## Facts

- Lawrence and Georgene Kruser maintained a joint checking account with Bank of America and each had an ATM card and PIN for account access.
- The Bank provided written disclosures describing consumer liability and how to notify the Bank of suspected unauthorized transfers.
- The Krusers believed Mr. Kruser’s ATM card had been destroyed in September 1986.
- A periodic statement transmitted in December 1986 reflected a $20 unauthorized ATM withdrawal using Mr. Kruser’s card.
- The Krusers did not notify the Bank about the $20 withdrawal until August or September 1987.
- Mrs. Kruser underwent surgery in late December 1986 or early January 1987, was hospitalized about 11 days, and recuperated at home for several months; during this time she reviewed the bank statements.
- Statements for July and August 1987 reflected 47 additional unauthorized ATM withdrawals totaling $9,020, also using Mr. Kruser’s card.
- The Krusers notified the Bank of the July/August 1987 withdrawals within a few days of receiving those statements, but the Bank refused to recredit the account.
- The trial court granted summary judgment for the Bank on the ground that the Krusers failed to satisfy the notice requirements of the Electronic Fund Transfer Act and Regulation E; the Krusers appealed.

## Issues

1. Whether the 60-day notice period for reporting an unauthorized electronic fund transfer runs from the bank’s transmittal of the periodic statement showing the transfer, regardless of when the consumer reads or discovers it.
2. Whether failure to provide notice within 60 days relieves the bank of liability for later unauthorized transfers occurring after the 60-day period and before notice.
3. Whether illness and related personal circumstances extend or toll the 60-day notice period on these facts.

## Decision

- The Court of Appeal affirmed summary judgment for the Bank.
- The 60-day notice period begins when the bank transmits the periodic statement reflecting the unauthorized transfer, not when the consumer actually discovers it.
- Because the Krusers did not report the December 1986 unauthorized withdrawal within 60 days of statement transmittal, the Bank was not required to recredit the account for the later $9,020 in unauthorized withdrawals occurring before notice.
- The asserted illness-related circumstances did not justify extending the notice period where the evidence showed the statements were received and reviewed during the relevant months.
- With no triable dispute of material fact on timing and notice, the Bank was entitled to judgment as a matter of law.

## Legal Principles

- Under Regulation E, a consumer must report an unauthorized electronic fund transfer appearing on a periodic statement within 60 days of the financial institution’s transmittal of that statement to avoid liability for subsequent unauthorized transfers.
- If the consumer fails to notify within 60 days, the consumer may be liable for unauthorized transfers occurring after the 60-day period and before notice, to the extent the institution establishes those transfers would not have occurred with timely notice.
- The notice clock is triggered by statement transmittal; a rule keyed to actual discovery would incentivize nonreview of statements and frustrate loss prevention.
- Personal hardship does not extend the regulatory notice deadline absent a factual basis consistent with the consumer’s duty to monitor and promptly report unauthorized activity.

## Conclusion

The court held that Regulation E’s 60-day notice period runs from the bank’s transmittal of the statement showing the first unauthorized transfer, and that the Krusers’ late notice shifted liability for later unauthorized withdrawals occurring before notice, making summary judgment for the Bank proper.


Kruser v. Bank of Am. Nat’l Tr. & Sav. Ass’n, 230 Cal. App. 3d 741 (Ct. App. 1991)