Consumer's UCL Claim Based on Violation of OCC Disclosure Requirements Not Preempted
Question: Are state law claims against a national bank based on alleged violations of disclosure requirements by the Office of the Comptroller of the Currency preempted by federal law?
Answer: No, according to the Fourth District Court of Appeal in Smith v. Wells Fargo Bank, 06 C.D.O.S. 855 (Jan. 26, 2006).
In this case, the plaintiff account holder alleged causes of action for false advertising, unfair competition, and violations of the Consumer Legal Remedies Act, claiming the Bank's account agreement and disclosures failed to adequately disclose the Bank could unilaterally charge certain fees for point of sale transactions when the customer had insufficient funds in his or her account.
Reversing a trial court order granting summary adjudication in favor of the Bank, the Court of Appeal held that the plaintiff's state law claims were not preempted by the National Bank Act and regulations of the Office of Comptroller of Currency. According to the court, such claims were not based on predicate acts involving a violation of state law but were instead based upon alleged violation of OCC disclosure regulations. "Because Smith's UCL cause of action is not based on a predicate act involving an alleged violation of a state law requiring (or limiting) certain disclosures by Bank, it is not preempted. . . ."
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