Chase Isn’t Liable for Assistant’s $1M Fraud

We’ve read about a number of lawsuits where businesses sue their banks for money that was siphoned off in wire transfers without the company being aware of the problem. Here’s a court decision out of the Third Circuit Court of Appeals that may impact some cases down the road and serves as a timely reminder to check your statements to ensure that you are not authorizing charges by employees or others that you really don’t intend to authorize. Courthouse News reports:

… From 1999 to 2006, Vanek withdrew between $200 and $700, typically twice a day, from Azur’s credit card. Each transaction carried a finance charge of $4 to about $20.

When Azur discovered the fraudulent scheme, he fired Vanek, closed the account and disputed the charges with Chase, claiming they were never authorized.

A federal judge ruled for Chase, and the Philadelphia-based appeals court affirmed.

Chase has no duty to reimburse Azur for payments he already made, the court ruled, and Azur gave his assistant the “apparent authority” to use his credit card by continuing to make payments without reviewing the bank statements.

“[B]y identifying apparent authority as a limitation on the cardholder’s protections … Congress recognized that the cardholder is oftentimes in the best position to identify fraud committed by its employees,” Judge D. Michael Fisher wrote.

“Here, Azur’s negligent omissions led Chase to reasonably believe that the fraudulent charges were authorized.”

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