Bank of America Holds Cardholders Liable for Unauthorized Charges Without Proof, Class Action Alleges

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A proposed class action lawsuit claims Bank of America has violated the federal Truth in Lending Act (TILA) by holding cardholders liable for fraudulent transactions without properly investigating the charges.

The 15-page case explains that the TILA prohibits credit card issuers such as Bank of America from holding cardholders liable for unauthorized charges “without complying with specific requirements.” Among these requirements, the suit says, is Bank of America’s obligation to demonstrate that the user of the credit card can be identified as the individual authorized to use it.

The lawsuit was filed by a Hawaii resident who says the bank improperly held her liable for $4,000 in fraudulent charges that she did not authorize. According to the suit, a cursory review of the documents provided to Bank of America by the merchant as apparent proof that the plaintiff had authorized the charges would have revealed “several obvious indicators” that the transactions were fraudulent.

The case contends that it is Bank of America’s policy to deny a cardholder’s claim of unauthorized charges without undertaking “any meaningful investigation” because it is cheaper to hold a cardholder liable for the loss rather than “risk[] a prolonged dispute with the merchant.”

The plaintiff says she received a “fraud alert” text message from Bank of America in January 2022, in which the bank asked if she had used her credit card for three attempted transactions, two of which had been declined. Per the suit, the plaintiff responded “NO” to the alert since she had not authorized the transactions at issue.

The case says that the third transaction at issue involved a merchant identified as Axus LLC and had been approved. Despite the plaintiff’s indication that she had not authorized the transaction, Bank of America subsequently billed her for two transactions involving Axus LLC, each in the amount of $2,000, the lawsuit relays.

Although Bank of America issued a $4,000 credit to the plaintiff’s account after she disputed the two charges over the phone, the bank reposted the Axus transactions to her account in early March 2022 with “no basis for its decision,” the case says.

The plaintiff again made clear to Bank of America that she had not authorized the charges and filed a police report on March 11, 2022, according to the case. The bank responded via a letter to the plaintiff around April 4, stating that it had rejected her request to not be held liable for the transactions based on documentation provided by Axus LLC that purportedly confirmed the woman had received merchandise or service from the company, the lawsuit relays.

Per the suit, the bank later sent the plaintiff copies of the “scattered documents” it had supposedly relied upon to resolve her claim. The lawsuit alleges that although the documents “unconvincingly” suggest that Axus LLC had prepared a resumé and provided career help services for the plaintiff, they were “barely legible” and contained several “obvious indicators” that the plaintiff was not the one who authorized the transactions or received the company’s services. For example, the complaint states, the documents identify the plaintiff’s IP address as “Taipei, Taiwan,” even though the woman lives in Hawaii and has never been to Taiwan or used her Bank of America credit card there, as the bank “knew or had reason to know.”

Moreover, although Axus claimed to be a Delaware limited liability company, it has never been registered to do business in that state, which Bank of America could have confirmed by performing a free online search, according to the complaint.

“Put simply, Bank of America blindly relied on Axus LLC’s specious ‘proof’ to hold Plaintiff liable for credit card transactions that she did not authorize,” the lawsuit contends. “A cursory review of the documents apparently relied on by Bank of America would have alerted Bank of America to the fraudulent nature of the transactions.”

The lawsuit looks to represent Bank of America credit card holders who, within the past year, disputed as unauthorized one or more credit card charges that were performed over the telephone or internet and who were held responsible for the unauthorized charges because the merchant contested the chargeback.

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