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Hirl v. Bank of America, N.A.

198 N.J. 318, 967 A.2d 284 (2009)

ELECTRONIC FUND TRANSFER PRIVACY ACT — A customer qualifies for a remedy under the Electronic Fund Transfer Privacy Act for a bank’s unauthorized disclosure of the customer’s account records if the account has electronic fund transfer capability, even if the disclosed records are unrelated to an electronic fund transfer.

A bank customer sued a bank for damages after the bank had improperly provided her bank records to her ex-husband. The customer’s ex-husband subpoenaed her bank records and her daughter’s bank records in connection with a post-divorce support dispute. The subpoena specified that the information was not to be produced until July 10, 2006. It also provided that the bank was not to produce the bank records if it was advised that a motion to quash the subpoena had been filed. The customer’s attorney advised the bank, in writing, that she intended to move to squash the subpoena. On July 6, before the production date, the bank delivered the customer’s bank records to her ex-husband. On July 10, the customer filed a motion to squash the subpoena. Relief was granted. When the customer discovered that the bank had released her bank records to her ex-husband, she sued the bank seeking damages pursuant to the Electronic Fund Transfer Privacy Act (EFTPA), N.J.S.A. 17:16K-1.

The lower court found that the bank violated the EFTPA and awarded the customer and her daughter compensatory damages, punitive damages, and attorneys’ fees. The bank appealed. It argued that the remedial provisions of the EFTPA only applied to an improper, actual “electronic fund transfer” and did not apply to the disclosure of a bank account where no electronic fund transfer occurred. The customer retorted that the statute applied to any bank account that had electronic funds transfer capability regardless of whether there had been an actual electronic funds transfer. The Appellate Division found the EFTPA to be remedial legislation that must be construed liberally to effectuate its purpose to protect consumers. On that basis, the Court held that the EFTPA applied to any bank account with electronic funds transfer capability, whether or not there had been an electronic transfer. It remanded the case to the lower court and held that if the customer could establish that her bank accounts were qualified accounts under the EFTPA, then the customer and her daughter were entitled to the compensatory and punitive damages and attorneys’ fees previously awarded by the lower court.

On further appeal, the Supreme Court affirmed. It analyzed the EFTPA and the authorized disclosure of “information relative to an electronic fund transfer or account to a third-party.” The Court found that, in the context of the EFTPA, the word “account” cannot be separated from the phrase “electronic fund transfer” and the word “account” could not be read out of the disclosure provisions of the EFTPA. It found that the EFTPA provided remedial measures to bank customers for a bank’s unauthorized disclosure of the customer’s electronic fund transfers and for disclosure of a customer’s bank account records if the account had electronic fund transfer capability if the customer chose to use it.

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