§4010 — Title 12 Banks and Banking | U.S. Code

Summary

If a bank or similar deposit-taking institution fails to follow the rules under this law and someone (not another bank) is hurt by that failure, the institution must pay for the harm. The payment must cover the person’s actual loss. For individual lawsuits, the court can also award extra money, but that extra must be at least $100 and no more than $1,000. For class lawsuits, the court can award extra money but there is no minimum per person and the total extra award cannot be more than the lesser of $500,000 or 1 percent of the bank’s net worth. A winning plaintiff can also get court costs and reasonable lawyer fees. When deciding awards in a class case, the court will look at actual losses, how often the bank broke the rules, the bank’s resources, how many people were harmed, and whether the violations were intentional. A bank is not liable if it proves the mistake was not intentional and came from a genuine error (for example clerical, computer, calculation, or printing mistakes) despite having reasonable procedures to prevent errors; mistakes of legal judgment do not count. Lawsuits must start within one year of the violation. Acts done in good faith following a Federal Reserve Board rule or interpretation are protected even if that rule is later changed or overturned. The Federal Reserve Board may also assign payment-system losses among banks; those losses are limited to the amount of the check that caused the loss, with extra damages allowed if there was bad faith.

Title 12, §4010

Banks and Banking — Source: USLM XML via OLRC

(a)Except as otherwise provided in this section, any depository institution which fails to comply with any requirement imposed under this chapter or any regulation prescribed under this chapter with respect to any person other than another depository institution is liable to such person in an amount equal to the sum of—

(1)any actual damage sustained by such person as a result of the failure;

(2)(A)in the case of an individual action, such additional amount as the court may allow, except that the liability under this subparagraph shall not be less than $100 nor greater than $1,000; or

(B)in the case of a class action, such amount as the court may allow, except that—

(i)as to each member of the class, no minimum recovery shall be applicable; and

(ii)the total recovery under this subparagraph in any class action or series of class actions arising out of the same failure to comply by the same depository institution shall not be more than the lesser of $500,000 or 1 percent of the net worth of the depository institution involved; and

(3)in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court.

(b)In determining the amount of any award in any class action, the court shall consider, among other relevant factors—

(1)the amount of any actual damages awarded;

(2)the frequency and persistence of failures of compliance;

(3)the resources of the depository institution;

(4)the number of persons adversely affected; and

(5)the extent to which the failure of compliance was intentional.

(c)(1)A depository institution may not be held liable in any action brought under this section for a violation of this chapter if the depository institution demonstrates by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(2)Examples of a bona fide error include clerical, calculation, computer malfunction and programming, and printing errors, except that an error of legal judgment with respect to a depository institution’s obligation under this chapter is not a bona fide error.

(d)Any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year after the date of the occurrence of the violation involved.

(e)No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Board of Governors of the Federal Reserve System, notwithstanding the fact that after such act or omission has occurred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

(f)The Board is authorized to impose on or allocate among depository institutions the risks of loss and liability in connection with any aspect of the payment system, including the receipt, payment, collection, or clearing of checks, and any related function of the payment system with respect to checks. Liability under this subsection shall not exceed the amount of the check giving rise to the loss or liability, and, where there is bad faith, other damages, if any, suffered as a proximate consequence of any act or omission giving rise to the loss or liability.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective Sept. 1, 1988, see section 613(b) of Pub. L. 100–86, set out as a note under section 4001 of this title.

§4010 Civil liability

Summary

Title 12, §4010

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Citations & Metadata