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A Florida couple is suing the $9 billion Space Coast Credit Union in Melbourne and cryptocurrency exchange company Coinbase in San Francisco for allegedly violating federal laws after a hacker compromised their accounts and stole more than $14,000.
Justin Rueda and Janet Echevarria-Cabret, who claimed they were victims of identity fraud, filed the civil lawsuit last week in U.S. District Court in Miami. They had a checking account with Space Coast and a cryptocurrency trade account with Coinbase, which was linked to their credit union’s debit card, the suit said.
On Aug. 17, a hacker allegedly used the couple’s stolen credentials, intercepted a two-factor authentication code to access their Coinbase account and liquidated Rueda’s cryptocurrency, withdrawing $4,997, and made another $3,150 withdrawal on Aug. 22. The lawsuit did not explain how the two-factor authentication code was intercepted.
Coinbase confirmed the hack in an email and said it was irreversible, according to the suit. The company denied a refund on grounds that the account holder is responsible for activity even when credentials are compromised.
On Aug. 28, nine identical point-of-sale debits, each for $700 and coded “COINBASE https://www.fCAUS,” were posted on the couple’s Space Coast checking account in rapid succession, clearing $6,300 and leaving the account with a negative balance. Rueda and Cabret contacted the credit union that same day and reported the withdrawals as fraud.
Two days later, Space Coast issued nine provisional credits of $700 each, fully restoring the $6,300 balance, pending an investigation by VISA.
However, on Oct. 19, 52 days later, the credit union reversed the provisional credits, leaving the account overdrawn. On the same day, Space Coast mailed a form letter to the Florida couple stating the charges were deemed valid.
"The security of our members’ accounts is a top priority. We have rigorous protocols and authentication measures in place to safeguard accounts, and we take all reports of unauthorized use very seriously,” Space Coast Chief Strategy and Growth Officer Gary Prager said. “While we cannot comment on the specifics of any pending litigation, we are committed to thoroughly investigating claims as we strive to protect our members’ financial well-being."
Coinbase did not respond to a CU Times' request for comment on Tuesday.
Rueda and Cabret claimed that the credit union and Coinbase violated three provisions of the Electronic Fund Transfer Act (EFTA), alleging both organizations failed to investigate the disputed transactions, did not provide any documentation to back their decisions and improperly held the Florida couple liable for the full losses.
The first alleged violation was that Coinbase did not recredit the couple’s account within 10 days after informing Coinbase they did not authorize the transactions. Rueda and Cabret also claimed Coinbase failed to properly investigate the disputed transactions. Space Coast reversed the provisional credits without further explanation and failed to conduct a “good faith” investigation, the suit said.
The second alleged violation was that Coinbase gave no documents to explain its denial of reimbursement while the credit union did not provide the documented evidence that denied the couple’s claim.
The third violation alleged Coinbase and Space Coast improperly held Rueda and Cabret liable for the full loss of more than $14,000.
The Florida couple is asking the court to award unspecified damages and reimburse their attorney’s fees and costs.
Peter Strozniak can be reached at pstrozniak@cutimes.com.
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