Judge Rejects Bank of America Motion in Fraud Case

A federal judge ruled that bank customers may be protected under the Electronic Fund Transfer Act after being tricked by scammers.

Updated on Oct. 27, 2026 in Financial Crime

Bold flat-color editorial illustration of a classical stone pillar, evoking the institutional authority of the federal court system. — A federal judge ruled that Bank of America customers may be protected by the Electronic Fund Transfer Act after being tricked by scammers. AI Illustration. Upload story photo >

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U.S. District Judge Edward M. Chen denied a motion from Bank of America to dismiss a class-action lawsuit filed by customers who lost $106,000 to fraud. The court determined that authorizing a scammer to access a device via a FaceTime call does not constitute valid account authorization for electronic debits.

Why it matters

The ruling clarifies that deception used to gain remote device access does not equate to legitimate customer authorization for transfers under federal law. This provides a legal path for account holders to contest fraudulent debits that banks have historically rejected as authorized transactions.

Judge Edward M. Chen denied the motion to dismiss the lawsuit, allowing the plaintiffs to pursue claims regarding the $78,000 and $28,000 lost from their checking and savings accounts. The case continues as the court examines allegations under the Electronic Fund Transfer Act.

The players

Edward M. Chen

He is a U.S. District Judge serving in the Northern District of California.

Bank of America

It is one of the largest financial institutions in the United States providing banking and investment services.

The details

The plaintiffs were targeted by a phishing scheme where scammers sent fake text alerts regarding suspicious charges, leading them to grant remote control of their iPhone during a FaceTime call. Bank of America had previously refused to reimburse the funds, claiming the account holder had authorized the transfers.

1978: The Electronic Fund Transfer Act was enacted by Congress.
2024: The plaintiffs were targeted by a phishing attack.
October 22, 2026: Court documents regarding the motion to dismiss were filed.

Legal Context

The ruling updates the interpretation of the Electronic Fund Transfer Act, which has historically been the primary federal statute governing electronic payments since 1978. By applying this framework to modern remote-access scams, the court marks a departure from banks treating these incidents as valid customer-authorized transactions.

This decision potentially simplifies the process for bank customers to recover stolen funds lost through remote-access phishing attacks. It also puts financial institutions on notice that they may face increased legal responsibility for unauthorized debits initiated by scammers.

The takeaway

Consumers should remain vigilant against any request to grant remote access to their smartphones, especially during unexpected calls or texts. If you are a victim of a similar scam, you may have more legal rights to dispute the unauthorized charges than previously assumed.