Eddie Holiday of Haber Law. Photo by Lynn Parks

'Milgram v. Chase Bank USA,' 72 F.4th 1212 (11th Cir 2023)

Imagine you have an employee that opens a credit card in your name for your business. Your employee then runs up tens of thousands of dollars of debt on the account and illegally accesses your bank accounts to partially pay off the monthly statements. When you discover the scheme, you report the fraud to your bank, but the bank refuses to characterize those charges as fraudulent because payments to the account were made. Your now-former employee has pled guilty to identity theft, and you provide that information to your bank, but the bank still refuses to label the charges made on the account as fraudulent. You sue your bank under the Fair Credit Reporting Act (FCRA) challenging the accuracy of the information on your credit report and allege that the bank failed to conduct a reasonable investigation regarding the fraud. Do you have a cause of action against the credit information furnisher?

This is exactly what happened to Shelly Milgram, a Broward County business owner. Milgram hired Jean Williams to be her office manager, but did not authorize Williams to handle credit cards, make payments on those cards or access bank accounts. As for her bank accounts, she kept all of the information necessary to access the accounts in an unlocked file cabinet in her office and expressly told Williams not to open the file cabinet.

Between 2014 and 2016, Williams opened three credit cards in Milgram's name without her knowledge or permission. When the bills came due, Williams made payments on the cards from the business's checking accounts. In May 2016, Milgram noticed a charge on her account that she didn't recognize. Upon reviewing her credit, Milgram discovered three unauthorized credit cards in her name. Milgram called Chase to informally report fraud and then filed a police report. Chase then called Williams, who admitted that all the charges were fraudulent, and that Milgram was not responsible. In June 2016, Milgram formally reported the fraud to Chase and provided Chase with the police report, screenshots from the bank accounts, and text messages from Williams admitting to the fraud.