Unauthorized Purchase Lawsuits: Did Your Bank Refuse to Reimburse You?

Attorneys working with ClassAction.org are looking into whether class action lawsuits can be filed against certain banks over potential violations of the Electronic Fund Transfer Act (EFTA).

Specifically, they believe some banks may be running afoul of the federal consumer protection law by failing to conduct a proper investigation and issue reimbursement when a customer reports an unauthorized transaction or purchase on their account. The EFTA covers unauthorized charges on debit cards; through person-to-person (P2P) payment services like Cash App, Venmo, Zelle and PayPal; and, in some cases, through wire transfers.

As part of their investigation, the attorneys want to speak with individuals who reported an unauthorized purchase or transaction to their bank and were refused reimbursement.

What Is the Electronic Fund Transfer Act?

The Electronic Fund Transfer Act, or EFTA, was implemented in 1979 to provide protections for money transfers that use electronic means, such as a computer, phone or magnetic strip, to authorize a financial institution to credit or debit a person’s account.

For instance, the EFTA covers the use of ATMs, debit cards, direct deposits, over-the-phone payments, and P2P or mobile payments like Cash App, Venmo, Zelle and PayPal.

When a person reports an unauthorized transaction—i.e., a purchase or transfer from their account that was initiated by someone who did not have permission or authority to do so—the EFTA requires their bank to conduct an investigation and, if it cannot show that the transaction was authorized, issue a reimbursement to the consumer for at least a portion of the amount.

If the consumer disputes an unauthorized transaction or reports a lost or stolen debit card within two days, their liability is capped at $50, and if the transaction is reported within 60 days of appearing on the person’s account statement, they are only liable for up to $500.

Examples of Unauthorized Transactions

Unauthorized charges and purchases often occur as a result of identity theft, fraud, or a lost or stolen debit card.

For instance, according to the Consumer Financial Protection Bureau (CFPB), the EFTA covers purchases and money transfers that are initiated after a person’s account credentials are obtained through hacking or a data breach, or even if the person is tricked into giving out their account access information to a fraudster.

The CFPB also states that money transfers initiated through a non-bank P2P payment provider (e.g., Cash App, Venmo, Zelle, PayPal) by a fraudster are considered unauthorized under the EFTA because they are initiated by someone other than the consumer (and without their authority) and the consumer receives no benefit from the transfer.

Reddit, CFPB Complaints About Unauthorized Transactions

Many consumers have complained about unauthorized purchases and transactions in online forums such as Reddit and reports to the Consumer Financial Protection Bureau. In many instances, the individuals said their bank ignored clear evidence that the transactions were unauthorized and refused to reimburse them.

Below is a sampling of some of the complaints posted online [sic throughout]:

I discovered charges of 2500, 2000, and 1000 dollars to what looked like a cleaning company in a town a few minutes away from where I lived. I called the bank immediately to let them know I did not make these charges and they were not authorized by me. I didn't even know you could authorize these amounts without ID or a PIN number. They credited the money to my account temporarily while they investigated. A month later I see that they reversed the credited funds and I called them to ask why. They said that after investigating they concluded that the charges were authorized (when they were absolutely not). I asked them how they could possibly come to that conclusion and so far they only said they looked at the location and pattern of my purchases (I was still using the card via Apple Pay at the time but canceled the card right after the fraud occured). Now they are essentially accusing me of lying and I cannot get my stolen money back.”
— bbytiramisu, Reddit.com

Recently, I had an unauthorized charge hit my account for a gas station about 15 minutes from where I live. It was for $124. I immediately checked and I did still have my card, so I knew it must have been skimmed somewhere. Immediately, within 5 minutes of the charge, I cancelled everything, opened a dispute, and ordered a new card. After about a week, they came back with the dispute decision and denied it due to the fact that earlier in the same day, I had used my card physically at a location (a restaurant) that was only 13 minutes away from where the disputed charge had occurred. In there eyes, this meant that this charge was not an error and I am wrongly disputing this charge.”
— DummyCUBoulderGuy, Reddit.com

I have some fraudulent charges on my debit card for a website on 4 different dates. The total was $720 dollars. Whoever made the purchases used my information such as my name and email address that is also linked with my bank. I have no confirmation emails regarding these purchases. The email used is only used for personal/professional things.The person from the fraud department at the bank said they will not refund my money. They said whoever made the purchases verified my identity to do so. (I honestly do not know what they mean by ‘verify identity’ for an online purchase) And will not refund me without a police report.”
— FerrWhat, Reddit.com

I noticed early this month that someone had stolen my debit card info & spent about $1,500, about 40 transactions, all on Uber. I have my card in my possession and my Uber account itself shows no charges. Chase is claiming that my physical card was used and PIN (which makes no sense bc you don’t have to put a PIN in to make any online transaction) so, they denied my claim.”
— margaritamorada, Reddit.com

My PIN number was accessed by an unauthorized person and made over XXXX charged on my debit card. The bank did not give me money money back after saying the charges were uncharacteristic for my usual transactions. They closed the case and did not refund me the full amount that was taken from me.”
— 3/20/24 CFPB complaint, ConsumerFinance.gov

My Cash app account was compromised and there we're not over 30 unauthorized attempts to access my account. I communicated with Cash app stating that I was going to close my account AFTER my XXXX was deposited. When I attempted to transfer my funds to a different card, they were rerouted to an debit card that I wasn't familiar with. At first I thought it may be a previous card I no longer had access to, after researching it, I learned that there was not so. I contacted Cash App and requested the information on the fraudulent card. I was given the last 4 numbers of the receiving card and the bank it went to. Cash App denied my dispute and told me to contact the Bank. The Bank XXXX XXXX XXXX ) informed me that they had no records of the transaction and that I had no accounts with them. I contacted Cash App again requesting all information pertaining to the transaction and I was told no. I filed a fraud report and a police report.”
— 3/16/24 CFPB complaint, ConsumerFinance.gov

I noticed a ATM withdrawal of XXXX from XXXX XXXX AZ on XX/XX/XXXX. I was in XXXX California that day and even made purchases with the card showing I was in XXXX. I only noticed this because on XXXX someone tried making an unauthorized purchase of {$150.00} early in the morning. I called Wells Fargo to report the fraud, initially they gave me the credit for {$140.00}. on XX/XX/XXXX they then took that money back claiming there was no issue and I was the one withdrawing that money. I even had an address and requested the police were to be involved, they didnt even look into it. I called Wells Fargo back questioning this and they basically told me tough luck.”
— 4/27/24 CFPB complaint, ConsumerFinance.gov

How Could a Lawsuit Help?

A class action lawsuit could help people get back money for losses involving an unauthorized transaction or purchase. It could also force the bank to change how it investigates and handles disputed charges and fraud.

What You Can Do

After you get in touch, an attorney or legal representative may reach out to you directly to ask you some questions and explain more about how you may be able to help get a class action lawsuit started. It costs nothing to fill out the form or speak with someone, and you’re under no obligation to take legal action if you don’t want to.

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