ALLOWED BUSINESS ACCOUNT TO BE OPENED WITHOUT TAX ID OR OTHER DOCUMENTS
After GBD, a Chase customer, was scammed by a third party (who also happened to have a Chase account), GBD filed suit against the bank in the New York County Supreme Court.
And when the judge assigned to the matter declined Chase’s motion to dismiss the case, an appeal ensued.
While banks normally aren’t responsible for the acts of third parties with whom they do business, the Appellate Division, First Department, was of the view that an exception applied here.
Chase apparently advertised that it maintained anti-fraud procedures, and that it wouldn’t allow accounts to be opened without appropriate identification and documentation, like corporate records. But in this instance, an employee of the bank inexplicably allowed a fraudster – doing business as “A.C. LLC” -- to open an account without a taxpayer identification number, (personal or otherwise), or any corporate records.
And thinking that the business was legitimate, and had been vetted by the bank, GBD is said to have wired some $300,000 to that account. Of course, the monies were later purloined, and when GBD reported the fraud, the bank allegedly failed to take any action.
Given that her “complaint adequately pleaded that Chase assumed a duty to abide by the anti-fraud procedures that it publicized,” the AD1 thought that the denial of the bank’s motion was appropriately premised.
Think she’s going to recover some cash?
You can bank on that!
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DECISION