Green v. Capital One, N.A.

Background

Gerald Green alleged that he tried to transfer money from his Capital One account to his friend, Edward Butler, through Square’s Cash App. Butler could not access the funds. Green and Butler then called a telephone number they believed was Cash App customer support, but Green alleged that the person who answered was a fraudster impersonating a Cash App representative. After Green and Butler provided some personal and account information, additional transactions occurred that they had not authorized. More than $1,000 was transferred to unknown third parties.

Green reported the transactions to Capital One. The bank initially refunded the money while investigating, then reversed three of the four refunds. Green alleged that Capital One wrongly treated him and Square as responsible for the transactions. He asserted claims under the Electronic Fund Transfer Act, a federal law governing electronic transfers from consumer accounts, and New York General Business Law § 349, which prohibits certain deceptive consumer practices. Square had previously settled with Green and was no longer part of the case at issue in this motion.

Electronic Fund Transfer Act claims

Green asserted that Capital One violated 15 U.S.C. § 1693g by reversing refunds for unauthorized transfers and violated 15 U.S.C. § 1693f by failing to conduct the required investigation after he reported the alleged errors.

The court held that Green plausibly alleged that the transfers were unauthorized. Under the Electronic Fund Transfer Act, an unauthorized transfer is one initiated by someone other than the consumer without actual authority and from which the consumer receives no benefit. The court relied on regulatory guidance stating that a transfer initiated by someone who obtained account access through fraud or theft is unauthorized. Because Green alleged that the person who obtained his information was fraudulently impersonating a Cash App representative, the court concluded that Green had adequately stated a claim even though he voluntarily provided some information during the call. The court also rejected Capital One’s argument based on Green’s reporting the transactions the day after they posted, because the opinion stated that Green reported the theft of his account information within two business days.

The court also allowed Green’s claim concerning Capital One’s investigation to proceed. The law requires a financial institution to investigate a reported error, which can include an unauthorized transfer. The court explained that the bank must reasonably review relevant information in its own records; contacting a third party may supplement that review but does not automatically satisfy the obligation. Green alleged that Capital One failed to consider information such as his transaction history and account background. The court found those allegations—“just barely”—sufficient at the motion-to-dismiss stage. It did not decide whether Capital One actually conducted an adequate investigation or whether the bank would ultimately have a defense.

New York General Business Law § 349 claim

The court granted Capital One’s motion to dismiss Green’s claim under New York General Business Law § 349. To state such a claim, Green had to allege consumer-oriented conduct, materially misleading conduct, and resulting injury.

The court found that Green had not adequately alleged conduct affecting consumers generally. His allegations focused on the circumstances of his own transactions and Capital One’s investigation of his account. References to complaints submitted to the Better Business Bureau and the Consumer Financial Protection Bureau did not provide enough factual support for an alleged uniform policy by Capital One. The court also found that Green had not plausibly alleged that Capital One’s statements that Square’s information showed no error would mislead a reasonable consumer. Green plausibly alleged that Capital One’s conclusion might be wrong or based on an inadequate investigation, but disagreement with that conclusion did not itself establish deceptive conduct.

Disposition and classification

Judge Edgardo Ramos denied Capital One’s motion to dismiss the Electronic Fund Transfer Act claims and granted its motion to dismiss the New York General Business Law § 349 claim. The opinion did not state that either ruling was with or without prejudice. Because the order ruled on a motion to dismiss and applied the pleading standard without resolving the ultimate merits, this summary classifies it as a procedural order.