Wednesday, 10 February 2016 23:49

Galper v. JP Morgan Chase Bank, N.A.: Liability for ID Theft under NY Fair Credit Reporting Act

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In this case, the appeals court considered the relationship between a state law that provides remedies to victims of identity theft and the federal Fair Credit Reporting Act (FCRA). The New York Fair Credit Reporting Act, like statutes in other states, creates a private civil cause of action for those victimized by identity theft so they can recover damages resulting from the crime if the theft results in information about the individual being transmitted to a consumer reporting agency like a credit bureau.

Yelena Galper claimed to be a victim of an identity theft scam perpetrated by employees of the JP Morgan Chase Bank, N.A. and sought to hold the bank liable for the crime under the New York law. The issue before the court was whether her lawsuit was preempted by the federal FCRA, which preempts claims under state laws for ID theft if they are "with respect to" subject matter regulated by that law.

For a period of some three years, employees at Chase bank allegedly aided and abetted certain money laundering activities in a scheme to defraud Medicare. The employees helped the money launderers, in exchange for cash bribes and other gratuities, in using Galper's name as the signer on Chase accounts established in the name of fake corporations. The bank's employees also aided and abetted the money launderers in operating and controlling a previously dormant private personal checking account of Galper's, using an ATM card associated with that account. Galper's was unaware of any of these transactions or any of the money laundering activities.

The district court, ruling on the bank's motion to dismiss, held that Galper's claims under the New York law were preempted by the federal statute. The U.S. appeals court concluded that the FCRA does not preempt all of the plaintiff's claims under the state law, however. The court differentiated between claims of ID theft and aiding and abetting the theft based on the bank's vicarious liability for its employees' theft of Galper's information, and erroneous or otherwise wrongful actions by the bank in providing the information to consumer reporting agencies. The claims of identity theft are not "with respect to" responsibilities of those who provide information to consumer reporting agencies; therefore, they are not preempted by the FCRA. Since Galper's claim raised state law claims not preempted by the federal law, the appeals court vacated the judgment of the district court and remanded the case for further action in regard to its ruling.

Resources

Yelena Galper, Plaintiff–Appellant, v. JP Morgan Chase Bank, N.A., Defendant–Appellee. United States Court of Appeals, Second Circuit. Docket No. 14–0867–cv. Decided: September 30, 2015

 

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