A small legal case in California brings a warning to banks: Be careful who you report for fraud.
On Tuesday, a California federal jury found that Bank of America illegally blacklisted and defamed a former employee. It awarded her employee compensatory and punitive damages that could surpass $1.6 million.
According to court documents, Salma Aghmane, a client manager at Bank of America, was fired in 2013 for withdrawing money from a cousin’s Bank of America account, purportedly without authorization. Aghmane said she did have the authorization and the young cousin owed her the money.
Her cousin, a Moroccan emigre, had shared her online banking username and password with Aghmane to let her withdraw an agreed-upon amount of $12,800 as reimbursement for expenses incurred getting her an apartment, furniture, and other efforts to help her get settled in the United States.
When fraud was reported on the account, Aghmane explained the situation to a fraud investigator at the bank and presented her with documentation of these expenses.
The bank put Aghmane on a blacklist run by Early Warning Services, a provider of fraud prevention services that also runs the person-to-person payments network Zelle. Aghmane argued that under Early Warning’s rules, in order for a company to put someone on a fraud report, there has to be an admission and conclusive evidence of wrongdoing, which she says does not exist.
Also, Aghmane pointed out, the Early Warning blacklist is for crimes, and Aghmane was never accused of a crime by the bank but fired for a violation of its code of ethics.
When Aghmane received a job offer from Chase and was about to start her new job, she received an email saying she was ineligible for hire “due to an alert found with the Early Warning Services Fraud Scan from Bank of America.” Later, Aghmane was able to get a job at Cathay Pacific bank, which is not an Early Warning Services member.
In court, Aghmane’s lawyer argued that the bank is a “great big barrel-chested bully” whose “grossly inadequate” fraud investigation ruined her earning potential, according to the legal news site Law360.