Reif dismissed the state consumer protection claims, ruling that plaintiffs failed to plausibly allege violations under any statute. Plaintiffs claimed that BofA violated California’s Unfair Competition Law (CA UCL), the South Carolina Unfair Trade Practices Act (SCUPTA), New York General Business Law § 349 (NYGBL), and the New Jersey Consumer Fraud Act (NJCFA). They argued that BofA misrepresented and concealed material facts about Zelle and the safety of its banking services.
On the allegations of fraudulent or deceptive practices, BofA argued that it made no statements likely to mislead a reasonable consumer or cause injury. BofA further asserted that the CA UCL, SCUTPA, and the NJCFA all require proof of causation, and that plaintiffs’ injuries stemmed from criminal third parties, not from any unfair practice by the bank.
Judge Reif agreed with BofA, ruling that plaintiffs merely claimed BofA’s Zelle-related marketing could mislead the public, but never alleged they saw the statements. He reviewed each state statute and emphasized that plaintiffs failed to claim any reliance on BofA’s alleged misrepresentations or omissions.
Judge Reif dismissed the breach of contract claim under BofA’s Online Banking Service Agreement (OBSA). Plaintiffs argued that BofA had a duty to maintain the safety and security of customers’ online banking. Judge Reif explained that the complaint did not cite any contractual language imposing such an obligation. Because plaintiffs failed to identify a specific provision requiring BofA to ensure security, they did not plausibly allege a breach.
However, the court declined to dismiss plaintiffs’ claims under the EFTA and their claim for breach of contract with fraudulent intent. Judge Reif provided no further commentary on these claims.
Bottom Line: Plaintiffs’ claims under the EFTA and breach of contract will proceed to discovery.
Document: Opinion
