Levin v. Bank of America

Background

Plaintiff Corrine Beth Levin, described in the opinion as an elder, banks with defendant Bank of America, N.A. A scammer called her using a spoofed caller ID that mimicked a legitimate Bank of America phone number, pretended to be from the bank's fraud department, and induced her to disclose a one-time passcode. The scammer then used that passcode to transfer $58,635 from her account to a third party. She reported the fraud the next day. Bank of America denied her reimbursement claim and, after she filed a complaint with the Consumer Financial Protection Bureau (CFPB), confirmed its denial.

She filed suit in state court, alleging violations of: (1) the Electronic Fund Transfers Act (EFTA), 15 U.S.C. § 1693, a federal law protecting consumers from unauthorized electronic fund transfers; (2) California's Elder Abuse and Dependent Adult Civil Protection Act, Cal. Welf. & Inst. Code § 15600; and (3) California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200. The case was removed to federal court based on diversity and federal-question jurisdiction. Bank of America moved to dismiss all three claims.

Legal Standard

The court applied the standard for a Rule 12(b)(6) motion to dismiss (a procedural challenge arguing the complaint fails to state a viable legal claim). A complaint must allege enough facts to make a claim plausible on its face. All factual allegations are accepted as true and read in the plaintiff's favor. Leave to amend must be granted unless the deficiency cannot be cured.

EFTA Claim

The EFTA defines an "unauthorized electronic fund transfer" as one initiated by someone other than the consumer, without actual authority, and from which the consumer received no benefit. A statutory exception removes from "unauthorized" any transfer where the consumer "furnished" the third party with the code or means of access — unless the consumer notified the bank that the authorization was revoked.

Bank of America argued the transfer was not "unauthorized" because the plaintiff handed the passcode to the fraudster, thereby "furnishing" access. The court rejected this argument at the pleading stage for three reasons:

1. Who initiated the transfer: The fraudster, not the plaintiff, used the passcode to initiate the transfer. This satisfies the EFTA's threshold requirement that the transfer be initiated by someone other than the consumer.

2. No actual authority: An imposter posing as a bank representative has no actual authority to move a customer's funds. The plaintiff never agreed to the transfer.

3. The "furnishing" exception does not apply to fraud-induced disclosure: The exception presupposes a consumer who knowingly gives another person access for making transfers and who retains the ability to revoke that authorization. A consumer tricked into giving a code for a stated "security check" cannot revoke authority she never knowingly granted. Both the CFPB's and the Board of Governors' official interpretations of Regulation E (the EFTA's implementing regulation) state that the exception covers authorized access later revoked, not access obtained through fraud or robbery. While those interpretations are not binding, the court gave them persuasive weight under the framework established in Skidmore v. Swift & Co., 323 U.S. 134 (1944), as endorsed in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).

The court distinguished cases cited by Bank of America — involving consumers who themselves initiated Zelle payments to scammers — because in those cases the consumer initiated the transfer, not the fraudster. The court also noted that a contrary reading would absurdly treat transfers enabled by hacked credentials as unauthorized while treating those extracted by trickery or at gunpoint as authorized.

The court held the plaintiff plausibly alleged an unauthorized transfer and denied dismissal of the EFTA claim.

Elder Abuse Claim

California's Elder Abuse Act imposes liability when a person or entity takes, appropriates, or retains an elder's property for a wrongful use or with intent to defraud. It also imposes liability for assisting such a taking if the defendant had actual knowledge of the third party's wrongful conduct.

The court identified two potential theories:

Assisting Theory — Dismissed With Prejudice The plaintiff expressly disclaimed any theory that Bank of America assisted the fraudster. Because she disclaimed it, any such claim was dismissed with prejudice (meaning it cannot be refiled).

Direct-Deprivation Theory — Allowed to Proceed The plaintiff's actual theory was that Bank of America itself deprived her of a property right — specifically, her statutory entitlement to reimbursement ("recredit") under the EFTA — by wrongfully denying her claim. The court found this theory cognizable:

- Property right: A statutory entitlement to payment of a specific sum on specified conditions is a property right. The EFTA recredit obligation (15 U.S.C. §§ 1693f(b), 1693g(a)) is such an entitlement. - Wrongful use: Denying an elder a nearly $60,000 recredit that the statute allegedly required is conduct the bank knew or should have known would harm her. Bad faith or fraud is not required at the pleading stage. - The "no receipt" argument fails: The bank argued it couldn't be liable for a direct taking because it didn't receive the stolen funds. The court held the relevant property is the recredit the bank allegedly owes and retains, not the stolen funds themselves. - The "circular" argument fails: The bank argued the theory presupposes an EFTA violation. The court characterized the relationship as derivative (the EFTA claim is the predicate), not circular. If the EFTA claim fails, this elder abuse theory fails with it.

The court acknowledged the claim is close: treating every disputed claim denial as a "taking" risks converting ordinary disputes into elder abuse claims whenever the customer is elderly. The court also noted that Paslay v. State Farm, 248 Cal. App. 4th 639 (2016), may require more than a disputed denial — it may require showing the bank knew or had reason to know its denial was a wrongful breach. The court considered granting the motion with leave to amend on this count but concluded that the claim is better tested on a fuller factual record at summary judgment. The claim survives on the direct-deprivation theory only.

UCL Claim — Dismissed Without Prejudice

The UCL prohibits unlawful, unfair, or fraudulent business practices. Private plaintiffs may seek only restitution or injunctive relief — not damages.

The court found two of Bank of America's arguments against standing unpersuasive: the plaintiff had suffered an economic injury (the withheld recredit) caused by the bank's conduct, and the complaint identified the challenged practice with sufficient specificity (the bank's allegedly EFTA non-compliant investigation and denial).

Nonetheless, the UCL claim was dismissed for two independent reasons:

1. Restitution disclaimed: The plaintiff expressly gave up her restitution remedy, leaving only injunctive relief.

2. No plausible future injury for injunction: To seek injunctive relief in federal court, a plaintiff must show a sufficient likelihood of future injury. The plaintiff's theory — that she must either close her account or remain subject to the bank's claims-handling policies — depends on a speculative chain of events: she would again be targeted by a fraudster, again have her credentials stolen, and again be wrongfully denied reimbursement. A single past denial does not establish likely future harm.

3. Adequate legal remedy bars equitable relief: Because EFTA damages are available at law (15 U.S.C. § 1693m), the plaintiff cannot pursue equitable UCL relief for the same harm under Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020).

The dismissal is without prejudice. The court noted the plaintiff might be able to plead facts showing an ongoing policy and a non-speculative risk of recurrence. The court also noted that a dismissal for lack of Article III standing (the federal constitutional requirement to bring suit) is without prejudice to pursuing available claims in state court.

Disposition

- EFTA claim: Motion to dismiss denied. - Elder abuse claim (direct-deprivation theory): Motion to dismiss denied. - Elder abuse claim (assisting theory): Dismissed with prejudice (plaintiff disclaimed this theory). - UCL claim: Dismissed without prejudice, with leave to amend. Amendment deadline to be set at the initial case-management conference.