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Financial Services Law Insights and Observations

District Court says bank must face reopened accounts allegations

Courts EFTA Class Action State Issues


On September 27, the U.S. District Court for the District of New Jersey granted in part and denied in part a national bank’s motion to dismiss a putative class action concerning allegations that the bank opened and reopened accounts without notifying customers. The plaintiffs alleged that they discovered the bank reopened closed accounts after receiving tax refunds and a one-off refund from a retailer. According to the plaintiffs, the bank accepted deposits into the reopened accounts and then allegedly collected funds from the accounts, resulting in unanticipated fees.

The court issued an opinion, calling it an issue of first impression within the Third Circuit, finding that “account numbers, whether new or old, which identified or provided access to the disputed accounts opened in Plaintiffs’ names each qualified as a ‘card, code, or other means of access’ to those accounts” under [EFTA] § 1693i(a).” Since the opening of an account “necessarily must be accompanied with an account number associated with that account,” the court found that the plaintiffs sufficiently stated a claim that the bank violated § 1693i(a). Among other things, the court disagreed with the bank’s argument that it could not “have been unjustly enriched by assessing [the plaintiff] fees in exchange for her acceptance of the services [the bank] provides,” stating that the bank’s argument “either misunderstands or purposefully misconstrues the basis” for the plaintiff’s claim, which was that the bank “opened the account in her name without her permission, and therefore did not have a contractual basis for assessing such fees associated with maintaining that account[.]” The court also allowed the plaintiffs’ unjust enrichment claim and Massachusetts Consumer Protection Act claim to proceed. While the court provided the plaintiffs the opportunity to file an amended complaint to revive their dismissed breach of contract claims, their FCRA allegations were dismissed with prejudice.

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