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Bank dodges claim for customer’s in-person transfer

Virginia Lawyers Weekly//September 19, 2023

Bank dodges claim for customer’s in-person transfer

Virginia Lawyers Weekly//September 19, 2023//

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Where a customer went to her bank and requested transfers of money, because a person who later turned out to be a fraudster told her to make the transfers, this claim against the bank was dismissed. Under Va. Code § 8.4A-202(a), the customer bears the responsibility for “authorized” fraudulent transfers.


Janice Carter filed suit against Wells Fargo Bank National Association, alleging a violation of the Uniform Commercial Code after losing her life savings in a fraud scheme. Wells Fargo moves to dismiss Carter’s second amended complaint, or SAC, saying her claims fail as a matter of law.

The customer bears the responsibility for fraudulent transfers “authorized” under Va. Code § 8.4A-202(a) or “effective” under Va. Code § 8.4A-202(b). Conversely, the bank has responsibility for transactions neither authorized nor effective.

Online transfers

Wells Fargo argues that Carter’s claim should be dismissed as it relates to the online transfers because Carter’s “allegations make clear that she did play a role in authorizing the transfers by providing information to the fraudster to obtain on-line access to her bank account for the stated purpose of transferring money out of her Wells Fargo account.”

Carter states that the fraudster contacted her and said that to protect her money, Carter should move the funds from her compromised account to a secure account and then transfer the money back to a new Wells Fargo account. To accomplish this goal, the fraudster told Carter she needed to set up online banking.

However, Carter alleges that the fraudster set up the online banking access and then the fraudster, not Carter, made the four wire transfers from Carter’s account. Additionally, Carter does not allege, and the facts do not point to, Carter having knowledge that the fraudster would complete the transfers as her agent, without her authorization.

While the fraudster may have told Carter what steps were needed to “protect” her money, the allegations in the SAC do not show that Carter intended or understood that the fraudster would initiate these wire transfers on her behalf. In fact, Carter unequivocally states that she “did not make a keystroke, click a button, sign a form, agree or otherwise discuss these transfers with Wells Fargo” and therefore did not authorize the transfers.

Neither party has provided any authority which allocates the risk of loss between a bank and its customer where a third-party gains online access to an account without the knowledge of either the bank or the customer. I conclude that Carter has alleged adequate facts at this stage to survive a motion to dismiss and to allow discovery to provide a more fulsome understanding of how the online account was established and what, if any, remedies Carter or Wells Fargo had.

Wells Fargo does not challenge at the motion to dismiss stage that the online transactions were not effective as to Carter, and I find that Carter has adequately pled that the online wire transfers were not effective. Accordingly, I deny Wells Fargo’s motion to dismiss as it relates to the online wire transfers.

In-person transfers

The facts alleged in the SAC are clear that Carter went to her local Wells Fargo branch in person and requested the transfers, but she argues that because “the fraudster induced her to make these transfers that she thought [were] protecting her money[,] [s]he did not authorize what actually happened.” Because Carter authorized the in-person wire transfers, she has failed to state a claim under § 8.4-202. Accordingly, I grant Wells Fargo’s motion to dismiss as it relates to the in-person wire transfers.

Cash advances

In her SAC, the only reference that Carter makes to the credit card is that the fraudster allegedly “made a $10,000 cash advance from [her] Wells Fargo Propel American Express card which had expired in June of 2022.” To succeed on her claim for a refund, Carter must show that the cash advance was a wire transfer which was neither authorized nor effective. Here, Carter does not allege that the transaction was not authorized or effective and does not provide sufficient facts to plausibly establish that Wells Fargo is liable to refund the transferred amount. Accordingly, I grant Wells Fargo’s motion to dismiss as it relates to the cash advance on the credit card.

Defendant’s motion to dismiss granted in part, denied in part.

Carter v. Wells Fargo Bank National Association, Case No. 1:23-cv-00007, Aug. 30, 2023. WDVA at Abingdon (Ballou). VLW 023-3-524. 9 pp.

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