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Lesson Learned: Regularly Monitor Your Bank Account

By: Michelle Robberson

One of your worst nightmares in today’s high-tech society:  a thief steals your identity and methodically drains your bank account.  Most of today’s customers track the transactions in their bank accounts online or even via their mobile phone.  In Compass Bank v. Calleja-Ahedo, No. 17-0065, 2018 WL 6713245 (Tex., Dec. 21, 2018), however, the customer lived in Mexico and did not review the account weekly or even through his monthly bank statements. 

Nonetheless, when a thief stole the customer’s identity, ordered checks on the account, and drained it through a series of transactions over six months, the customer sued the bank for reimbursement of the unauthorized transactions under the Texas Uniform Commercial Code (“UCC”).  The bank refused to reimburse, and the parties ended up in litigation.  The trial court granted summary judgment to the bank, and the customer appealed.  The Houston First Court of Appeals reversed and granted judgment to the customer.

Thus, the Texas Supreme Court had to decide whether the applicable Texas banking statutes in the UCC shielded the bank from liability or whether it was required to reimburse the customer.  The facts of the case are important to the high court’s decision. 

As noted, the customer lived in Mexico but kept a bank account in Houston.  He directed the bank to send his bank statements to his brother in The Woodlands.  The bank did so from 2008 until June 2012; but, the brother did not open the statements or forward them. 

In June 2012, the thief impersonated the customer and instructed the bank to change the account address to a California address.  The bank began sending the bank statements to the imposter.  The imposter then ordered new checks on the account and drained the account through a series of forged checks over the next six months. 

The customer did not learn of the fraudulent activity on his account until January 2014, when a check he wrote was returned with the notation “account closed.”  The customer then demanded reimbursement of the funds (more than $42,000), and the bank declined, relying on section 4.406 of the Texas UCC. 

That statute provides that, if “a bank sends or makes available a statement of account ... the customer must exercise reasonable promptness in examining the statement ... to determine whether any payment was not authorized” and “must promptly notify the bank of the relevant facts” regarding the unauthorized payment.  Tex. Bus. & Com. Code § 4.406(c).  The statute limits the liability of the bank when the customer fails to comply with these duties.  Id. § 4.406(d).  

The bank argued that it duly mailed the bank statements.  The customer responded that, after the imposter took over the account, the bank statements were mailed to the imposter.  The bank replied that it also made the bank statements available at any branch and through online banking, and it also had an 800 number for customers to inquire about their accounts. 

The Texas Supreme Court held that the customer’s complete inattention to the bank account for over a year meant the statute prohibited him from recovering the stolen funds from the bank.  Although the bank did not “send” the statements to the customer after the thief took over the account, the bank statements were “made available” by the bank to the customer through multiple channels.  The customer never explored these or showed any interest in keeping up with his account, even though he stopped receiving bank statements nearly 18 months before the reported the fraud.  Thus, as a matter of law, the customer failed to exercise the necessary diligence to monitor his account and promptly notify the bank of the fraud. 

Further, the deposit agreements between the customer and the bank did not change the result.  Although the statute could be “varied by agreement,” the deposit agreements contained similar due diligence provisions that required the customer to review his bank statements reasonably promptly and report errors or fraud within specified times (some as short as 30 days after receipt of a statement).  The Court held that the deposit agreements did not conflict with or alter the statutory requirements. 

Therefore, the statute barred the customer’s claim for reimbursement.  The painful lesson here:  review your bank statements monthly or more often and be vigilant about reporting unauthorized activity. 


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