Cifaldo v. BNY Mellon Investment Servicing Trust Co.

          ORDER (DOCKET NO. 5)

          NANCY J. KOPPE, UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Michael Cifaldo is proceeding in this action pro se and requested authority pursuant to 28 U.S.C. § 1915 to proceed in forma pauperis. Docket No. 1. On May 23, 2017, the Court granted Plaintiff's application, and screened Plaintiff's complaint pursuant to 28 U.S.C. § 1915. Docket No. 3. The Court dismissed Plaintiff's complaint with leave to amend. Id. The Court identified numerous deficiencies in Plaintiff's complaint, and provided him an opportunity to cure those defects. Id. Pending before the Court is Plaintiff's amended complaint. Docket No. 5.

         I. BACKGROUND

         Plaintiff alleges that, on September 2, 2016, two unauthorized charges totaling $755.61 were made to his Fidelity Visa Gold Debit Card while he was asleep. See, e.g., Docket No. 5 at 1-2, 16. Plaintiff further alleges that, on the same day, he notified Defendant of the charges via telephone. See Id. at 16. Plaintiff alleges that Defendant “denied [his] claims without explanation on September 7, 2016.” Id. at 2. Plaintiff further alleges that, on September 20, 2016, he sent Defendant a letter requesting all documentation used in its investigation of his claim. Id. at 2, 16-17. Plaintiff alleges that Defendant received the letter on September 23, 2016. Id. Plaintiff alleges that, on October 3, 2016, Defendant sent him a letter stating that its denial of his claim was based on verbal information provided to it by the third party merchant who charged Plaintiff's account. Id. at 2, 20. Plaintiff further alleges that, on November 17, 2016, Defendant sent him a second letter, again denying his claims, and stating that it had subsequently received documentation from the third party merchant that was consistent with the verbal information the merchant previously provided it. Id. at 3, 24.

         II. ANALYSIS

         Plaintiff's amended complaint alleges violations of the Electronic Funds Transfer Act (“EFTA”), 15 U.S.C. §§ 1693 et seq. Id. Specifically, Plaintiff alleges that Defendant violated 15 U.S.C. §§ 1693f(a), 1693f(c), 1693f(d), 1693g(a), and 1693g(e). Id. Plaintiff has addressed the deficiencies the Court identified in his complaint regarding 15 U.S.C. §§ 1693d(a), 1693f(d) (regarding his allegation that Defendant failed to deliver the results of its investigation within three business days), and 1693g(e) by removing them from his complaint. Plaintiff has addressed the deficiencies the Court identified in his complaint regarding 15 U.S.C. §§ 1693f(a) and 1693f(c) by alleging further facts. Id. at 3-4. However, the Court must examine whether these facts state a claim against Defendant under 15 U.S.C. §1693.

         “The EFTA creates a ‘framework [of] rights, liabilities, and responsibilities of participants in electronic fund transfer systems.'” Sanford v. MemberWorks, Inc., 625 F.3d 550, 560 (9th Cir. 2010) (quoting 15 U.S.C. § 1693(b)). “In a basic sense, the EFTA allows consumers to preauthorize electronic transfers of funds from accounts they hold at financial institutions.” Camacho v. JPMorgan Chase Bank, 2015 WL 5262022, at *2 (N.D. Cal. Sept. 9, 2015) (citing 15 U.S.C. § 1693e). “These financial institutions must thereafter provide to consumers documentation evidencing the transfers on a periodic basis.” Id. (citing 15 U.S.C. § 1693d).

         “The EFTA contains an error resolution process which obligates consumers to report transfer errors to financial institutions within 60 days after having been transmitted the written documentation containing the error.” Id. (citing 15 U.S.C. § 1693f(a)). “For the purposes of this provision, an ‘error' includes either an unauthorized, incorrect or omitted transfer of funds.” Id. (citing 15 U.S.C. § 1693f(f)). “Actions against financial institutions for failure to comply with the EFTA must be brought ‘within one year from the date of the occurrence of the violation.'” Id. at *5 (citing 15 U.S.C. § 1693m(g)). With this framework in mind, the Court addresses in turn each of the statutory provisions under which Plaintiff attempts to state a claim for relief.^[1]

         First, Plaintiff alleges that Defendant violated 15 U.S.C. § 1693f(a) by exceeding the 10-business-day time limit to complete its investigation of the disputed transactions. Docket No. 5 at 3. 15 U.S.C. § 1693f(a) provides that:

If a financial institution, within sixty days after having transmitted to a consumer documentation pursuant to section 906(a), (c), or (d) (15 USCS § 1693d(a), (c), or (d)) or notification pursuant to section 906(b) (15 USCS § 1693d(b)), receives oral or written notice in which the consumer--

(1) sets forth or otherwise enables the financial institution to identify the name and account number of the consumer;

(2) indicates the consumer's belief that the documentation, or, in the case of notification pursuant to section 906(b) (15 USCS § 1693d(b)), the consumer's account, contains an error and the amount of such error; and

(3) sets forth the reasons for the consumer's belief (where applicable) that an error has occurred, the financial institution shall investigate the alleged error, determine whether an error has occurred, and report or mail the results of such investigation and determination to the consumer within ten business days. The financial institution may require written confirmation to be provided to it within ten business days of an oral notification of error if, when the oral notification is made, the consumer is advised of such requirement and the address to which such confirmation should be sent. A financial institution which requires written confirmation in accordance with the previous sentence need not provisionally recredit a consumer's account in accordance with subsection (c), nor shall the financial institution be liable under subsection (e) if the written confirmation is not received within the ten-day period referred to in the previous sentence.

12 C.F.R. § 205.11(c)(1) sets forth the Board of Governors of the Federal Reserve System's (“Board of Governors”) interpretation of these provisions. See, e.g., Gale v. Hyde Park Bank, 2007 WL 2358625, at *3 (N.D. Ill. Aug. 8, 2007). Courts grant the Board of Governors' interpretation of its own regulations ...