CopyCited 26 times | Published | Court of Appeals for the Eleventh Circuit | 79 U.C.C. Rep. Serv. 2d (West) 152, 2012 U.S. App. LEXIS 24358, 2012 WL 5907151
...the bank’s transfer of $329,500 from his account to someone in the Dominican
Republic. Chavez sued the bank to recover the $329,500. In response to Chavez’s
complaint, the bank asserted, inter alia, an affirmative defense premised upon Fla.
Stat. § 670.202(2), which relieves a bank of liability for fraudulent payment orders
in certain situations....
...§
670.201, and the procedure is commercially
reasonable, a bank is absolved of liability for a fraudulent transfer of the
customer’s funds if the bank, when processing an order to transfer the customer’s
funds, follows the security procedure in good faith. See FLA. STAT. §§
670.201 &
670.202(2)....
...Batten, Sr., United States District Judge for the Northern District
of Georgia, sitting by designation.
2
Case: 11-15804 Date Filed: 11/27/2012 Page: 3 of 26
satisfy §
670.201 and consequently §
670.202(2) does not apply....
...may be initiated by a written
payment order. Id. §
670.103.
8
Case: 11-15804 Date Filed: 11/27/2012 Page: 9 of 26
The statutes at issue here are Fla. Stat. §§
670.201 &
670.202....
...However, pursuant to § 202
the bank may shift the risk of loss to the customer by showing one of two things:
(1) the “payment order received . . . is the authorized order of the person identified
as sender if that person authorized the order or is otherwise bound by it under the
law of agency,” id. § 670.202(1), or (2) the parties agreed to a security procedure
that is commercially reasonable and that the bank followed in good faith, id.
§ 670.202(2).
Section 202(1) is not before us, as the bank did not rely upon it when filing
its motion for summary judgment....
...With
respect to the first requirement, the agreed-upon security procedure must satisfy
the definition of that term in § 201. With respect to the second requirement, the
commercial reasonableness of a security procedure is a question of law for the
court. Id. § 670.202(3).
B....
...To the extent that the Bank adopted
additional procedures in this case and those procedures were commercially
23
Case: 11-15804 Date Filed: 11/27/2012 Page: 24 of 26
reasonable, the Bank may rely on them under section 202. See Fla. Stat.
§ 670.202(2).
B....
...procedures offered to the customer; and security procedures in general
use by customers and receiving banks similarly situated.
24
Case: 11-15804 Date Filed: 11/27/2012 Page: 25 of 26
Fla. Stat. § 670.202(3)....
...rder.
The final requirement for the application of the safe harbor provision of
section 202 is that the Bank acted in good faith and in compliance with the agreed-
upon security procedures when it accepted the payment order. See Fla. Stat.
§ 670.202(2)....
CopyCited 7 times | Published | District Court, S.D. Florida | 87 U.C.C. Rep. Serv. 2d (West) 182, 2015 U.S. Dist. LEXIS 98235, 2015 WL 4554921
...ice. Generally, the bank bears the risk of loss of any unauthorized funds transfer: If a receiving bank accepts a payment order issued in the name of its customer as sender which is not authorized and not effective as the order of the customer under s. 670.202 or is not enforceable, in whole or in part, against the customer under s....
...at is as good as no security procedure at all: the loss reverts to the bank and the customer has an absolute right to recover. This allocation of loss is so integral to the structure of Article 4A that it may not be varied by contract.”). However, § 670.202, referenced above, provides two circumstances where the bank may shift the risk of loss to the customer: (1) where the “payment order received ......
...is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency”; or (2) where the bank and customer have agreed to a security procedure and the bank acted in good faith. See Fla. Stat. § 670.202 (l)-(2)....
...Stat. §
670.505 cmt. (“Under 4A-505, however, the obligation to refund may not be asserted by the customer if the customer has not objected to the debiting of the account within one year after the customer received notification of the debit.”). Section
670.202 is only implicated when the customer has received notice and has properly objected....
CopyCited 1 times | Published | District Court, S.D. Florida | 85 U.C.C. Rep. Serv. 2d (West) 83, 2014 U.S. Dist. LEXIS 154767, 2014 WL 5522478
...Section
670.204, Florida Statutes, governs unauthorized wire transfers, and provides If a receiving bank accepts a payment order issued in the name of its customer *1352 as sender which is not authorized and not effective as the order of the customer under s.
670.202 or is not enforceable, in whole or in part, against the customer under s....
...pon which relief can be granted. To reiterate, §
670.204, Florida Statutes, states If a receiving bank accepts a payment order issued in the name of its customer as sender which is not authorized and not effective as the order of the customer under s.
670.202 or is not enforceable, in whole or in part, against the customer under s....
...Moreover, Plaintiffs have alleged who they suspect is behind the unauthorized transactions, and further allege that these individuals lacked the authority to make the transfers at issue. While it is true that a payment order is deemed authorized if the sender was an agent of the authorized individual, see Fla. Stat. § 670.202 (1) (“A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency.”), the Court respectfully declines to determine whether an agency relationship existed at the pleading stage....
...Unlike Count III of the Third Amended Complaint, Count IV does not contain an allegation that the Group B Plaintiffs had no agreement in place with BB & T regarding funds transfers or security procedures. According to BB & T, this omission is critical as § 670.202 states that a transfer is deemed to be authorized where the parties have agreed to a commercially reasonable security procedure. See Fla. Stat. § 670.202 (2). Pursuant to § 670.202, where a receiving bank receives a payment order, such an order will be deemed authorized, whether or not actually so, if there is a security procedure in place, the security procedure is a commercially reasonable one, and the bank acted in good faith....
...nk proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer. Fla. Stat. § 670.202 (2) (emphasis added).
CopyPublished | District Court, S.D. Florida | 55 U.C.C. Rep. Serv. 2d (West) 956, 2005 U.S. Dist. LEXIS 5631, 2005 WL 195536
...§
670.204 is not completely preempted by federal law. Fla Stat. §
670.204 specifically provides, in relevant part: [i]f a receiving bank accepts a payment order issued in the name of its customer as sender which is not authorized and not effective as the order of the customer under section
670.202 or is not enforceable, in whole or in part, against the customer under
670.203 the bank shall refund any payment of the payment order received from the customer to the extent the bank is not entitled to enforce payment and shall pay i...
CopyPublished | Court of Appeals for the Eleventh Circuit
...In the operative pleading, the Fourth Amended Complaint,
the Appellants asserted four claims against BB&T. As relevant
here, the Appellants claimed that BB&T was required to refund
them for the fraudulent wire transfers under Florida Statutes
§ 670.202....
...mand the rest of the case to the district court for discovery, replead-
ing, and further litigation.
The only issue that we decide is a question of pure law:
whether the one-year period to make a demand for a refund of a
fraudulent wire transfer under Florida Statutes § 670.202 may be
modified by the parties. We hold that the parties may not modify
that period by agreement.
USCA11 Case: 21-11763 Date Filed: 08/26/2022 Page: 11 of 27
21-11763 Opinion of the Court 11
A. The Time to Demand Repayment in § 670.202 May Not Be
Modified by Agreement
Before we get to the actual arguments, we need to first lay
out the statutory framework....
...When a receiving bank—really, the paying bank—receives a
payment order, it must determine whether the payment is “veri-
fied.” Id. §
670.204(1). 6 The bank and the customer may agree
beforehand to security procedures to verify the authenticity of pay-
ment orders. Id. §
670.202(2)....
...entitled to the interest if the customer failed to exercise ordinary
care and to notify the bank of the fraudulent transfer within a rea-
sonable time that cannot exceed 90 days. Id. Florida provides that
6 A payment order can also be “authorized.” Id. § 670.202(1)....
...13 of 27
21-11763 Opinion of the Court 13
a “[r]easonable time” may be fixed by agreement, but—crucially—
“the obligation of a receiving bank to refund payment” may not be
varied by agreement. Id. § 670.202(2).
We realize this is a bit of a slog, but we have just two more
provisions to wade through: First, Chapter 670 has a general rule
that “the rights and obligations of a party to a funds transfer may
be varied by agreement of the affected party.” Id....
...Section 204 concerns only unauthorized
or unverified wire transfers and a bank’s duty to refund. FLA. STAT.
§
670.204. Section 505, on the other hand, provides a statute of re-
pose for objecting to all debits to a customer’s account. Id.
§
670.505 cmt. It applies to unauthorized or unverified transfers,
see id. §
670.202, to uncompleted funds transfers, and to errone-
ously executed payment orders, see id....
...BB&T’s argument goes like this: Section 501 provides that every
provision in Chapter 670 can be varied unless “[e]xcept as other-
wise provided.” Id. §
670.501(1). Section 505 has no such limita-
tion. Id. §
670.505. Other provisions, BB&T points out, do. See,
e.g., FLA. STAT. §§
670.202(6),
670.305(6),
670.402(6),
670.403(3).
Thus, BB&T concludes, we should interpret Section 505 as not
containing a limitation against modification....
...eriod in Section 505
isn’t modifiable by agreement—and there is no dispute that the Ap-
pellants gave notice within one year—we would ordinarily next
turn to whether BB&T’s security procedures were “commercially
reasonable” as defined in Section 670.202. But here, we will wait
for further proceedings rather than decide the question.
Section 670.202 provides that a bank has a safe harbor from
refunding fraudulent wire transfers if the bank and the customer
agreed upon “commercially reasonable” security procedures and
the bank followed those procedures in good faith. FLA. STAT.
§ 670.202(2)....
