In a groundbreaking ruling, the Massachusetts Appeals Court has dealt a hefty blow to consumer expectations regarding bank responsibility in the age of cryptocurrency scams. The case revolved around Lourenco Garcia, a Santander customer who lost a staggering $750,000 to a crypto scam. Ouch, right?
But here’s the kicker: the court ruled that Santander had no obligation to stop those transactions, even though they were obviously headed for fraudulent platforms like Crypto.com and CoinEgg.
Garcia had authorized two debit purchases and seven wire transfers between December 2021 and January 2022. By the bank’s logic, if you authorize it, you’re on the hook. The court decided that the wording in the contract was key. Santander “may” block transactions, but “may” doesn’t mean “must.” So, tough luck, Garcia. Your bank isn’t your watchdog. They don’t have to check if you’re about to throw your money to a shady operation.
If you authorize transactions, you’re on the hook—your bank isn’t your watchdog against scams.
The court dismissed claims of breach of contract and negligent misrepresentation. They even waved off consumer protection violations. Apparently, marketing language doesn’t bind banks to anything. Who knew?
The judges leaned on some legal precedents that basically said banks aren’t obligated to monitor transactions unless they have actual knowledge of fraud. In fact, the ruling sets a precedent that banks are not liable for customer-initiated crypto losses. So, if you’re a customer, you’re supposed to be the smart one here. This ruling is particularly striking given that Garcia’s accounts accumulated significant funds prior to the fraudulent transactions.
This ruling shifts the risk squarely onto consumers. Banks can sit back and let customers bear the brunt of their own mistakes. There’s a glaring gap in Massachusetts law regarding crypto transaction monitoring, leaving consumers in the lurch. It’s a clear message: if you get scammed, it’s your problem.
With no regulatory guidance to help, consumers are left to fend for themselves. This case sets a precedent that could discourage similar liability claims against banks in the future. In short, welcome to the wild west of cryptocurrency, where banks can wash their hands clean, and consumers are left holding the bag.
