WALLING BY WALLING v. BANK OF AMERICA (2025)

ORDER

Plaintiff Robert R. Walling (“Plaintiff”), by his Attorney in Fact, Michael Walling, brings this action against Defendant Bank of America, N.A. (“BANA” or “Defendant”) for alleged violation of the Electronic Funds Transfer Act of 1978 and Regulation E, 15 U.S.C. §§ 1693 et seq.; 12 C.F.R. Part 1005, and South Carolina state law arising from the theft of funds from Plaintiff's account with BANA in connection with wire transfers. (ECF No. 14.)

Now pending before the Court is BANA's motion to dismiss the amended complaint in its entirety. (ECF No. 23.) For the reasons that follow, BANA's motion is granted in part and denied in part.

I. FACTUAL BACKGROUND

From January 16, 2024, to February 5, 2024, Plaintiff alleges that thirteen unauthorized transfers were made from his account with BANA. (ECF No. 14 ¶ 12.) He alleges that the transfers were initiated electronically through BANA's online banking platform or mobile app and that, upon information and belief, his iPad was compromised, letting criminals gain access to his account through the application “AnyDesk” to execute the unauthorized transfers. (Id. ¶¶ 7-9, 25(a).) The total amount of loss to Plaintiff as a result of these thirteen unauthorized transactions was $179,500.00. (Id. ¶ 13.)

Plaintiff contends that none of the transactions followed his previous banking activity and that they all should have been detected by BANA's systems. (Id. ¶¶ 15, 18.) Yet, Plaintiff alleges, not one of the transactions was flagged, intercepted, or challenged. Plaintiff further alleges that, once Plaintiff's son notified BANA about the fraudulent transactions, BANA took no action to remedy the situation, investigate the transactions meaningfully, or issue any provisional credits to Plaintiff's account. (Id. ¶¶ 17, 19.) Rather, BANA denied Plaintiff's dispute. (Id. ¶ 20.) This action ensued.

II. LEGAL STANDARD

“A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of the claims pled in a complaint.” ACA Fin. Guar. Corp. v. City of Buena Vista, 917 F.3d 206, 211 (4th Cir. 2019). It does not “resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” King v. Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016).

A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). “This pleading standard does not require detailed factual allegations.” ACA Fin. Guar. Corp., 917 F.3d at 211 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Instead, “[t]o meet the Rule 8 standard and ‘survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” ’ ” Nadendla v. WakeMed, 24 F.4d 299, 305 (4th Cir. 2022) (quoting Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007))). The complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level,” Twombly, 550 U.S. at 555, with all allegations in the complaint taken as true and all reasonable inferences drawn in the plaintiff's favor, King, 825 F.3d at 212. However, the Court need not “accept the legal conclusions drawn from the facts,” or “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Simmons v. United. Mortg. & Loan Inv., LLC, 634 F.3d 754, 768 (4th Cir. 2011) (internal quotes omitted).

III. DISCUSSION

Plaintiff asserts three claims against BANA: (a) violation of the Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. §§ 1693 et seq. and Regulation E, 12 C.F.R. Part 1005; (b) a claim for participating in the exploitation of a vulnerable adult under S.C. Code § 43-35-87; and (c) violation of South Carolina Uniform Commercial Code (“UCC”) Article 4A. (ECF No. 14.) The Court addresses each claim in turn.

A. EFTA Claim

Plaintiff's first cause of action arises under the EFTA. The EFTA is a consumer protection statute that regulates the terms of certain transactions. 15 U.S.C. § 1693 et. seq. EFTA was enacted to establish “individual consumer rights” in the context of electronic fund transfers (“EFTs”). 15 U.S.C. § 1693(b). The EFTA defines EFTs as follows:

[T]he term “electronic fund transfer” means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account. Such term includes, but is not limited to, point-of-sale transfers, automated teller machine transactions, direct deposits or withdrawals of funds, and transfers initiated by telephone.

15 U.S.C. § 1693(a)(7). The EFTA allocates loss from unauthorized EFTs from consumer accounts, generally capping a consumer's losses so long as the consumer reports an unauthorized transfer within certain statutory time periods. See 15 U.S.C. § 1693g.

Plaintiff alleges that BANA failed to properly investigate the thirteen unauthorized EFTs that were made ancillary to transfers on the wire networks, as well as to provisionally credit and ultimately reimburse Plaintiff, among other alleged failures. (ECF No. 14 ¶¶ 27-28(a) – (j).) Plaintiff contends that the transactions are covered by the EFTA because they were initiated electronically through BANA's online banking platform or mobile app that debited Plaintiff's account and moved money to a pooled BANA account and only after these “EFTs” did BANA send the funds over a wire service to another bank. (Id. ¶ 25(a).)

In response, Defendant asserts that Plaintiff's EFTA claim must be dismissed because “the EFTA is inapplicable to claims involving wire transfers.” (ECF No. 23-1 at 4.) Defendant contends that the alleged unauthorized transfers at issue do not qualify as EFTs under the EFTA. Defendant relies on the statutory text, which excludes from the definition of EFTs:

any transfer of funds, other than those processed by automated clearinghouse, made by a financial institution on behalf of a consumer by means of a service that transfers funds held at either Federal Reserve banks or other depository institutions and which is not designed primarily to transfer funds on behalf of a consumer.

15 U.S.C. § 1693a(7)(B). (Id.) Defendant also relies on Regulation E, which was promulgated to “carry out the purposes” of the EFTA, see 15 U.S.C. § 1693b(a); 12 C.F.R. § 205.1, and excludes the following types of transfers from EFTA coverage:

(3) Wire or other similar transfers. Any transfer of funds through Fedwire or through a similar wire transfer system that is used primarily for transfers between financial institutions or between businesses.

12 C.F.R. § 205.3(c)(3). (Id.)

Thus, the Court must determine whether the thirteen allegedly fraudulent electronic payment orders, causing a debit from Plaintiff's account, fall within the EFTA even if a subsequent transfer within a wire network does not. Not only is this a question of first impression in this Circuit, but also it appears that only one United States district court has addressed this specific question. See New York v. Citibank, N.A., No. 24-CV-659, 2025 WL 251302 (S.D.N.Y. Jan. 21, 2025) (deciding, as a matter of first impression, “what parts of an electronic payment, initiated by a consumer and facilitated in part by an interbank wire, are regulated by the EFTA”).

While the Citibank decision was rendered after the parties had briefed the pending motion, Plaintiff filed a notice of supplemental decisions regarding EFTA coverage with the Court on March 26, 2025, alerting the Court to this seminal decision. (ECF No. 36.) BANA filed a response to Plaintiff's notice, wherein it pointed out that the Consumer Financial Protection Bureau (“CFPB”) recently filed a motion to withdraw its previously submitted statement of interest – supporting New York's position (which is aligned with Plaintiff's position in this case) in the Citibank case. (ECF No. 37 at 1-2.) Plaintiff filed a reply, contending that BANA's response is misleading and should be disregarded for three reasons. According to Plaintiff, (1) the CFPB's withdrawal “is [an] administrative directive following the recent change in presidential administration ․ As part of this directive, the CFPB has been systematically withdrawing from various cases nationwide”; (2) “the CFPB's withdrawal does nothing to diminish the legal reasoning or holding of the Southern District of New York” in Citibank”; and the CFPB's withdrawal “does not constitute a substantive reversal of the CFPB's interpretation of EFTA's scope”; but rather, CFPB's motion “focuses on procedural concerns about administrative rulemaking.” (ECF No. 39 at 1-2.)

The Court agrees with Plaintiff that the CFPB's actions do not diminish the district court's legal reasoning or the ultimate holding in Citibank. Rather, as aptly stated by Plaintiff, the “court's analysis stands on its own merits, regardless of the CFPB's change in litigation position.” (Id. at 2.) Further, while BANA certainly could have put forth its arguments for why this Court should reject the legal reasoning and holding in Citibank in its response, as it did with the other cases contained in Plaintiff's notice, BANA did not do so. (ECF No. 37.) Given the absence of controlling precedent, the Court turns to the only persuasive authority that exists addressing the question now before it.

1. Citibank’s examination of 15 U.S.C. § 1693(a)7(B)

The State of New York, by Leticia James, New York Attorney General (“NYAG”), on behalf of victims like Plaintiff, sued Citibank, a large financial institution that, just like BANA, offers its customers online and mobile banking services. The case concerned “frauds perpetrated using a relatively novel form of online banking: ‘payment systems [that] provide consumers with electronic access to wire transfer services over the internet or on mobile devices.’ ” Citibank, 2025 WL 251302, at *2. The complaint asserted violations of the EFTA and New York state law. Id. at *1. Citibank moved to dismiss the complaint. Id.

In support of its EFTA claim, NYAG alleged that Citibank failed to properly investigate unauthorized EFTs that were made ancillary to transfers on the wire networks and failed to provisionally credit and reimburse consumers who were victims of those EFTs. Id. at *4. Citibank argued for dismissal, contending that the EFTA does not apply to transfers from a consumer's account made to pay for a wire transfer.” Id. More specifically, according to Citibank, “[b]ecause the losses ․ arose from unauthorized Payment Orders requesting wire transfers ․ [15 U.S.C. § 1693(a)]7(B) renders the EFTA inapplicable.” Id. In response, NYAG acknowledged “that the losses ․ arose from unauthorized Payment Orders requesting wire transfers,” but argued that “subsection (7)(B) excludes from the EFTA's coverage only the “transfer” of funds from one financial institution to another along a wire network.” Id. NYAG included the following chart in its complaint to illustrate its position:

Id. Recognizing that the parties’ disagreement required it “to decide what parts of an electronic payment, initiated by a consumer and facilitated in part by an interbank wire, are regulated by the EFTA,” the district court properly turned to the statutory text. Id. at *5. See Queen v. Zefco Inc., No. 8:19-CV-2966-TMC, 2020 WL 9350977, at *5 (D.S.C. June 18, 2020) (stating that “the court must begin, of course, with the statutory text, with the understanding that unless otherwise defined, statutory terms are generally interpreted in accordance with their ordinary meaning”) (internal quotations and citations omitted).

The Citibank court first noted that subsection (7)(B) confines its scope to a “transfer” and imposes the following three requirements on such a “transfer”: “It must be (1) ‘made by a financial institution,’ (2) ‘on behalf of a consumer,’ (3) ‘by means of a service that transfers funds held at either Federal Reserve banks or other depository institutions and which is not designed primarily to transfer funds on behalf of a consumer.’ ” Citibank, 2025 WL 251302, at *5. The court then rejected Citibank's argument that the ordinary meaning of “transfer” is the entire end-to-end “wire transfer,” noting that “subsection (7)(B) does not use the phrase ‘wire transfer’ ” and further finding that “if Congress knew that a ‘wire transfer’ was one integrated transaction, the fact that it chose not to use that term in lieu of ‘transfer’ cuts against Citibank's view.” Id. Relying on the well-known principle that if a term is not defined in a statute, courts are to give the term its ordinary meaning, the Citibank court found better evidence of the meaning of “transfer” within “subsection (7)(B) itself.” Id. at *6 (examining the phrase “by means of a service that transfers funds held at either Federal Reserve banks or other depository institutions” and concluding that, in this phrase, “ ‘transfers’ refers only to the movement of funds within a wire network” thereby suggesting “a narrower meaning than the one Citibank offers, because a wire ‘service’ does not ‘transfer’ funds from an initial customer to an ultimate payee, but only between banks”). The court found that Citibank's proposed interpretation creates, rather than solves, any ambiguity in subsection (7)(B). Id. (stating that “[i]f ‘a wire transfer goes from beginning to end’, what is the ‘beginning’ and what is the ‘end’?”) Finally, the court examined the terms and structure of the three requirements set forth above, finding that they “constitute more evidence of the meaning of the term ‘transfer’ as used in subsection (7)(B), and it surveyed “the relevant dictionaries,” finding that

the contemporaneous dictionary evidence suggests that “on behalf of” meant that, for a transfer to be covered by subsection (7)(B), it would have to be conducted by a financial institution for the benefit or in the interests of a consumer. Thus, when a consumer initially requests a wire transfer—or when a third party fraudulently requests such a transfer—that does not fall within subsection (7)(B), since it is an action performed by the consumer, or an unauthorized third party, themselves.

Id. at *7; see also id. at *8. In closing, the Citibank court held:

In sum, the plain meaning of subsection (7)(B) does not apply to electronic transfers of funds between consumers and their financial institutions, even when made ancillary to an interbank wire. Even if the Court were faced with strong countervailing extrinsic evidence (which it concludes it is not), that subsection (7)(B)’s text is unambiguous would end the inquiry here.

Id. at *9 (emphasis added).

2. Citibank’s examination of Regulation E & case law BANA relies on

To support of its argument that the “EFTA is inapplicable to claims involving wire transfers,” BANA relies on Regulation E, see 12 C.F.R. § 205.3(c)(3), and the following cases. (See ECF No. 23-1 at 4 (citing to Stepakoff v. IberiaBank Corp., 637 F. Supp. 3d 1309 (S.D. Fla. 2022), and McClellon v. Bank of America, N.A., No. 18-CV-829, 2018 WL 4852628 (W.D. Wash. Oct. 5, 2018))); see also ECF No. 37 at 3 (relying on Nazimuddin v. Wells Fargo Bank N.A., No. 23-CV-4717, 2024 WL 3431347 (S.D. Tex. June 24, 2024), R&R adopted, 2024 WL 3559597 (S.D. Tex. July 25, 2024), aff'd, No. 24-20343, 2025 WL 33471 (5th Cir. Jan 6, 2025).)

As for Regulation E, the Citibank court was not convinced that the “exemption” provision therein supports a finding that subsection 7(B) preludes EFTA coverage for electronic payment orders. It stated as follows:

The EFTA was and remains implemented by Regulation E, oversight and rulemaking authority over which was transferred to the newly established Consumer Financial Protection Board, or CFPB, in 2011. Baker, supra, at § 12.04. ․ The Federal Reserve Board promulgated the first final version of Regulation E in 1979. See 44 Fed. Reg. 18468 (Mar. 28, 1979). In issuing the regulation, the Board explicitly forwent including “a descriptive statement of the scope of electronic fund transfers,” so as to avoid “limit[ing] the development of new EFT services.” Id. at 18469. Indeed, the Board recognized that, “[b]ecause EFT systems are still rapidly evolving, ․ few data are available on existing EFT systems, and ․ the long-run effects of this Act and regulation will have to be measured historically ․” Id. at 18478.

Unlike the EFTA itself, Regulation E placed its provision parallel to subsection (7)(B) under the “exemption” for “Wire transfers,” specifying that Regulation E “does not apply to ․ [a]ny wire transfer of funds for a consumer through the Federal Reserve Communications System or other similar network that is used primarily for transfers between financial institutions or between businesses.” Id. at 18481. But importantly, Regulation E's version of subsection (7)(B)’s specification of a transfer “for a consumer” largely tracked the EFTA's “on behalf of a consumer” language. And the Board's official commentary did the same when explaining the change in language from the interim Regulation E to the final version: “[T]ransfers for consumers by any network similar to Fedwire (that is used primarily for financial institution or business transfers) are exempt.” Id. at 18471 (emphasis added). Regulation E thus preserved the subsection's instruction that, to be immune from EFTA liability, wire transfers needed to be “for” (or “on behalf of”) consumers. It merely simplified the EFTA's technical definition of the wire networks and added the recognizable header “Wire transfers.”

Citibank, 2025 WL 251302, at *10.

Additionally, as for the cases BANA relies on, the Citibank court explained that “none considered the precise statutory interpretation question at issue, i.e., the scope of a “transfer” that is excluded from the EFTA because it occurs by means of wire network.” Id. at *13. As for McClellon, the Citibank court noted that this court “did not consider the statutory language in subsection (7)(B)” nor did it “discuss any allegation of an electronic payment order, at issue in this case.” Citibank, 2025 WL 251302, at *13. The Citibank court further found Stepakoff “even less on point,” noting that

[i]mportantly, the only disagreement regarding subsection (7)(B) was whether transfers on other wire networks besides Fedwire fell within the provision; no one argued that the subsection might apply to some payment “legs” and not others. Nor would anyone in that case have had any reason to make such an argument, since there was no electronic payment ancillary to the transfer on the wire network to which EFTA liability would have attached.

Citibank, 2025 WL 251302, at *14. Similarly, the Citibank court noted that Nazimuddin “did not confront the instant legal issue—instead confronting whether the wire network used was covered by subsection (7)(B).” Citibank, 2025 WL 251302, at *14.

In addition to the above, BANA argues that the EFTA does not contemplate bifurcated wire transfers, relying on Pope v. Wells Fargo Bank, N.A., 2023 WL 9604555, at *3-4 (D. Utah Dec. 27, 2023). (ECF No. 23-1 at 8.) As for Pope, the Citibank court stated:

In Pope v. Wells Fargo Bank, N.A., the fraud occurred in the inducement of a wire transfer that was requested by a consumer in person at a regional branch of their financial institution. No. 23-CV-86, 2023 WL 9604555, at *2 (D. Utah Dec. 27, 2023). And though the Pope report and recommendation does conclude that wire transfers fall outside of the EFTA by virtue of subsection (7)(B), it misstates the holding in Wright [v. Citizen's Bank of East Tennessee, 640 F. App'x 401, 404 (6th Cir. 2016)] to do so, writing incorrectly that “the Sixth Circuit ․ held EFTA did not apply to the plaintiff's instructions regarding a same-day wire transfer that was not performed until the next morning because it involved a wire transfer through Fedwire or similar system.” Id. at *4 (emphasis added). In fact, the Sixth Circuit's analysis did not turn on whether a transaction “involved” a wire transfer, which would be broader than even Citibank's construction of subsection (7)(B).

Citibank, 2025 WL 251302, at *13 n.10; see also id. at *13 (further noting that in Wright, “the plaintiff there went in person to a branch of her financial institution to request the wire transfer, meaning there was no electronic Payment Order of the type that NYAG argues establishes Citibank's EFTA liability here”).¹

3. Plaintiff has plausibly alleged a violation of the EFTA

After close review, the Court is persuaded by the sound legal reasoning of the district court for the Southern District of New York and concurs with the holding reached in Citibank, that “the plain meaning of subsection 7(B) does not apply to electronic transfers of funds between consumers and their financial institutions, even when made ancillary to an interbank wire.” Citibank, 2025 WL 251302, at *9.

While the majority of BANA's arguments and case law were addressed and dismissed by the Citibank court, BANA also claims that “[t]he text of Article 4A ․ refutes the Plaintiff's [bifurcated] theory,” relying on Jajati v. JP Morgan Chase Bank, N.A., 711 F. Supp. 3d 169 (E.D. N.Y. 2024). The Court disagrees.

S.C. Code Ann. § 36-4A-104(a) (2003) defines a funds transfer as follows: “Funds transfer” means the series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator's bank or an intermediary bank intended to carry out the originator's payment order. A funds transfer is completed by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary of the originator's payment order.

Id. (emphasis added). S.C. Code Ann. § 36-4A-103(a)(1) (2003) in turn defines a payment order as follows:

“Payment order” means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:

Id. (emphasis added). Therefore, based upon the definitions of “funds transfer” and “payment order,” a funds transfer must be initiated by one bank using a payment order directed to another bank to then transfer funds to the beneficiary of the payment order.

Without any explanation or reasoning, BANA concludes that, based on the aforementioned text, a payment order is “not a distinct transfer of funds independent or outside of a wire transfer.” (ECF No. 23-1 at 8.) The Court, however, fails to see how the plain text of Article 4A supports such a conclusion. Rather, it appears the drafters contemplated a transfer via a payment order and then another transfer via a wire transfer. Further, the Court finds Jajati distinguishable because the plaintiff in that case was effectively

asking the Court to find, in effect, that a bank that receives an authorized wire transfer instruction and follows that instruction precisely, but learns ․ later from the customer that [it] had been tricked by a third-party to wire the funds, can be liable for executing the instructions. Such a farfetched standard would toss bank payment systems into chaos because the risk of loss from [the customer's] own actions (or inactions) would be unreasonably shifted to the bank. That is not what the contracts here provide for, and ․ is certainly not what the drafters of the U.C.C. had in mind when they drafted Article 4-A.

Jajati, 711 F. Supp. 3d at 175. Here, in stark contrast, Plaintiff is not attempting to impose common law liability on BANA for processing an authorized wire transfer.

In sum, for the myriad reasons set forth above, the Court denies BANA's motion to dismiss Plaintiffs’ EFTA claim.

B. Claim For Participating in Exploitation of A Vulnerable Adult, S.C. Code Ann § 43-35-87

In his second cause of action, Plaintiff alleges that he “is an 83-year-old individual who qualifies as a vulnerable adult under South Carolina law, specifically S.C. Code Ann. § 43-35-10(11), due to his advanced age and inability to adequately provide for his own financial protection.” (ECF No. 14 at 6.) He asserts that BANA's “actions and failures to act” with regard to the unauthorized transfers of funds from Plaintiff's account “facilitated the financial exploitation of” him and, therefore, he “is entitled to recover damages, costs, and attorney's fees” from BANA pursuant to S.C. Code Ann. § 43-35-87. (Id. at 6-7.) According to Plaintiff, the unauthorized EFTs constitute “exploitation,” and BANA “participated in and materially aided the financial exploitation of Plaintiff by criminal third parties” by failing “to exercise its duty to protect Plaintiff” “despite the presence of multiple red flags and the notification from Plaintiff.” (Id. at 7.)

In response, BANA claims that the Court must dismiss this cause of action because the statute does not provide a private right of action by vulnerable adults against financial institutions and because Plaintiff has failed to sufficiently allege that he qualifies as a “vulnerable adult”. (ECF No. 23-1 at 9-11.)

The Omnibus Adult Protection Act (“the Act”), S.C. Code Ann. § 43-35-5 et seq., was enacted “to protect vulnerable adults from abuse, neglect, and exploitation.” Williams v. Watkins, 665 S.E.2d 243, 245 (S.C. Ct. App. 2008). The Act “generally calls for administrative and regulatory investigative procedures, sets forth reporting requirements, and criminalizes the abuse, neglect and exploitation of vulnerable adults.” Williams-Garrett v. Murphy, 106 F. Supp. 2d 834, 841 (D.S.C. 2000).

In 2021, the Act was amended to add Section 43-35-87, entitled “Financial exploitation; financial institution authority to decline transaction requests.” Id. This section was added to allow financial institutions to put a hold on transactions if the bank in good faith believes that elder financial exploitation is occurring or about to occur. See S.C. Code Ann. § 43-35-87(B). This section states, however, that a bank “is not required” to decline or put a hold on any transaction. S.C. Code Ann. § 43-35-87(B) & (D). Here, Plaintiff brings his claim under paragraph H of the Act, which provides in relevant part that

Nothing in this section is intended to nor does it limit or shield in any manner a financial institution from civil liability against any claim, including reasonable attorneys’ fees, costs, and litigation expenses, for participating in or materially aiding the financial exploitation of a vulnerable adult. Any such claims shall be asserted by the vulnerable adult, or on his behalf by an appropriate guardian or representative who is not involved in or otherwise suspected of participating in the financial exploitation of the vulnerable adult, by filing a civil action in circuit court.

S.C. Code Ann. § 43-35-87(H) (emphasis added). Specifically, Plaintiff alleges that BANA “participated in and materially aided the exploitation of [him] by criminal third parties” because, according to Plaintiff, the “unauthorized electronic fund transfers ․ constitute ‘exploitation”,² a term defined in the Act.

“Exploitation” means: ․ an improper, unlawful, or unauthorized use of the funds, assets, property, power of attorney, guardianship, or conservatorship of a vulnerable adult by a person for the profit or advantage of that person or another person ․

S.C. Code Ann. § 43-35-10(3)(b).

The parties dispute whether a private right of action exists under S.C. Code Ann. § 43-35-87(H), and whether Plaintiff qualifies as a “vulnerable adult.” The Court finds, however, that it need not decide either issue, as the allegations in the amended complaint fail to show that BANA (1) participated in or materially aided the financial exploitation of Plaintiff through the (2) improper, unlawful, or unauthorized (3) use of the funds (4) of a vulnerable adult by a person (5) for the profit or advantage of that person or another person. While Plaintiff criticizes BANA for not recognizing red flags and not detecting, flagging, intercepting, and stopping these alleged unauthorized transactions, Plaintiff fails to identify any provision of the Act that imposes such an obligation on financial institutions. The Court is not convinced that the failure to act, i.e. to prevent fraud and “protect Plaintiff”, equates to using Plaintiff's funds, improperly, unlawfully, or without authorization, for BANA's own or another's benefit, as required to establish “exploitation” under S.C. Code Ann. § 43-35-10(3)(b). (ECF No. 14 at 7.) Plaintiff understandably seeks to hold BANA liable for failing to prevent the fraud. However, the Act does not impose the obligation Plaintiff asserts. See, e.g., S.C. Code Ann. § 43-35-87(B) (“[T]he financial institution may, but is not required to, decline or place a hold on any transaction ․”); S.C. Code Ann. § 43-35-87(D) (“A financial institution is not required to decline or place on hold a transaction pursuant to this section.”)

Thus, assuming arguendo that such a claim can be brought against BANA, the Court finds that Plaintiff has failed to allege a plausible claim under the Act and, therefore, it grants BANA's motion to dismiss Plaintiff's claim for participating in exploitation of a vulnerable adult under S.C. Code Ann § 43-35-87.

C. South Carolina Uniform Commercial Code Article 4A Claim

Plaintiff's third cause of action concerns BANA's alleged violations of the South Carolina Uniform Commercial Code, S.C. Code Ann §§ 36-4A-202 & 211. Under Article 4A, Plaintiff alleges that BANA failed to act in good faith and in a manner consistent with commercially reasonable banking standards; that BANA's security procedures were inadequate and not commercially reasonable; that BANA's acceptance and processing of unauthorized payment orders was not authorized by Plaintiff; and that BANA was notified and failed to timely cancel or reverse the unauthorized transactions under section 211. (ECF No. 14 at 7-8.)

As set forth above, the Court has determined that the allegedly fraudulent payment orders at issue in this case are governed by the EFTA because they do not occur on the wire network and are thus not removed from the EFTA's coverage by virtue of 15 U.S.C. § 1693a(7)(B). Relevant then is the following section of Article 4A, which states:

(a) Except as provided in subsection (b), this chapter does not apply to a funds transfer any part of which is governed by the Electronic Fund Transfer Act of 1978 (Title XX, Public Law 95-630, 92 Stat. 3728, 15 U.S.C. Section 1693, et seq.) as amended from time to time.

S.C. Code Ann. § 36-4A-108 (emphasis added). Consequently, and because subsection (b) is not applicable, Plaintiff's third cause of action arising entirely under Article 4A must be dismissed. See, e.g., Citibank, 2025 WL 251302, at *21 (holding that “Article [4A] does not apply to a funds transfer any part of which is governed by the Electronic Fund Transfer Act of 1978” (quoting NY UCC § 4-A-108)); Bernstein v. JPMorgan Chase Bank, N.A., No. 24-CV-3552 (JGLC), 2025 WL 950684, at *8 (S.D.N.Y. Mar. 28, 2025) (dismissing New York UCC Article 4A claims “[b]ecause the EFTA applies to plaintiff's ACH claims”).

IV. CONCLUSION

For the foregoing reasons, the Court grants in part and denies in part Defendant's motion to dismiss (ECF No. 23.) Defendant's motion is denied with respect to Plaintiff's first cause of action but is granted with respect to Plaintiff's second and third causes of action.

IT IS SO ORDERED.

FOOTNOTES

1.   In addition to Pope, BANA also relies on Spain v. Union Trust, 674 F. Supp. 1496 (D. Conn. Sept. 28, 1987). (ECF No. 23-1 at 8.) However, after review, the Court finds that this case also did not address the question now before the Court. Rather, in Spain, the plaintiff alleged that the EFTA applied “when a bank made an unauthorized charge to her account [wherein] [a] ‘debit slip’ had been prepared by a teller and sent to the bank's operation center for electronic processing.” Id. at 1500. The Spain court held that the transaction was “more closely akin to an internal processing of a check ․ than ․ to an electronic terminal transfer,” and thus found the transaction was not covered by the EFTA. Id.

2.   ECF No. 14 at 7.

Bruce Howe Hendricks, United States District Judge