Payments

[...]the U.S. Supreme Court weighs in on what constitutes bank fraud under the united States Criminal Code when funds in a customer's bank account are fraudulently transferred out of the account but the bank itself does not suffer a loss. The Supreme Court rejected Shaw's arguments.64 The Court stated that the bank fraud statute covers schemes to deprive a bank of money in a customer's deposit account because the bank does have property rights in the bank accounts of its customers.65 The Court noted that when a customer deposits funds, the bank ordinarily becomes the owner of the funds, which the bank has a right to use as a source of loans that help the bank earn profits.66 Hence, for purposes of the bank fraud statute, a scheme fraudulently to obtain funds from a bank depositor's account normally is also a scheme fraudulently to obtain property from a "financial institution," at least where, as here, the defendant knew that the bank held the deposits, the funds obtained came from the deposit account, and the defendant misled the bank in order to obtain those funds, even if Shaw may not have intended to cause the bank financial harm.67 Customer-Bank Agreement In Majestic Building Maintenance, Inc. v. Huntington Bancshares, Inc.,68 the payor bank avoided liability for unauthorized checks drawn on its customer's business checking account by a provision in its customer's "Master Services" account agreement that made the customer responsible for unauthorized account transactions if the customer did not avail itself of a fraud prevention service that was offered by the bank and designed to discover or prevent the type of unauthorized activity that occurred. Because the customer was eligible for the bank's "Positive Pay" service, which was designed to discover and allow the customer to prevent out of sequence checks, raised checks, and checks not issued by the customer, the bank was able to shift the risk of loss to its customer based on the loss prevention language of the Master Services agreement, even though it did not specifically mention the bank's "Check Positive Pay" program by name.69 The court held that the provision in question was not manifestly unreasonable and did not relieve the bank of its duties of good faith and exercising ordinary care; rather it was a permissible variation of Article 4's default rule that the drawee bank is responsible for forged checks.70 This is not the first case to give the bank a defense based on a requirement in the ban