Capital One Class Action: Bank Accused of Fraud Denial Scheme

A class action lawsuit filed against Capital One alleges the banking giant has systematically failed to properly investigate fraud claims and wrongfully denied victims reimbursement, leaving consumers to bear the burden of unauthorized charges.

The lawsuit, brought by California resident Leah Walton, claims Capital One breached its accountholder contract and violated the federal Electronic Funds Transfer Act (EFTA). The EFTA explicitly places the burden of proving that fraud did not occur on financial institutions, not consumers.

Stolen Card, Denied Claims: One Customer's Nightmare with Capital One

Walton's ordeal began in March 2023 when her car was broken into and her Capital One debit card was stolen, along with her phone, driver's license, and other valuables. The theft left her in a vulnerable position, unable to immediately report the fraud to Capital One due to the loss of her phone and identification.

When Walton was finally able to borrow a phone and contact Capital One, she was met with bureaucratic obstacles. Despite multiple attempts to report her stolen card, she was repeatedly told there was no one available to take her claim after hours or that the bank could not verify her identity. Meanwhile, unauthorized transactions were accumulating on her account, even though Capital One had flagged them as suspicious.

By the time Walton was able to purchase a new phone and officially report the fraud, she had discovered numerous emails from Capital One asking her to verify these suspicious charges. The bank had allowed the transactions to proceed despite being aware of the stolen card, effectively penalizing Walton for the bank's own cumbersome reporting process.

After finally filing a fraud claim for nearly $1,500 in unauthorized charges, Walton's claim was summarily denied with no explanation beyond "didn't find an error." Capital One then closed her checking account, leaving her without recourse or a clear understanding of the bank's decision.

Capital One's System Favors the Bank, Lawsuit Claims

The lawsuit argues that Capital One's fraud investigation process is designed to favor the bank, systematically denying claims without sufficient investigation or providing consumers with any substantive explanation. This "black-box" decision-making, the lawsuit contends, leaves consumers like Walton "hamstrung" and unable to refute the bank's conclusions.

By denying claims without proper investigation or explanation, Capital One is accused of shifting the burden of proof from the bank to the consumer, a direct violation of the EFTA. The lawsuit asserts that this practice creates a system where "the bank always wins," precisely the situation federal law was designed to prevent.

Multiple Lawsuits Highlight Pattern of Consumer Complaints Against Capital One

Capital One is no stranger to legal battles. This latest class action lawsuit is just one in a series of legal challenges the bank has faced in recent years. Just this year, Capital One agreed to a $16 million settlement over claims of unlawful overdraft fees. The bank is also currently facing a separate class action accusing them of failing to inform existing customers about a new savings account with higher interest rates.

In 2023, Capital One settled a $190 million class action lawsuit stemming from a 2019 data breach that compromised the personal information of 98 million customers. And in 2014, the bank, along with three collection agencies, paid a record-breaking $75.5 million to settle a class action lawsuit alleging violations of the Telephone Consumer Protection Act.

In the Capital One fraud denial class action lawsuit, Walton seeks to represent all Capital One checking account holders who were denied reimbursement for unauthorized charges without a full investigation and explanation. She is asking for actual damages, punitive damages, and an injunction to prevent Capital One from continuing its alleged unlawful practices.

Case Details

• Lawsuit: Walton v. Capital One
• Case Number: 5:24-cv-02788
• Court: U.S. District Court for the Northern District of California

Plaintiffs' Attorneys

• Scott Edelsberg (Edelsburg Law P.A.)
• Jeffrey D. Kaliel and Sophia G. Gold (Kaliel Gold PLLC)