LawyersUSA

A bank can be sued for failing to conduct a reasonable investigation before initiating a criminal complaint against an identity theft victim, the New Jersey Appellate Division has ruled in reversing a summary judgment.

The plaintiff's identity was used to open an account at the bank and to withdraw nearly $10,000 in fraudulent checks.

The bank's fraud investigator viewed several surveillance tapes and photos of the person who opened the account. He was advised by police that the plaintiff had a criminal record, but he never reviewed a photo array that included the plaintiff's photo to determine whether he was the same person in the surveillance photos.

He also failed to review the plaintiff's weight and height descriptions and failed to note a misspelling on the identification card used to open the account.

The investigator proceeded to sign two criminal complaints against the plaintiff for forging documents and theft by deception.

The plaintiff was indicted and arrested.

He sued the bank for malicious prosecution, negligent investigation and negligent hiring of the fraud investigator.

The court said the claims could go forward.

"Financial institutions – particularly banks – have a duty to exercise reasonable care in opening accounts. The duty of care extends to investigating fraud and pursuing allegedly fraudulent claims," the court said.

"Here, [the bank] through its employee … – a certified fraud investigator – pursued [the] plaintiff in the face of numerous indicators that he was not the perpetrator of the fraud. [The investigator] had the opportunity to obtain a photo and physical description of plaintiff, which he could have shown to [the bank's] employees who interacted with the imposter. He did not do so. He could have shown the bank's surveillance photos to the police. He did not do so. He could have compared the perpetrator's description with [the plaintiff's]. He did not do so. Nevertheless, he signed two criminal complaints and testified before the grand jury based upon very limited information and the illogical premise that plaintiff opened the account in his own name, using his own address and social security number – in order to perpetrate a fraud. …

"In our view, [the bank] and [the investigator] had a duty of care to plaintiff. That duty included the duty to conduct a reasonable investigation before initiating criminal proceedings against the person whose stolen identity was used to open the account," the court said.

New Jersey Appellate Division. Brunson v. Affinity Federal Credit Union, No. A- 4439-06T14439-06T1. Sept. 9, 2008. Lawyers USA No. 993-11. Click here for the full text of this opinion.