Banks on Hook for SIM Swap Damages via T-Mobile’s Inaction: Suit

T-Mobile removed to U.S. District Court for Eastern Michigan in Detroit a class action filed Dec. 2 in Wayne County Circuit Court alleging the carrier violated the Federal Communications Act when it failed to safeguard its subscribers' most sensitive information through SIM swap schemes. As a result of T-Mobile's failures, third parties have been able to gain access to T-Mobile’s subscribers’ financial accounts “and transfer significant sums of money from the accounts without the subscribers' authorization,” alleged plaintiff Michigan First Credit Union. T-Mobile subscribers challenged the unauthorized transactions with their financial institutions, which reimbursed customers for the cash transfers, as they're required to do under Regulation E of the Electronic Funds Transfer Act, said the complaint. Banks across the U.S. “have therefore been forced to bear the damages” associated with T-Mobile’s “actions and omissions,” it said. “These financial institutions are completely without fault, but are held responsible for these damages because of the strict liability provisions of Reg E,” said the complaint. Based on its allegations, the complaint puts “substantially more” than $5 million “in controversy in this action,” said T-Mobile’s notice of removal (docket 2:22-cv-13159). T-Mobile didn't comment Tuesday. An unrelated Dec. 21 class action alleged T-Mobile failed to protect customers' information in a SIM swap fraud (see 2212270024). That complaint alleged T-Mobile’s “gross negligence” in protecting consumers’ data, plus its “negligent hiring and supervision” of employees responsible for safeguarding that information, resulted in the loss of millions of dollars for plaintiffs in the class action.