§4010 Civil Liability

Summary

If a bank or similar deposit-holding institution fails to follow the rules and a person (not another bank) is harmed, the bank must pay that person for the loss. The person can get the actual money lost. For a single-person lawsuit, the court can also give extra damages of at least $100 and at most $1,000. For class actions, the court can award extra money but there is no minimum per person, and the total extra award for the class (or a series of class suits about the same failure by the same bank) cannot be more than the lesser of $500,000 or 1 percent of the bank’s net worth. A winning plaintiff can also recover court costs and a reasonable lawyer’s fee. When deciding class awards, the court will look at actual losses, how often the bank failed, the bank’s resources, how many people were hurt, and whether the failure was intentional. A bank can avoid liability if it proves the mistake was not intentional and came from a genuine error despite having reasonable procedures; examples include clerical, calculation, computer, programming, and printing mistakes, but not legal-judgment errors. Suits must be filed within one year in federal court or another proper court. Acts done in good faith under Federal Reserve Board rules are protected even if those rules are later changed or found invalid. The Federal Reserve Board can make rules that share losses and liability among banks for payment-system matters; those rules limit liability to the amount of the check, and allow extra damages where there was bad faith.