MARK A. KEARNEY, District Judge.
Mersadies Bonilla is defending criminal charges in Pennsylvania state court arising from her alleged receipt of thousands of dollars from a credit union account of her ex-boyfriend's mother into her credit union account. She then spent a sizable portion of the transferred funds. Upon learning of the disputed transfer, the credit union reversed the transfer even though her account did not have sufficient funds. Her credit union account then had a negative balance more than $3,300.00. The credit union did not charge her interest or fees on the negative balance. It accurately reported her savings account as "overdrawn" to credit reporting agencies for accounts with "overdraft" protection. She feels the credit union's conduct in reversing the deposit creating an "overdraft" balance and then reporting her savings account as overdrawn since 2017 violates the law. While incarcerated as a pretrial detainee on the state criminal case, Ms. Bonilla pro se sued her credit union under the Electronic Funds Transfer Act, its implementing Regulation E, the Truth in Lending Act, its implementing Regulation Z, and the Fair Credit Billing Act. The credit union moves to dismiss the Fourth Amended Complaint as failing to plead claims under these federal statutes and the claims are time-barred. Ms. Bonilla is now released awaiting her criminal trial and presented oral argument. After oral argument, we grant the credit union's motion and enter judgment in its favor on all claims. After four failed complaints, we dismiss with prejudice.
Mersadies Bonilla became a member of the American Heritage Federal Credit Union in 2015 by opening two accounts: a "secured credit card account" and a "savings share account."
In response to what it considered fraudulent activity, the Credit Union "reversed" the $5,600 transfer to Ms. Bonilla's savings account on September 7, 2016.
The Credit Union first reported the charged off savings account to credit bureaus in January 2017.
Ms. Bonilla filed a Complaint on August 3, 2018, a First Amended Complaint on August 24, 2018, a Second Amended Complaint on August 27, 2018, and a Third Amended Complaint on September 12, 2018. We granted the Credit Union's motion to dismiss with prejudice all claims relating to the August 2016 transactions and without prejudice to allow Ms. Bonilla to file an amended complaint to plead timely and plausible claims regarding an alleged overdraft protection transaction.
Ms. Bonilla filed a Fourth Amended Complaint alleging the Credit Union violated federal law by opening a "Deposit Account Overdraft Protection Account" added to her credit report in the amount of $3,334 beginning in August 2018.
Ms. Bonilla alleges the Credit Union opened a "Deposit Account Overdraft Protection Account" on January 1, 2017 which she did not open, request to be open, opt-in to, or contract for.
The Credit Union denies it ever opened a "Deposit Account Overdraft Protection Account" on Ms. Bonilla's account and the transactions on her savings account do not involve overdraft protection. It argues it is a reversal of charges on her savings account. Credit Union first argues Ms. Bonilla's claims do not fall under the Electronic Funds Transfer Act ("EFTA"),
The Credit Union argues EFTA and Regulation E do not apply to the allegations of the Fourth Amended Complaint, arguing EFTA is intended to protect consumers engaging in electronic fund transfers and remittance transfers and Regulation E applies to electronic fund transfers authorizing a financial institution to debit or credit a consumer's account.
The purpose of EFTA is "to provide a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer systems" with the "primary objective . . . the provision of individual consumer rights."
Ms. Bonilla alleges the Credit Union violated EFTA and Regulation E, specifically 12 U.S.C. § 205.17 providing the requirements for overdraft services. The regulation defines "overdraft service" as "a service under which a financial institution assesses a fee or charge on a consumer's account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account."
The Credit Union argues the pleadings show Ms. Bonilla had an overdrawn savings account since 2016 "due to a reversal of charges" the Credit Union made in accordance with the terms of the Membership Agreement between it and Ms. Bonilla. The Credit Union points to Regulation E excluding from the definition of "electronic fund transfer" any "intra-institutional automatic transfers under an agreement between a consumer and a financial institution."
We agree with the Credit Union. It did not offer an overdraft service governed by EFTA. It did not charge a fee or interest on the negative balance in the savings account. Ms. Bonilla challenges a reversal of an intra-institutional transfer between two credit union accounts when the police authorities charged fraud in connection with the transfer. We are not deciding whether the Credit Union had the right to transfer the funds under a member agreement. Ms. Bonilla only challenges the transfer back to Ms. Eubanks' Credit Union account as violating EFTA and Regulation E. It plainly does not.
Congress enacted TILA to "assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices."
Ms. Bonilla alleges the Credit Union violated several sections of the FCBA: Section 1666a, regulating credit reports with regard to consumer credit; Section 1666(b)(1), pertaining to the correction of billing errors and defining a "billing error" as "a reflection on a statement of an extension of credit which was not made to the obligor or, if made, was not in the amount reflected on such statement"; and Section 1666h, prohibiting credit card issuers from offsetting a cardholder's indebtedness from funds held on deposit unless the cardholder authorizes such offset in writing.
Ms. Bonilla alleges the Credit Union "offset" her savings account to satisfy "debt" by adding a deposit overdraft protection account without her authorization in violation of TILA and Regulation Z, and violated the FCBA by reporting to credit reporting agencies a delinquency in her account without noting her dispute over the $5,600 August 2016 deposits.
The Credit Union argues Ms. Bonilla's claims do not come within TILA, the FCBA, and Regulation Z because her allegations do not involve credit cards, credit billing, or credit card debt. The Credit Union argues it simply closed Ms. Bonilla's accounts — both her credit card account and savings account — each with negative balances, she had no assets with the Credit Union, and it could not have "offset" consumer credit card debt.
Ms. Bonilla does not state a claim based on fees or charges involved in credit transactions. The Credit Union did not engage in a credit transaction. It reversed a deposit into a savings account upon determining fraud in the deposit transfer. The Credit Union did not charge a fee or interest. It need not disclose what it is not charging. The pleadings admit the Credit Union transferred the funds from the savings account. Given these admissions, we cannot further proceed into finding Ms. Bonilla states a claim against the Credit Union for violating federal law in a credit card account.
Ms. Bonilla also failed, after four attempts, to plead the Credit Union violated federal law in characterizing its reversal of an allegedly fraudulent deposit under a credit reporting agency's description "8B" for overdrawn and charged off deposit accounts such as Mr. Bonilla's savings account. Ms. Bonilla has never alleged the Credit Union directed the credit reporting agency to misrepresent the nature of the overdrawn savings account.
As we explained in our memorandum granting the Credit Union's motion to dismiss the third amended complaint, TILA and the FCBA have one year statute of limitations.
At oral argument, the Credit Union argued Ms. Bonilla's first three Complaints show credit reporting beginning in January 2017 of the $3,334 negative balance on the savings account; the Credit Union cannot explain why the reporting stopped and then re-started in August 2018, but it cannot be held liable for TransUnion's conduct.
We cannot today find claims based on TransUnion's reporting are time-barred. But the pleadings admit the credit reporting agency reported this transaction a year and a half before Ms. Bonilla filed this action. As we find Ms. Bonilla cannot state a claim under EFTA, Regulation E, TILA, the FCBA and its implementing Regulation Z, we need not address the statute of limitations.
Viewing the facts and all reasonable inferences to be drawn in the light most favorable to Ms. Bonilla, we find the Credit Union is entitled to judgment as a matter of law. We grant the Credit Union's Motion for judgment on the pleadings and dismiss Ms. Bonilla's Fourth Amended Complaint with prejudice in the accompanying Order.
