As cyberthreats continue to evolve, courts remain reluctant to hold banks responsible for failing to intervene when some of the most vulnerable customers fall victim to phishing and financial exploitation.

Older adults are a key group targeted by some of these financial scammers. While the number of elderly people targeted slightly decreased from 2021 compared to 2022, the amount of money collectively lost nearly doubled from $1.7 billion to $3.1 billion, respectively, according to the Federal Bureau of Investigation‘s most recent report.

As in previous years, the number of complaints filed by individuals over 60 continued to increase for fraudulent schemes involving the tech and customer support sectors, as well as investment and cryptocurrency scams. The average dollar loss per victim was $35,101 in 2022 compared to $18,246 in 2021, while the number of victims who lost more than $100,000 last year was also close to doubling with 5,456 victims, according to the report.

But just because victims are losing more funds doesn’t mean there is always legal recourse to hold banks, the source of those funds, accountable—yet.

At least, that’s what Fairfax, Virginia-based Hale Ball Murphy partner Kimberley Ann Murphy hopes to change for her client, Janine Satterfield, despite a federal judge dismissing a lawsuit earlier this month in an attempt to hold banks responsible.

Satterfield, on behalf of her uncle, Larry W. Cook, whose judgment and cognition was severely impaired from a 2019 stroke, sued Wells Fargo and Navy Federal Credit Union to recoup the nearly $3.68 million that they allegedly wired from his accounts to Thailand as part of a six-month, suspected and ongoing scam.

“You’re responsible for reviewing outgoing wires, especially at an institutional level. Once it’s left this country, you don’t know what you’re funding,” Satterfield, who has worked in the financial services industry for more than 30 years, told Law.com.

After Cook’s death in April 2021, his family discovered transactions. Satterfield initially brought claims of assumption of voluntary duty, breach of the covenant of good faith and fair dealing, and negligent/voluntary assumption of duty in Fairfax County Circuit Court, but the defendants subsequently removed the case to the U.S. District Court for the Eastern District of Virginia.

Satterfield claimed Wells Fargo processed one international wire transfer, but claims that Navy Federal continued to process a total of 74 transactions—despite warnings to Cook that he was likely caught up in fraudulent activity and attempts to connect him with social services for possible elder financial exploitation, though the former Navy commander declined assistance.

“They could have just stopped processing the wires. They didn’t have to process them,” Murphy told Law.com. “They don’t have to process them, there’s no requirement that they must do it, they can simply not.”

U.S. District Judge Claude M. Hilton of the Eastern District of Virginia disagreed. Earlier this month, he sided with the banks and granted their motions to dismiss on the ground that the plaintiff’s state law claims relating to Cook’s wire transactions are preempted and displaced by Article 4A of Virginia’s Uniform Commercial Code—which applies to wire transfers and has been codified under Virginia law as Section 8.4A.

“Plaintiff argues Navy Federal and Wells Fargo had a duty to protect Cook and prevent his losses by not accepting his payment orders. While a bank can be liable under Section 212 for not accepting a payment order, no provision of Section 8.4A imposes liability on a receiving bank that properly executes a duly authorized wire transfer by the sender. Further, a ‘bank owes no duty to any party to the funds transfer except as provided in this title or by express agreement.’ Va. Code § 8.4A-212,” Hilton wrote.

The UCC further states that liability is preempted on the bank for conduct that happens before the bank accepts a payment order. Additionally, the bank does not have a duty “‘before acceptance, to take any action, or refrain from taking any action, with respect to the order except as provided in this title or by express agreement,’” the order said.

Even though Cook did not cooperate with an Adult Protective Services investigation, Hilton said there was not a sufficient basis to impose a duty not included in the party’s contact. Furthermore, the judge also found that there was no contractual agreement to create a relationship between Cook and the banks.

“Under Virginia law’s economic loss rule, a plaintiff may not rely on a tort theory to recover losses against a defendant. See Filak v. George 267 Va. 612, 618 (2004),” he wrote. “Here, plaintiff’s claims all stem from obligations due to a contractual deposit agreement between defendants and Cook. Since the source of defendants’ duties arise out of a contractual duty, and plaintiff’s claim for negligence focuses on conduct arising out of that contractual duty, the claim is founded in contract, not tort.”

The plaintiff disagreed with Cook’s analysis.

“According to how the law is being interpreted—which we disagree with—you cannot obtain damages for the wires because they went where they were supposed to go—notwithstanding the fact that they knew it was part of a known scam,” Murphy told Law.com. “They knew that there was something wrong and continued to do it, and they were cooperating in an [Adult Protective Services] investigation. I just don’t understand how it is that they can say, ‘We can’t do anything.’ That’s absurd.”

In a statement provided to Law.com, a Navy Federal spokesperson said that the company respected the court’s decision. The global credit union, which is headquartered in Vienna, Virginia, was represented by Troutman Pepper Hamilton Sanders partners David M. Gettings and Mary C. Zinsner.

“Wells Fargo takes financial exploitation very seriously. We are committed to helping our customers avoid fraud and scams through various resources, including ongoing education efforts,” company spokesman Jim Seitz also told Law.com.

Heather B. Chaney of McGuireWoods in McLean, Virginia, represented Wells Fargo.

In the meantime, the plaintiff’s legal team is weighing its options for a motion at the district court level before appealing. Murphy said she is also considering a legal strategy under the Bank Secrecy Act/the Anti-Money Laundering Examinations, under 31 U.S.C. Section 5311, which establishes reporting requirements for national banks, federal savings associations, and federal branches.

“From a legal perspective, to sue them, there’s not that many roads available, but there are cases that are coming up more frequently,” Murphy said.

But even for the savviest of individuals who fall victim to some of these ruses, the law simply isn’t on their side and hasn’t been for some time.

Five years ago, three-lawyer real estate and corporate transactional law firm O’Neill, Bragg & Staffin, based in Warminster, Pennsylvania, fell prey when a hacker posed as a partner of the firm, Gary Bragg, and emailed another partner about a loan transaction of which the hacker seemed to have intimate knowledge.

In the correspondence, the hacker addressed partner Alvin Staffin by his nickname, Mel, and asked for a $580,000 transfer from the firm’s IOLTA sub-account to the Bank of China on behalf of a client.

Bank of America made the transfer at Staffin’s request. After the transfer was made, Staffin called Bragg to discuss it, finding out only then that Bragg had no knowledge of the $580,000 request.

The firm’s client’s account had insufficient funds to cover the transfer, only $1,900, according to the complaint. However, Bank of America drew from the firm’s other IOLTA sub-accounts belonging to other clients to cover the fraudulent transfer, the plaintiffs claimed.

The firm sued Bank of America for failing to stop the transfer once it had been notified of the breach, but in November, a federal judge for the Eastern District of Pennsylvania dismissed the action, finding that the firm failed to show that the bank breached any agreement, violated federal regulations or breached the Pennsylvania Commercial Code.

As for recommendations for other attorneys focused in elder law and estates, Murphy recommended that their clients have all estate planning documents, including a financial power of attorney, on file with the bank. Having a trusted family member on file can also be helpful, she said.

“The legal profession needs to be more aware that financial exploitation is not always by a family member or caregiver,” Murphy told Law.com. “This is criminal activity that’s happening and really and truly needs to be taken seriously. People need to be prepared to have serious conversations with their family members.”