Boa Class Action

Case 2:18-cv-09490 Document 1 Filed 11/08/18 Page 1 of 44 Page ID #:1
1 Jeffrey R. Krinsk, Esq. (SBN 109234)

2 [email protected]
David J. Harris, Jr. (SBN 286204)
3 [email protected]
4 FINKELSTEIN & KRINSK LLP
550 West C Street, Suite 1760
5 San Diego, California 92101
6 Telephone: (619) 238-1333
Facsimile: (619) 238-5425
7
8 Counsel for Plaintiffs and
the Putative Class
9
10
11
UNITED STATES DISTRICT COURT
12
13 CENTRAL DISTRICT OF CALIFORNIA
14
15 FEDERICO GALAVIS and ZAK Case No.:
KIRIAKOS, Individually and On Behalf
16 of All Others Similarly Situated, CLASS ACTION COMPLAINT FOR:
17
Plaintiffs, (1) VIOLATION OF THE FEDERAL
18 TRUTH IN LENDING ACT, 15
19 vs. U.S.C. § 1601, et seq.;
(2) BREACH OF CONTRACT;
20 BANK OF AMERICA, N.A. and VISA, (3) TORTUOUS INTERFERENCE
21 INC., WITH CONTRACTUAL
RELATIONS
22 (4) DECLARATORY JUDGMENT
Defendants.
23 PURSUANT TO 28 U.S.C. § 2201
24 DEMAND FOR JURY TRIAL
25
26
27
28
1 Pursuant to Fed. R. Civ. P. 23, Plaintiffs Federico Galavis and Zak Kiriakos
2 bring this class action individually and on behalf of all other persons in the United
3
States who, upon purchasing a cryptocurrency from Coinbase.com or another Visa
4
5 credit card merchant, incurred cash advance fees and/or cash advance interest charges
6 on a consumer credit card issued by Defendant Bank of America, N.A. Plaintiffs

7
make the following allegations based on the investigation of their counsel, and based
8
9 upon personal knowledge as to themselves and their own acts and dealings with
10 Defendant Bank of America, N.A. Plaintiffs and their counsel believe that substantial,
11
additional evidentiary support will exist for the allegations set forth herein after a
12
13 reasonable opportunity for discovery.
14 INTRODUCTION
15
1. Bank of America, N.A. (“BOA” or “Defendant”) is one of the largest
16
17 credit card issuers in the United States. BOA partners with the nation’s two largest
18 credit card networks, Visa, Inc. (“Visa”) and MasterCard, Inc. (“MasterCard”), to
19
facilitate BOA’s payments to merchants on behalf of credit cardholders. Visa and
20
21 MasterCard, in turn, partner with merchants worldwide to allow them to receive credit
22 card payments from BOA and other credit card issuers.
23
2. Upon opening a consumer credit card account, BOA provides the
24
25 consumer with a standard form, adhesive contract stating the terms under which BOA
26 will extend credit to the consumer. Among those terms are the types of transactions
27
that result in different finance charges.
28 1
CLASS ACTION COMPLAINT
1 3. BOA’s written contracts and account-opening disclosures to cardholders
2 (the “Written Contracts”) show that BOA will charge a particular interest rate for
3
credit card “Purchases,” and a higher rate for so-called “Cash Advances.” “Purchases”
4
5 and “Cash Advances” are defined terms under the Written Contracts. The Written
6 Contracts state that BOA will extend credit in the form of a Cash Advance in
7
exchange for a transaction fee, in the greater amount of $10.00 or 5% of the
8
9 transaction amount. BOA will also assess interest charges of over 26% annually,
10 which accrue daily on both the transaction amount and the transaction fee, beginning
11
on the transaction date.
12
13 4. By contrast, BOA’s Written Contracts provide that credit card
14 “Purchases” come with no transaction fees and lower interest rates. BOA begins
15
charging interest on Purchases only (if ever) after a cardholder’s payment due date has
16
17 passed without the cardholder paying off their balance. By paying off one’s entire
18 account balance before the payment due date, a cardholder can avoid paying interest
19
on their Purchases, and many consumers often do this to avoid interest charges. With
20
21 Cash Advances, however, this frugal practice is impossible; the cardholder is charged
22 heavily, starting the day of the transaction and continuing every day thereafter until the
23
balance is paid in full.
24
25 5. Plaintiffs and thousands of Class members have used their BOA credit
26 cards to buy so-called “cryptocurrencies” (also called “virtual currencies” or
27
“cryptos”), such as Bitcoin, Litecoin and Ethereum. BOA’s Written Contracts do not
28 2
1 expressly address cryptos or the so-called “blockchain” technologies upon which
2 cryptos operate. The Written Contracts, however, make clear that the term “Purchase”
3
includes any “transaction that is not otherwise a Cash Advance.” And as detailed
4
5 herein, the buying of cryptos from a third-party credit card merchant does not fit
6 within any of the types of transactions which the Written Contracts enumerate as
7
“Cash Advances.”
8
9 6. Moreover, beginning in 2016 or earlier, BOA properly designated,
10 disclosed, and charged Plaintiffs’ and other Class members’ crypto purchases as
11
“Purchase” transactions under their Written Contracts.
12
13 7. From 2016 until and including January 22, 2018, BOA correctly deemed,
14 and affirmatively disclosed and charged, such transactions as “Purchases” under its
15
Written Contracts. BOA assessed no transaction fees, and applied the same interest
16
17 charges that it applied for all other types of credit card Purchases. Plaintiffs made
18 numerous crypto purchases during 2017 and early 2018, which BOA affirmatively
19
designated, disclosed, and billed to them as “Purchases.”
20
21 8. Then, between January 23, 2018 and February 2, 2018 (inclusive),
22 Plaintiffs bought more cryptos using their same BOA credit cards, under the same
23
Written Contracts. BOA wrongly treated all crypto transactions occurring between
24
25 those dates as “Cash Advances”: contrary to the plain language of its Written
26 Contracts, and contrary to BOA’s prior dealings with Plaintiffs and the Class. BOA
27
has assessed hundreds of dollars in surprise Cash Advance fees and interest charges
28 3
1 against Plaintiffs, without any advance notice, and now refuses to undo them. BOA’s
2 acts and omissions violated the Written Contracts, the federal Truth in Lending Act
3
(“TILA”) and Regulation Z promulgated thereunder by the U.S. Consumer Financial
4
5 Protection Bureau (“Bureau”). As detailed infra, Defendant Visa, Inc. (“Visa”) also
6 knowingly and tortuously interfered with Plaintiffs’ and the Class’s contractual
7
relationships with BOA.
8
9 9. As a direct and proximate result of Defendants’ wrongful conduct,
10 Plaintiffs estimate that they and the Class have incurred millions of dollars in Cash
11
Advance fees and interest charges on their BOA credit cards. The Class’s actual
12
13 financial damages are readily quantifiable based on BOA’s records of the credit card
14 transactions and finance charges in question. Plaintiffs and the Class seek, inter alia,
15
complete relief from all Cash Advance fees and interest charges levied against them
16
17 by BOA for their cryptocurrency purchases. Plaintiffs and the Class further seek a
18 declaratory judgment from this Court, clarifying the Class’s legal obligations under the
19
Written Contracts, once and for all.
20
21 JURISDICTION AND VENUE
22 10. With respect to Plaintiffs’ claims under the Truth in Lending Act, 15
23
U.S.C. § 1601, et seq., Regulation Z promulgated thereunder at Title 12, Part 1026 of
24
25 the Code of Federal Regulations, and the Declaratory Judgment Act, 28 U.S.C. §
26 2201, this Court has jurisdiction over the subject matter of this action pursuant to 28
27
U.S.C. § 1331, as this is a civil action arising under the laws of the United States.
28 4
1 11. With respect to Plaintiffs’ state law claims, the Court has jurisdiction
2 under 28 U.S.C. § 1332(d) because the aggregate amount in controversy exceeds

3
$5,000,000 and Plaintiffs and many Class members are citizens of States different
4
5 from the Defendants. If, however, the Court determines that it lacks jurisdiction over
6 Plaintiffs’ state law claims under 28 U.S.C. § 1332(d), then it may exercise
7
supplemental jurisdiction over such claims pursuant to 28 U.S.C. § 1367.
8
9 12. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b), as
10 Plaintiff Galavis resides within this district, and a substantial part of the events and
11
property giving rise to the claims presented herein are located within this district. In
12
13 addition, Visa is headquartered in California and transacts substantial business within
14 this district. Many of the acts that constitute the violations of law complained of
15
herein occurred in substantial part in this District.
16
17 PARTIES
18 13. Plaintiff Zak Kiriakos is a resident of California and has been a Bank of
19
America credit cardholder since 2017 or earlier.
20
21 14. Plaintiff Galavis is a resident of California and has been a Bank of
22 America credit cardholder since 2017 or earlier.
23
15. Defendant Bank of America, N.A. is domiciled in North Carolina and is
24
25 one of the largest national banks and credit card issuers in the United States.
26
27
28 5
1 16. Defendant Visa, Inc. is domiciled in California and is one of the world’s
2 largest credit card networks, facilitating payments from card-issuing financial

3
institutions to consumer-facing credit card merchants.
4
5 BACKGROUND
6 What is Money?
7
17. In the most general of terms, money is a tool used to facilitate economic
8
9 transactions. Only those media of exchange which are readily accepted in exchange
10 for goods, services, and real and financial assets are considered to be money.
11
Throughout the United States, money is composed of three kinds:
12
13 (a) currency (i.e., paper money and metal coins in the pockets and purses of the
14 public);
15
(b) demand deposits (i.e., non-interest bearing checking account deposits in
16
17 banks); and
18 (c) other checkable deposits, such as negotiable order of withdrawal accounts

19
(“NOW” accounts) at depository institutions like banks, savings and loan associations,
20
21 and credit unions.
22 While paper currency remains widely used for small transactions, most of the dollar
23
amount of payments in the economy are made by check or by electronic transfers
24
25 between deposit accounts.
26 18. Under the domestic (and global) “fiat” currency system, monetary units
27
defined by the government generally lack intrinsic worth. A dollar bill is merely paper
28 6
1 and ink, and a deposit is merely a book entry. Thus, money has no real “use case”
2 other than to serve as money. Thus, the ultimate value and viability of fiat currencies,
3
including the U.S. dollar and various foreign currencies, depend upon: (a) a
4
5 government which has a sovereign monopoly over the provision of its own fiat
6 currency; and (b) the fact that such fiat currency is the only unit which is acceptable
7
for payment of taxes and other financial demands of the government.
8
9 19. Governments create money principally through the mechanism of a
10 central bank: in the U.S., the Federal Reserve System, which interacts with public-
11
facing depository institutions. The actual process of money creation takes place
12
13 primarily in banks, with major control over the process ultimately resting in the
14 central bank. If one examines a piece of actual U.S. currency, such as a Series 2009
15
$20 bill, one can see evidence of both the “fiat” nature, and central bank origin, of our
16
17 nation’s currency. It is labeled as a “Federal Reserve Note,” displays the official seal
18 of the United States Federal Reserve System, displays copies of the personal
19
signatures of the Treasurer of the United States and the U.S. Secretary of the
20
21 Treasury, and states, “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS,
22 PUBLIC AND PRIVATE.”
23
What is a “Cryptocurrency” or “Virtual Currency”?
24
25 20. In short: not money. Virtual currencies are not legal tender for any (let
26 alone “all”) debts, whether public or private. Nor do virtual currencies represent
27
claims on legal tender.
28 7
1 21. The government does not accept payment for taxes or other obligations,
2 such as traffic tickets or student loans, in “virtual currency.” The overwhelming

3
majority of private businesses and individuals will also not accept payment for the sale
4
5 of goods, services, or real or financial assets in “virtual currency.”
6 22. No government has a sovereign monopoly on the creation of

7
cryptocurrencies. In fact, no person or entity has a monopoly: or any control at all for
8
9 that matter. Literally anyone can create their own cryptocurrency at any time, so long
10 as they are sufficiently skilled at programming computers. Indeed, stripped down of

11
rhetoric, cryptocurrencies are — at their core — arbitrary computer codes generated
12
13 through the use of popular computer programming languages, such as “C++.”
14 23. “Blockchain” software is the technological foundation of

15
“cryptocurrencies,” which are named as such because of a blockchain’s heavy usage
16
17 of “cryptographic functions.”1 Basically, blockchain software consists of a lot of
18 computer code used to store data, somewhat like a traditional database, yet
19
substantially different in the way it functions.
20
21 24. Bitcoin, the first ever cryptocurrency, was released as open-source
22 software in 2009 by an anonymous person, or group of persons, under the pseudonym
23 1
A “cryptographic function” can be described as a mathematical algorithm which
24 maps data of arbitrary size to a bit string (hence, the name “bitcoin”) of a fixed size,
called a “hash value” or “hash.” Cryptographic functions are designed to be one-way
25 mathematical functions: that is, a function which is practically impossible to solve in
reverse. Generally speaking, the only way to recreate the input data from a proper
26 cryptographic function’s output data (the “hash”) is to try all possible inputs to see if
they produce a matching output. The input data of a cryptographic function is often
27 called the “message,” and the output hash value is often called the “message digest” or
“digest.”
28 8
1 “Satoshi Nakamoto.” Since 2009, several other cryptocurrencies have been invented
2 by private persons seeking to improve upon, or offer alternatives to, Bitcoin software.
3
Some of the most popular cryptos available for “mining” or purchase today include
4
5 Litecoin, Ethereum, and Ripple.2
6 25. In 2011, a computer scientist named Charlie Lee created Litecoin as

7
another open source software project. In technical details, Bitcoin and Litecoin
8
9 software are largely the same: people can create and transfer “coins” (i.e., arbitrary
10 computer codes) to each other based on an open source, cryptographic protocol. All
11
transfers are recorded and stored on the “blockchain” that corresponds to the given
12
13 “coin.” In 2012, someone else invented Ripple. Someone else invented Ethereum in
14 2013. Ripple and Ethereum are less similar to Bitcoin in their technical functions than
15
is Litecoin. Ripple and Ethereum are also different from each other in their technical
16
17 functions.
18 26. Nobody has a monopoly, control or oversight on the invention of

19
cryptocurrencies. Additionally, once a new crypto-blockchain project is invented and
20
21 publicly distributed, it may well change into something else later. This is because the
22 blockchain upon which a given virtual currency operates is maintained through a
23
consensus of private computers running the given blockchain’s software; these private
24
25 computers are called “mining nodes.”
26 2
Bitcoins and other cryptos are “mined” through the use of private computers to solve
27 complex math problems. Upon solving a given math problem, the “miner” is awarded
units of Bitcoin or whatever other crypto is being “mined.”
28 9
1 27. There is no central authority to validate transactions or ownership. In
2 fact, the widely known “Bitcoin” cryptocurrency of today is not the same “Bitcoin”
3
that existed as recently as 2017. They are, today, two distinct virtual currencies
4
5 operating on two distinct blockchains, with two different records of transactions and
6 ownership. Likewise, the “Ethereum” cryptocurrency of today is not the same

7
“Ethereum” cryptocurrency of 2015; they are today two distinct virtual currencies,
8
9 operating on two distinct blockchains with two different records of transactions and
10 ownership. In both cases, a “forking” of the blockchain and corresponding

11
cryptocurrency occurred because of significant changes to the blockchain’s software
12
13 that not all users (or “mining nodes”) agreed upon. Consequently, in each case, there
14 are now two distinct cryptocurrencies instead of one.

15
28. All that to say: private computer programmers create cryptos, and private
16
17 computer programmers can and do change the nature, function and ownership of
18 cryptos on the fly. And such “forking” is not considered scandalous or unlawful.
19
29. Cryptos can also have use cases beyond serving as digital units of
20
21 “currency.” Ethereum, for example, is a blockchain software platform focused on
22 providing “smart contracts.” Smart contracts are computer programs that are stored on
23
the Ethereum blockchain, and can be accessed by Ethereum users. Smart contracts are
24
25 capable of, inter alia, managing agreements between users, storing information about
26 a particular application (such as domain registration information or membership
27
records), and interacting with other “smart contracts” (i.e., computer programs).
28 10
1 30. Ultimately, despite cryptos’ lack of government endorsement, economic
2 status, centralized oversight, acceptability as payment, or even cognitive accessibility

3
in the minds of laypersons, cryptocurrencies have gained broad-based public attention
4
5 for their potential applications in the future of business and finance. Many consumers
6 have come to view cryptos and blockchain software as the future of money, or the
7
future of financial technology. Even major banks like BOA see valuable, potential
8
9 applications for this technology in future monetary transactions and economic
10 transactions. See, e.g., https://www.ccn.com/big-banks-are-investing-heavily-in-

11
blockchain-and-crypto-364-billion-investment-firm/ (last visited August 15, 2018).
12
13 31. As of today, though, cryptos are not money: not even close. Nor do
14 cryptos represent claims on, or derivatives of, money. Whatever their “coin”-sounding
15
names might portend, virtual currencies and their blockchain systems are,
16
17 fundamentally, private-sector technologies, arbitrary computer codes, and software
18 applications. Accordingly, the U.S. Internal Revenue Service deems cryptos to be

19
personal “property” (not “currency,” or money) for federal tax purposes. With court
20
21 approval, the U.S. Commodity Futures Trading Commission regulates the purchase
22 and sale of cryptos as transactions in “commodities.” See, e.g., C.F.T.C. v.
23
McDonnell, 287 F.Supp.3d 213, 228 (E.D.N.Y. 2018) (“Virtual currencies are ‘goods’
24
25 exchanged in a market for a uniform quality and value.”) (emphasis added).
26
27
28 11
1 Crypto Sellers As Credit Card Merchants
2 32. In recent years, as virtual currencies began to spread from a small

3
segment of computer science gurus, into the media, and ultimately into the public
4
5 consciousness, tech-savvy entrepreneurs began to develop new infrastructures to
6 support the buying and selling of cryptos to consumers. Among such “infrastructure”
7
businesses was a now-prominent website called “Coinbase” (www.coinbase.com).
8
9 Coinbase serves as one of the largest cryptocurrency dealers in the United States.
10 Coinbase.com is owned and operated by San Francisco-based Coinbase, Inc., a

11
privately held company that buys and sells cryptocurrencies to consumers through a
12
13 user-friendly web interface.
14 33. For those consumers who think it prudent to acquire a virtual currency for
15
investment or other purposes, but who lack the computing power to “mine” (or invent)
16
17 cryptos themselves, Coinbase is one of the easiest and most cost-effective options for
18 acquiring a crypto. Upon creating an online account with Coinbase, a user may login
19
to their account, select a type and quantity of virtual currency to buy, enter their
20
21 payment information, click “Buy,” and become the owner of a virtual currency.
22 Coinbase itself buys cryptos from, and sells cryptos to, its customers, rather than
23
facilitating transactions between customers.3
24
25
26 3
Coinbase is sometimes referred to as a cryptocurrency “exchange,” but Coinbase is
27 not an exchange in the mold of stock exchanges or other securities and commodities
exchanges.
28 12
1 34. In mid-2016, Coinbase began accepting credit card payments from its
2 customers for cryptos. Many consumers took advantage of the opportunity to buy
3
cryptos with their credit cards, not because they needed to borrow money to make the
4
5 purchase, but because using a credit card was the most convenient way to acquire
6 cryptos instantly via Coinbase and other merchants. Buying virtual currencies with a
7
bank account number would require days of processing time, so many consumers used
8
9 credit cards to buy cryptos from Coinbase and other merchants to avoid delays in
10 delivery, or for other reasons.

11
SUBSTANTIVE ALLEGATIONS
12
13 BOA’s Written Contracts and Disclosures to Its Credit Cardholders
14 35. BOA issues a number of different credit cards to consumers nationwide,

15
such as the Bank of America Cash Rewards Visa, Bank of America Travel Rewards
16
17 Visa, and the BankAmericard Platinum Plus MasterCard, which differ primarily
18 according to their “introductory offers” and “rewards” features. These include

19
account-opening bonus offers, as well as other forms of compensation that vary
20
21 according to a card member’s spending levels.
22 36. As far as is relevant to this case, all BOA-issued consumer credit cards
23
come with substantially identical Written Contracts. E.g., Ex. A. At all relevant
24
25 times, each Written Contract has set forth the applicable interest rates and fees that
26 apply to different types of credit card transactions. Each Written Contract provides for
27
28 13
1 some variable annual percentage rate (“APR”) for “Purchases,” and a substantially
2 higher APR for “Cash Advances.”

3
37. At all relevant times, BOA’s Written Contracts with Plaintiffs and the
4
5 Class defined “Cash Advances” as follows:
6
A Cash Advance means the use of your account for a loan in the following
7
8 ways:
9 1. Direct Deposit: by a transfer of funds via an ACH (Automated
10
Clearing House) transaction to a deposit account initiated by us at your
11
12 request. A Direct Deposit does not include an Overdraft Protection Cash
13 Advance or a Same-Day Online Cash Advance.
14
2. Check Cash Advance: by an access check you sign as drawer.
15
16 3. Bank Cash Advance: by loans accessed in the following
17
manner:
18
a. ATM Cash Advance: at an automated teller machine;
19
20 b. Over the Counter (“OTC”) Cash Advance: at any
21
financial institution (e.g., to obtain cash, money orders, wire
22
transfers, or travelers checks);
23
24 c. Same-Day Online Cash Advance: by a same day online
25
funds transfer to a deposit account;
26
27
28 14
1 d. Overdraft Protection Cash Advance: by a transfer of
2 funds to a deposit account pursuant to an overdraft protection

3
program (see the section titled Overdraft Protection below);
4
5 e. Cash Equivalents: by the purchase of foreign currency,
6 money orders, travelers checks, or to obtain cash, each from a non-

7
financial institution, or person-to-person money transfers, bets,
8
9 lottery tickets purchased outside the United States, casino gaming
10 chips, or bail bonds, with your card or account number

11
(including through the use of an enabled mobile device).
12
13 Cash Advances include Transaction Fees and adjustments associated with any
14 Cash Advance.
15
38. The Written Contracts do not enumerate any other type of credit card
16
17 transaction as a “Cash Advance.”
18 39. At all relevant times, BOA’s Written Contracts defined “Purchases” as

19
follows:
20
21 Purchase means the use of your card or account number (including through the
22 use of an enabled mobile device) to:
23
1. buy or lease goods or services;
24
25 2. buy wire transfers from a non-financial institution (Wire Transfer
26 Protection);
27
3. make a transaction that is not otherwise a Cash Advance.
28 15
1 Purchases include Account Fees, as well as Transaction Fees and adjustments
2 associated with any Purchase.

3
40. Accordingly, unless buying cryptos constitutes a “Cash Advance”
4
5 transaction under BOA’s definition in ¶37, supra, then buying cryptos necessarily
6 constitutes a “Purchase” transaction under Plaintiffs’ and the Class’s Written Contracts
7
because such transactions are “not otherwise a Cash Advance.” ¶39, supra.
8
9 41. At no point did buying cryptocurrencies directly from a third-party credit
10 card merchant constitute a “Cash Advance” under BOA’s longstanding definition in

11
¶37, supra.
12
13 (a) Such transactions did not constitute “Direct Deposits” because they
14 did not involve “a transfer of funds via an ACH (Automated Clearing House)
15
transaction” or “a deposit account.”
16
17 (b) Such transactions did not constitute a “Check Cash Advance”
18 because they did not involve an “access check” signed by the cardholder.
19
(c) Such transactions did not constitute an “ATM Cash Advance”
20
21 because they did not involve “an automated teller machine.”
22 (d) Such transactions did not constitute an “Over the Counter
23
(“OTC”) Cash Advance” because at all relevant times, Coinbase was not “a
24
25 financial institution,” and cryptos did not constitute “cash,” money, or any other
26 financial instrument that represents a claim on money or “cash.”
27
28 16
1 (e) Such transactions did not constitute a “Same-Day Online Cash
2 Advance” because such transactions did not involve a transfer of funds “to a
3
deposit account,” but instead to Coinbase, as with any other online merchant, in
4
5 exchange for a product.
6 (f) Such transactions did not constitute an “Overdraft Protection Cash

7
Advance,” in part because they had nothing to do with overdraft protection.
8
9 (g) Such transactions did not constitute the purchase of “Cash
10 Equivalents” because cryptos are not “foreign currency,” “money orders,”

11
“travelers checks,” “cash,” “lottery tickets,” “casino gaming chips,” or “bail
12
13 bonds,” nor did such transactions constitute “person-to-person money
14 transfers,” such as those that may be executed through PayPal or Venmo.

15
42. In sum, buying a cryptocurrency directly from Coinbase or another Visa
16
17 merchant has never constituted a “Cash Advance” under BOA’s Written Contracts.
18 Moreover, from 2016 through January 22, 2018, Defendants themselves consistently
19
and correctly recognized this, as evidenced by their own multi-year treatment of these
20
21 transactions.
22 BOA’s Unpredictable Course of Dealing With Plaintiffs and the Class
23
43. Prior to January 23, 2018, Plaintiff Kiriakos bought cryptocurrencies
24
25 from Coinbase on several different occasions using his BOA credit card. Prior to
26 January 23, 2018, BOA affirmatively designated, disclosed, and charged Mr.
27
Kiriakos’s crypto purchases as “Purchase” transactions under his Written Contract.
28 17
1 44. On and after January 23, 2018, Plaintiff Kiriakos bought cryptocurrencies
2 from Coinbase on several other occasions using his BOA credit card, reasonably
3
understanding these transactions to be “Purchase” transactions as they had been in the
4
5 past. At no point did BOA amend its Written Contract with Mr. Kiriakos, or otherwise
6 disclose any change to the terms of Mr. Kiriako’s Written Contract, or to the actual
7
credit terms on his account. Nevertheless, on and after January 23, 2018, BOA
8
9 affirmatively designated and charged Plaintiff Kiriakos’s crypto purchases as “Cash
10 Advance” transactions under his Written Contract. BOA assessed substantial, never-
11
disclosed Cash Advance fees and interest charges against Plaintiff Kiriakos for these
12
13 transactions, and refuses to remove them.
14 45. At no point did BOA attempt to notify Mr. Kiriakos — neither before nor
15
immediately after he executed his post-January 23 crypto purchases — that such
16
17 purchases would be deemed “Cash Advance” transactions rather than “Purchase”
18 transactions under his Written Contract. Had Mr. Kiriakos known that BOA was
19
going to treat his virtual currency Purchases as Cash Advances, Mr. Kiriakos would
20
21 not have used his BOA credit card to buy virtual currencies on or after January 23,
22 2018, and would not have incurred the Cash Advance fees and interest charges that
23
BOA has imposed upon him.
24
25 46. Similarly, prior to January 23, 2018, Plaintiff Galavis bought
26 cryptocurrencies from Coinbase on several occasions using his BOA credit card. Prior
27
28 18
1 to January 23, 2018, BOA affirmatively designated, disclosed, and charged Mr.
2 Galavis’s Coinbase purchases as “Purchase” transactions under his Written Contract.

3
47. On and after January 23, 2018, Plaintiff Galavis bought cryptocurrencies
4
5 from Coinbase on several other occasions using his BOA credit card, reasonably
6 understanding these transactions to be “Purchase” transactions as they had been in the

7
past. At no point did BOA amend its Written Contract with Mr. Galavis, or otherwise
8
9 disclose any change to the terms of Mr. Galavis’s Written Contract, or to the actual
10 credit terms on his account. Nevertheless, on and after January 23, 2018, BOA
11
affirmatively designated and charged Plaintiff Galavis’s crypto purchases as “Cash
12
13 Advance” transactions under his Written Contract. BOA assessed substantial, never-
14 disclosed Cash Advance fees and interest charges against Plaintiff Galavis for these
15
transactions, and refuses to remove them.
16
17 48. At no point did BOA attempt to notify Mr. Galavis — neither before nor
18 immediately after he executed his post-January 23 crypto purchases — that such

19
purchases would be deemed “Cash Advance” transactions rather than “Purchase”
20
21 transactions under his Written Contract. Had Mr. Galavis known that BOA was going
22 to treat his virtual currency Purchases as Cash Advances, Mr. Galavis would not have
23
used his BOA credit card to buy virtual currencies on or after January 23, 2018, and
24
25 would not have incurred the Cash Advance fees and interest charges that BOA has
26 imposed upon him.
27
28 19
1 49. It was Defendants’ affirmative decisions and actions, not any merchant’s
2 decision or action, that caused BOA to improperly assess these Cash Advance fees and
3
interest charges against Plaintiffs and the Class without notice.
4
5 Defendants Improperly “Re-Categorize” Crypto Transactions
on the Visa Credit Card Network
6
7 50. A typical Visa credit card transaction, between a consumer and a
8
merchant, implicates multiple third parties. The transaction begins when a cardholder
9
10 presents his or her Visa credit card to the merchant as payment for goods or services.
11 Transaction data is sent by the merchant to the merchant’s financial institution (often
12
called the “acquirer”), and then routed by Visa’s payment processing system
13
14 (“VisaNet”) to the consumer’s credit card issuer (in this case, BOA). BOA either
15 approves or denies the transaction, and then sends its decision back through the
16
VisaNet system to the acquirer and merchant, usually within a matter of seconds.
17
18 51. Visa is not a creditor. Visa does not issue credit cards (i.e., lend money)
19 to consumers. Visa does not determine the interest rates, fees or other finance charges
20
on consumer credit cards. As in any consumer credit transaction — whether an auto
21
22 loan, mortgage, or personal loan — the lender (BOA) sets the credit terms for every
23 credit card transaction with its customers.

24
52. Visa is primarily a payment technology company. VisaNet authorizes,
25
26 clears and settles consumer credit card transactions processed by Visa. VisaNet
27 consists of multiple synchronized processing centers that are linked by a global
28 20
1 telecommunications network. It is Visa’s vast VisaNet system that connects
2 consumers, their banks, merchants and merchants’ banks, all at the swipe (or insert) of
3
a credit card.
4
5 53. In a recent filing with the U.S. Securities and Exchange Commission,
6 Visa depicted the parties involved in a credit card transaction as follows:

7
8
9
10
11
12
13
14
15
16
17
18
19 54. So while issuers carefully control whether and how to process credit card
20
transactions (i.e., whether and how to extend credit to the cardholder), Visa carefully
21
controls the data issuers use to make those decisions. Visa meticulously regulates the
22
23 transaction data that merchants and their acquirers’ must provide to issuers (through
24
the VisaNet system) for purposes of obtaining issuer approval. The issuer’s (in this
25
case, BOA’s) transaction processing system then makes decisions based upon the
26
27 transaction data provided. The transaction data provided includes, among many other
28 21
1 data points, the cardholder’s account number (and by extension, identity), the
2 merchant’s identity, the merchant’s location, and the dollar amount of the particular
3
transaction.
4
5 55. Another data point that Visa requires from merchants and their acquirers
6 before the merchant can accept a credit card payment is a merchant category code (or
7
“MCC”). The MCC tells issuers like BOA the type of business that is requesting
8
9 payment from the issuer on the consumer’s behalf. Visa has established and defined
10 several hundred MCCs to be assigned to different business types across the economic
11
spectrum. An MCC is a four-digit number that is assigned by the merchant’s acquirer,
12
13 and approved by Visa, at the time that the merchant business begins accepting Visa
14 credit cards from consumers. For example, MCC 5812 represents “Eating Places and
15
Restaurants,” and MCC 7832 represents “Movie Theaters.”
16
17 56. BOA’s payment processing system uses MCCs for a variety of purposes,
18 such as determining the type of credit card transaction being requested through
19
VisaNet, and in turn, determining whether and how to charge that transaction to the
20
21 cardholder’s account.
22 57. In or about January 2018, Defendant BOA — as creditor — made a
23
decision that consumer credit card purchases of cryptocurrencies from third party
24
25 merchants should be treated as “Cash Advance” transactions, rather than “Purchase”
26 transactions, under BOA’s Written Contracts with cardholders. This was a new
27
decision by BOA, which as of January 2018, knew that BOA had long designated,
28 22
1 disclosed and charges such transactions to its cardholders as “Purchases.” Such
2 “Purchase” treatment was consistent with (and indeed, required by) the longstanding
3
language of BOA’s Written Contracts.
4
5 58. As creditor, however, upon opening a consumer credit card account, BOA
6 retained the right to change an account holder’s credit terms in the future for any
7
number of reasons. See, e.g., Ex. A (“We reserve the right to amend this Agreement
8
9 at any time . . . .”) (emphasis in original). Contractually, BOA retained for itself the
10 right to change pretty much any term of the cardholder’s account, including but not
11
limited to: the interest rates, fees, credit limit(s), or even — as most clearly applicable
12
13 here — the types of credit card transactions to which “Cash Advance” fees and interest
14 charges would apply under the Written Contract.

15
59. So when BOA endeavored in January 2018 to change its treatment of
16
17 crypto purchases from “Purchases,” to “Cash Advances,” there were two primary
18 ways that BOA could have effected this change as a practical matter. One way would
19
have been to amend its Written Contracts with cardholders so as to enumerate
20
21 purchases of cryptocurrencies as “Cash Advances” or “Cash Equivalents” under those
22 agreements. If BOA sent such amended Written Contracts to its cardholders, this
23
would have afforded BOA the contractual right to begin charging cardholders Cash
24
25 Advance fees and interest charges on their virtual currency purchases.
26 60. But as a matter of statutory law, this would not have sufficed. TILA and
27
Regulation Z affirmatively require credit card issuers to provided cardholders with
28 23
1 advance written notice before implementing any “significant change” to the credit
2 terms on their accounts. 15 U.S.C. § 1637(i)(2). In interpreting TILA and

3
promulgating Regulation Z, the U.S. Consumer Financial Protection Bureau
4
5 (“Bureau”) specifically identified changing “the types of transaction to which different
6 [interest] rates apply” as a “significant change in account terms” under TILA, which
7
require written notice to the cardholder 45 days in advance of implementing such a
8
9 change.
10 61. So as a practical matter, the first, “Front Door Option” was for BOA was
11
to send out written notice to its cardholders, including Plaintiffs and the Class,
12
13 informing them that BOA would begin treating all credit card purchases of
14 cryptocurrencies as “Cash Advance” transactions, not “Purchase” transactions under

15
the Written Contracts, and then to amend the Written Contracts accordingly. For
16
17 whatever reason in January 2018, BOA decided not to do this.
18 62. Instead, BOA chose to execute a “Back Door Option.” This Back Door
19
Option was to require crypto-selling merchants to change their existing MCCs on
20
21 VisaNet, into an MCC that BOA’s payment processing system had already been using
22 for years to identify “Cash Advance” transactions under its Written Contracts. Unlike
23
the Front Door Option (the only lawful option), the Back Door Option would allow
24
25 BOA to immediately implement its desired change in credit terms at the flip of a
26 switch, behind close doors. Consumers would remain entirely in the dark about what
27
was happening.
28 24
1 63. BOA chose this Back Door Option to serve its own interests at Plaintiffs’
2 and the Class’s expenses, while ignoring TILA’s requirements and the bank’s express
3
contractual obligations to cardholders. In or about January 2018, BOA lobbied Visa
4
5 for, and approved of, Visa’s decision to change Coinbase and other crypto-selling
6 merchants’ MCCs on VisaNet. BOA lobbied for and approved of this change for the
7
particular purpose of imposing brand new, undisclosed Cash Advance fees and interest
8
9 charges against its cardholders.
10 64. On January 23, 2018, Visa capitulated to BOA’s and other issuers’
11
improper requests. Visa capitulated by forcing Coinbase and other crypto-selling
12
13 merchants to change their MCCs to MCC 6051. Visa imposed this MCC change upon
14 Coinbase with full awareness that it would cause BOA’s and other issuers’ processing
15
systems to automatically identify every purchase transaction between cardholders and
16
17 Coinbase as a “Cash Advance” transaction, rather than the “Purchase” transactions
18 that they had always been. Visa imposed this MCC change on Coinbase with full
19
knowledge of the outcome for consumers, and further, Visa violated its own data
20
21 standards in the process.
22 Visa Reassigns Coinbase Overnight to The Wrong MCC
23 to Facilitate BOA’s Unlawful Conduct Against the Class
24 65. The technical mechanism by which Defendants — not Coinbase —
25
effected this change on January 23, 2018 was by requiring Coinbase and other
26
27 commercial crypto sellers to change their MCCs on the Visa credit card network.
28 25
1 However, based on Visa’s then-existing data standards for assigning MCCs to credit
2 card merchants, the MCC to which Coinbase was forcibly reassigned was clearly not
3
the “correct” MCC for Coinbase.
4
5 66. Specifically, the Visa Data Standards Manual (“DSM”) in effect as of
6 January 2018 listed several hundred MCCs, each with different descriptions for the
7
different types of businesses that should be assigned to each MCC. The DSM in effect
8
9 at the relevant time also provided helpful interpretive guidance for assigning MCCs to
10 merchants, based on the various MCC descriptions contained in the DSM.

11
67. Under a section titled “General Rules,” the DSM explained:
12
13 The MCC is a four-digit number assigned to describe a merchant’s
14 primary business based on annual sales volume measured in local

15
currency. In addition, some MCCs identify a specific merchant or type of
16
17 transaction. Because Visa and its members [i.e., issuers] use MCC data
18 for a range of purposes, including activity tracking, reporting, and risk

19
management purposes, it is crucial that acquirers assign the proper MCC
20
21 to each merchant.
22
23 The DSM further instructed as follows under a subsection titled “Basic Rules to
24 Remember”:
25
The following rules should be considered when assigning MCCs:
26
27
28 26
1 1. Select the MCC that most accurately describes the merchant’s
2 business. The MCC, in most cases, should reflect the primary type
3
of business in which the merchant is engaged. If the merchant has
4
5 more than one line of business and may qualify for more than one
6 MCC, the merchant must either:

7
Use the MCC that describes the business with the highest sales
8
9 volume (measured in local currency) to process all Visa sales [or]
10
Use different MCCs for each line of business.
11
12 2. Use MCCs termed “miscellaneous” only if there is no MCC
13
specific to the merchant’s business. MCC descriptions are very
14
15 accurate, and merchants must only be assigned a “miscellaneous”
16 MCC when no other MCC applies to its business. Miscellaneous

17
MCCs generally end in the number 99. Examples are MCC 5499
18
19 — Miscellaneous Food Stores and MCC 5999 —Miscellaneous
20 and Specialty Retail Shops. MCCs are used for a variety of

21
purposes by acquirers [i.e., merchants’ banks], issuers, and Visa. It
22
23 is important that a merchant be assigned the MCC that most
24 accurately describes its business. When there is such an MCC, the
25
merchant must not be assigned a “miscellaneous MCC.”
26
27
28 27
1 68. The DSM further provided that acquirers (i.e., merchants’ banks) must
2 “have a clear understanding of different merchants’ business types and their proper
3
MCC designation,” and that “[a]ll acquirers are responsible for making sure that each
4
5 merchant business is identified using the most appropriate MCC.” The DSM also said
6 that, “Visa retains the right to require corrections [not ‘arbitrary changes’] to non-
7
compliant or confusing merchant descriptors.”
8
9 69. As of January 23, 2018, Coinbase and its financial institution were
10 arbitrarily and capriciously required by Visa, at BOA’s and other issuers’ requests, to
11
change Coinbase’s longstanding, pre-approved MCC to a different MCC: numbered
12
13 6051.
14 70. As of January 23, 2018, MCC 6051 was titled in the Visa DSM as “Non-
15
Financial Institutions—Foreign Currency, Money Orders (Not Wire Transfer), and
16
17 Travelers Cheques.” The DSM’s complete description for MCC 6051 stated as
18 follows:
19
This MCC must be used for the funding of an account, the purchase of foreign
20
21 currency, money orders, or travelers cheques occurring at non-financial
22 institutions such as currency exchanges, money order merchants, and hotels.
23
The face-to-face purchase of foreign currency, money orders, and travelers
24
25 cheques at financial institutions such as banks, savings and loans, thrifts and
26 credit unions must be classified under MCC 6012 – Financial Institutions —
27
Merchandise and Services. (emphasis in the last two lines from the original).
28 28
1 The code description for MCC 6051 had always been expressly limited to “the funding
2 of an account, the purchase of foreign currency, money orders or travelers cheques.”

3
71. As the DSM itself explained, “MCC descriptions are very accurate,” not
4
5 generalized, except for those “miscellaneous” codes which are to be used sparingly.
6 See ¶67, supra. For the reasons explained in ¶¶17-31 and ¶¶41-46, supra, the sale of
7
virtual currencies did not, in fact, come close to matching Visa’s “very accurate”
8
9 description for MCC 6051 as of January 23, 2018.
10 72. In addition, as of January 23, 2018, there were several other more
11
accurate MCCs in the DSM that could have been chosen for Coinbase. Yet Visa acted
12
13 against its own DSM and required Coinbase to switch to an MCC that clearly never
14 applied to Coinbase, because:

15
(a) the particular purpose of this sham MCC change was to aid and abet BOA in
16
17 charging wrongful Cash Advance fees and interest charges against
18 cardholders; and
19
(b) BOA’s computer systems were long programmed to designate, disclose and
20
21 charge transactions coded with MCC 6051 as “Cash Advance” transactions
22 under the Written Contracts.4
23
24
4
25 This particular programming for MCC 6051 in BOA’s computer systems was not a
problem before January 23. But after this MCC change on January 23, BOA’s
26 computers were programmed to charge as “Cash Advances” a brand new category of
transactions that was never disclosed in, or permitted by, the terms of BOA’s Written
27 Contracts. This is the technical mechanism by which BOA silently effected these
brand new Cash Advance charges against cardholders.
28 29
1 73. Visa previously approved a different MCC for Coinbase, other than 6051,
2 as Visa merchants cannot be assigned an MCC in the first place without Visa’s
3
approval.
4
5 74. Moreover, in March 2018, just after Visa began requiring Coinbase and
6 other crypto sellers to switch to the inapposite MCC 6051, Visa’s Chief Financial
7
Officer publicly declared, “My personal view is that cryptocurrencies are more
8
9 speculative investment commodities than payment options, operating in a very
10 unsettled regulatory environment.” He further commented on one of the many

11
fundamental differences between cryptocurrencies and money: “With a currency
12
13 issued by the Federal Reserve, I know who stands behind it.” With cryptocurrency, he
14 said: “Who’s good for the money? Who the hell knows?” In addition, he opined,
15
“This is the ultimate thing that you hear about when you have a bubble, when the guy
16
17 shining your shoes tells you what stock to buy.” See
18 https://www.ft.com/content/ba6c2c40-285f-11e8-b27e-cc62a39d57a0 (last visited

19
August 15, 2018).
20
21 75. Visa’s CFO was likely correct to call cryptocurrencies “investment
22 commodities” in March 2018. And conveniently, Visa’s DSM had a specific MCC for
23
investment commodities at the time: MCC 6211. The DSM stated that, “Merchants
24
25 classified under this MCC [6211] buy, sell and broker securities, stocks, bonds,
26 commodities, and mutual funds.” This MCC 6211 could well have been used to
27
“accurately” and “appropriately” describe Coinbase, because Coinbase sells
28 30
1 cryptocurrencies to consumers for investment and other purposes. Coinbase never
2 sold “foreign currency, money orders, or travelers cheques,” as required by MCC

3
6051. But neither Visa nor BOA demanded the admittedly more “accurate” and
4
5 “appropriate” MCC 6211 from Coinbase or from Coinbase’s financial institution:
6 because the goal of this MCC change was never “accuracy,” as required by the DSM,
7
but rather, to help BOA levy Cash Advance charges against its cardholders.
8
9 76. As of January 2018, Visa’s DSM also had existing MCCs for “Digital
10 Goods — Applications (Excludes Games)” and “Digital Goods — Large Digital

11
Goods Merchant.” These were listed as MCC 5817 and MCC 5818, respectively.
12
13 The DSM described the former as selling “applications (excludes games: see 5914)
14 that are delivered in electronic format. Software, if delivered in electronic format,

15
may also be classified under this category.” The DSM described the latter as “large
16
17 merchants that sell digital goods (i.e., goods delivered via electronic format) with a
18 minimum threshold of 25 million transactions annually.” Coinbase, the preeminent

19
seller of virtual currencies, more accurately and appropriately fell into either of these
20
21 MCCs than into MCC 6051 because MCC 6051 was — by its express terms — limited
22 to sellers of “foreign currency, money orders, or travelers cheques.”
23
77. But again, “accuracy” was neither BOA’s goal nor Visa’s goal in
24
25 reassigning Coinbase and other crypto merchants to MCC 6051. The sole purpose was
26 to impose brand new Cash Advance charges against credit cardholders like Plaintiffs
27
and the Class without notice. To serve that unlawful purpose, far more “accurate” and
28 31
1 “appropriate” MCCs were ignored by BOA and Visa in favor of the clearly erroneous
2 MCC 6051, which would accomplish BOA’s and other issuers’ unlawful purposes.
3
78. In April 2018, months after MCC 6051 was wrongly foisted upon
4
5 Coinbase and other merchants, Visa substantially amended its DSM to reflect the new
6 action it had taken against cardholders. As of April 26, 2018, Visa amended the DSM
7
to describe a brand new version of MCC 6051, which is now titled: “Non-Financial
8
9 Institutions — Foreign Currency, Non-Fiat Currency (for example: Cryptocurrency),
10 Money Orders (Not Money Transfer) Travelers Cheques, and Debt Repayment.” This
11
substantially amended description for MCC 6051 now provides:
12
13 This MCC must be used for the funding of an account, the
14 purchase of foreign currency, non-fiat currency (for example:

15
cryptocurrency), money orders, or travelers cheques that occurs at
16
17 non-financial institutions such as currency exchanges, money order
18 (a negotiable paper-based remittance — not a Money Transfer)

19
merchants, and hotels.
20
21 This MCC must also be used for the repayment of a loan or debt if
22
the entity that holds the debt is not a financial institution.
23
24 A merchant that sells non-fiat currency such as cryptocurrency
25
must use MCC 6051 for those transactions. All other transactions
26
27
28 32
1 at the same merchant locations must use the appropriate MCC for
2 those transactions.
3
4 79. The main point of the above MCC allegations (¶¶50-78, supra) is this:
5 BOA’s overnight switch from crypto “Purchases” to crypto “Cash Advances” was not
6
merely the result of a technical error on the part of Visa, Coinbase or Coinbase’s
7
8 acquirer. Instead, BOA and its business partners at Visa literally rewrote the book on
9 credit card transaction processing in order to implement this undisclosed — and

10
therefore unlawful — change in credit terms against Plaintiffs and the Class.
11
12 CLASS ACTION ALLEGATIONS
13 80. Plaintiffs bring this action as a class action pursuant to Federal Rule of
14
Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons and
15
16 entities in the United States who, upon purchasing a cryptocurrency from
17 Coinbase.com or another Visa credit card merchant, incurred cash advance fees and/or
18
cash advance interest charges on credit cards issued by Bank of America, N.A.
19
20 Excluded from the Class are BOA, the officers and directors of BOA, at all relevant
21 times, members of their immediate families and their legal representatives, heirs,
22
successors or assigns and any entity in which BOA has or had a controlling interest.
23
24 81. The members of the Class are so numerous that joinder of all members is
25 impracticable. Leading up to and during January and February 2018, hundreds if not
26
thousands of BOA credit card members used their BOA cards to purchase cryptos for
27
28 33
1 millions of dollars, collectively. While the exact number of Class members is
2 unknown to Plaintiffs at this time, and can be ascertained only through appropriate
3
discovery, Plaintiffs believe that there are hundreds or thousands of members in the
4
5 proposed Class. Members of the Class may be identified and located from database
6 records maintained by BOA and may be notified of the pendency of this action by
7
electronic mail and/or regular mail, using the form of notice similar to that
8
9 customarily used in class actions.
10 82. Plaintiffs’ claims are typical of Class members’ claims, as all members of
11
the Class are similarly affected by Defendants’ wrongful conduct in violation of law,
12
13 as complained of herein.
14 83. Plaintiffs will fairly and adequately protect the interests of Class
15
members and has retained counsel competent and experienced in class action
16
17 litigation. Plaintiffs have no interests antagonistic to or in conflict with those of the
18 Class.
19
84. Common questions of law and fact exist as to all members of the Class
20
21 and predominate over any questions solely affecting individual members of the Class.
22 Among the questions of law and fact common to the Class are:
23
a. whether BOA violated TILA by declining to notify Plaintiffs and all other
24
25 Class members in advance of its sudden, unilateral change to their credit card terms;
26 b. whether BOA, in fact, failed or declined to provide Class members with
27
advance written notice of its sudden, unilateral change to their credit card accounts;
28 34
1 c. whether BOA breached its Written Contracts with Plaintiffs and the Class
2 by assessing Cash Advance fees and interest charges against them for buying cryptos
3
directly from a third-party Visa merchant;
4
5 d. whether Visa tortuously interfered with Plaintiff’s and the Class’s
6 contractual relationships with BOA;

7
e. whether Plaintiffs and the Class suffered damages as a result of
8
9 Defendants’ conduct, and the proper measure of such damages; and
10 f. whether Plaintiffs and the Class are entitled to statutory damages, as well
11
as reasonable attorneys’ fees and expenses as a result of BOA’s wrongful conduct.
12
13 85. A class action is superior to all other available methods for the fair and
14 efficient adjudication of this controversy since joinder of all members is impracticable.

15
Furthermore, as the damages suffered by individual Class members may be relatively
16
17 small, the expense and burden of individual litigation would make it difficult if not
18 impossible for members of the Class to redress the wrongs done to them on an
19
individual basis. There will be no difficulty in the management of this case as a class
20
21 action.
22 COUNT I
23 Breach of Contract
24 (Against Defendant BOA)
25 86. Plaintiffs hereby repeat and re-allege each and every allegation set forth
26
above as if fully set forth herein.
27
28 35
1 87. Plaintiffs and each member of the Class entered into adhesive Written
2 Contracts with Defendant Bank of America, N.A.

3
88. The Written Contracts provide that, “This Agreement is governed by the
4
5 laws of the State of North Carolina (without regard to its conflict of laws principles)
6 and by any applicable federal laws.”

7
89. Under North Carolina law, Defendant BOA and its agents acting on its
8
9 behalf breached the Written Contracts between BOA and members of the Class by
10 charging Cash Advance fees and interest charges on credit card transactions, which
11
did not and do not constitute “Cash Advances” or “Cash Equivalents” under BOA’s
12
13 Written Contracts.
14 90. As a direct and proximate result of Defendant’s breaches of its Written

15
Contracts with Class members, and the implied covenant of good faith and fair
16
17 dealing, Plaintiffs and each member of the Class have sustained financial losses, costs,
18 damages and expenses in amounts to be proven at the trial of this matter.

19
COUNT II
20 Violation of Truth in Lending Act, 15 U.S.C. §§ 1601, et seq.,
21 Regulation Z, 12 C.F.R. §§ 1026.1, et seq. – “Significant Change in
22 Account Terms”
(Against Defendant BOA)
23
25 above as if fully set forth herein.
26
27
28 36
1 92. The Truth in Lending Act, at 15 U.S.C. § 1637(i)(2), requires credit card
2 issuers to “provide a written notice of any significant change, as determined by rule of

3
the [U.S. Consumer Financial Protection] Bureau, in the terms . . . of the cardholder
4
5 agreement between the creditor and obligor, not later than 45 days prior to effective
6 date of the change.”

7
93. Pursuant to its express authority under 15 U.S.C. § 1637(i)(2), the
8
9 Consumer Financial Protection Bureau (“Bureau”) promulgated 12 C.F.R. §
10 1026.9(c)(2) which provides the following “Rules affecting open-end (not home-
11
secured) plans,” i.e., credit card plans:
12
13 (i) Changes where written advance notice is required.
14 (A) General. For plans other than home equity plans . . . , when
15
a significant change in account terms as described in
16
17 paragraph (c)(2)(ii) of this section is made, a creditor must
18 provide a written notice of the change at least 45 days prior

19
to the effective date of the change to each consumer who
20
21 may be affected.
22 12 C.F.R. § 1026.9(c)(2)(i) (emphasis added). Section 1026.9(c)(2)(ii) then defines
23
“Significant changes in account terms” as follows:
24
25 For purposes of this section, a “significant change in account
26 terms” means a change to a term required to be disclosed
27
under § 1026.6(b)(1) and (b)(2), an increase in the required
28 37
1 minimum periodic payment, a change to a term required to
2 be disclosed under § 1026.6(b)(4), or the acquisition of a

3
security interest.
4
5 12 C.F.R. § 1026.9(c)(2)(ii). The credit card account terms specifically enumerated in
6 12 C.F.R. § 1026.6(b)(1), (b)(2) and (b)(4) include, but are not limited to, the
7
following:
8
9 Transaction charges. Any transaction charge imposed by the
10 creditor for use of the open-end plan for purchases.

11
12 C.F.R. § 1026.6(b)(2)(iv).
12
13 Cash advance fee. Any fee imposed for an extension of
14 credit in the form of cash or its equivalent.

15
12 C.F.R. §1026.6(b)(2)(vii).
16
17 Type of transaction. The type of transaction to which the
18 [interest] rate applies, if different rates apply to different

19
types of transaction.
20
21 12 C.F.R. § 1026.6(b)(4)(i)(C).
22 94. By disclosing and treating Plaintiffs’ and the Class’s crypto purchases as
23
“Purchases” under its card member agreements, and not imposing cash advance fees
24
25 or interest charges — then changing Plaintiffs’ and the Class’s crypto “Purchases” to
26 be treated as “Cash Advances” on January 23, 2018 — BOA made “significant
27
28 38
1 changes” to Plaintiffs’ and the Class’s credit card terms within the meaning of 15
2 U.S.C. § 1637(i)(2) and Regulation Z promulgated thereunder.

3
95. Upon making this significant, overnight change to Plaintiffs’ and the
4
5 Class’s credit card terms in January 2018, BOA did not provide advance written notice
6 of the change as required by 15 U.S.C. § 1637(i)(2) and Regulation Z.

7
96. In the alternative, Regulation Z provides as follows:
8
9 [I]f a creditor increases any component of a charge, or introduces a
10 new charge, required to be disclosed under § 1026.6(b)(3) that is

11
not a significant change in account terms as described in paragraph
12
13 (c)(2)(ii) of this section, a creditor must either, at its option:
14 i. Comply with the [45-day notice] requirements of paragraph

15
(c)(2)(i) of this section; or
16
17 ii. Provide notice of the amount of the charge before the consumer
18 agrees to or becomes obligated to pay the charge, at a time and in

19
a manner that a consumer would be likely to notice the disclosure
20
21 of the charge. The notice may be provided orally or in writing.
22 12 C.F.R. § 1026.9(c)(2)(iii).
23
97. The credit card terms specifically enumerated in 12 C.F.R. § 1026.6(b)(3)
24
25 include, but are not limited to, the following:
26 For charges imposed as part of an open-end (not home-secured)
27
[credit card] plan, the circumstances under which the charge may
28 39
1 be imposed, [and] the amount of the charge or an explanation of
2 how the charge is determined.

3
12 C.F.R. § 1026.6(b)(3)(i).
4
5 98. Had BOA provided Plaintiffs and the Class with advance notice of these
6 changes as required by TILA and Regulation Z, then Plaintiffs and Class members
7
would not have used their BOA credit cards to buy cryptos from Coinbase and other
8
9 merchants on or after the effective date of such changes. Consequently, Plaintiffs and
10 the Class would not have incurred BOA’s surprise “Cash Advance” fees or interest
11
charges, effectively taking out personal cash loans from BOA without their knowledge
12
13 or consent.
14 99. Pursuant to 15 U.S.C. § 1640(a), Plaintiffs bring this claim on their own
15
behalf, and on behalf of the Class defined above, to recover their and the Class’s
16
17 actual financial damages, plus statutory damages in the aggregate amount of $1
18 million, plus their costs of this action and reasonable attorneys’ fees and expenses
19
incurred therein.
20
21 COUNT III
Tortuous Interference With Contractual Relations
22
(Against Defendant Visa)
23
25 above as if fully set forth herein.

26
27
28 40
1 101. Plaintiffs and each Class member entered into Written Contracts with
2 BOA, to which Defendant Visa is not a party.

3
102. At all relevant times, Defendant Visa had knowledge of BOA’s Written
4
5 Contracts with Plaintiffs and the Class.
6 103. In or about January 2018, Defendant Visa intentionally acted to induce a

7
breach and/or disruption of Plaintiffs’ and the Class’s contractual relationship with
8
9 BOA, by requiring various Visa credit card merchants to inaccurately identify
10 themselves under MCC 6051 on VisaNet, for the particular purpose of facilitating
11
BOA’s treatment of the Class’s relevant transactions as “Cash Advances,” rather than
12
13 the “Purchase” transactions they had always been under BOA’s Written Contracts
14 with Plaintiffs and the Class. Visa’s intentional, MCC-altering conduct, in fact,
15
induced an actual breach and/or disruption of Plaintiffs’ and the Class’s contractual
16
17 relationships with BOA, as BOA’s transaction processing systems immediately and
18 inaccurately began identifying Plaintiff’s and the Class’s crypto transactions as

19
“purchase[s] of foreign currency, money orders, or travelers cheques” (i.e., money or
20
21 monetary instruments) under MCC 6051, when in fact, Plaintiffs’ and the Class’s
22 relevant credit card purchases were of no such thing, and Visa well knew this.
23
104. As a direct and proximate result of Visa’s MCC-altering conduct,
24
25 Plaintiffs and the Class suffered actual financial damages in the form of unlawful Cash
26 Advance fees and interest charges on their personal credit card accounts.
27
28 41
1 COUNT IV
Declaratory Judgment, 28 U.S.C. § 2201
2 (Against Defendant BOA)
3
105. Plaintiffs hereby repeat and re-allege each and every paragraph set forth
4
5 above as though fully set forth herein.
6
106. Pursuant to 28 U.S.C. § 2201, Plaintiffs and the Class are entitled to have
7
8 this Court establish by declaration their rights and legal relations under their Written
9 Contracts with Chase.

10
107. Accordingly, Plaintiffs on behalf of the Class pray for a declaration that
11
12 the terms of their Written Contracts with BOA do not permit BOA to impose “Cash
13 Advance” fees and interest charges against Plaintiffs and the Class for buying virtual
14
currencies from third-party credit card merchants.
15
16 PRAYER FOR RELIEF
17 WHEREFORE, Plaintiffs demand judgment against Defendants as follows:

18
A. Determining that the instant action may be maintained as a class action
19
20 under Rule 23 of the Federal Rules of Civil Procedure, and certifying Plaintiffs as
21 Class representatives, and the law firm of Finkelstein & Krinsk LLP as Class Counsel;
22
B. Requiring Defendants to pay the actual damages sustained by Plaintiffs
23
24 and the Class by reason of the acts and transactions alleged herein;
25 C. Awarding Plaintiffs and the Class additional statutory damages in the

26
aggregate amount of $1 million pursuant to 15 U.S.C. § 1640(a);
27
28 42
1 D. Awarding Plaintiffs and other members of the Class prejudgment and
2 post-judgment interest, as well as reasonable attorneys’ fees, expert fees and other
3
costs and expenses of this litigation; and
4
5 E. Awarding such other relief as the Court may deem just and proper.
6 JURY DEMAND
7
Plaintiffs hereby demand a trial by jury.
8
9
10 Dated: November 8, 2018 Respectfully submitted,
11 FINKELSTEIN & KRINSK LLP
12
13 By: s/ David J. Harris, Jr.
David J. Harris, Jr., Esq.
14
15 [email protected]
550 West C Street, Suite 1760
16 San Diego, California 92101-3579
17 Telephone: (619) 238-1333
Facsimile: (619) 238-5425
18
19 Counsel for Plaintiffs and the Putative
Class
20
21
22
23
24
25
26
27
28 43

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Case 2:18-cv-09490 Document 1 Filed 11/08/18 Page 1 of 44 Page ID #:1

1 Jeffrey R. Krinsk, Esq. (SBN 109234)

6 on a consumer credit card issued by Defendant Bank of America, N.A. Plaintiffs

1 3. BOA’s written contracts and account-opening disclosures to cardholders

1 expressly address cryptos or the so-called “blockchain” technologies upon which

2 under 28 U.S.C. § 1332(d) because the aggregate amount in controversy exceeds

2 largest credit card networks, facilitating payments from card-issuing financial

18 (c) other checkable deposits, such as negotiable order of withdrawal accounts

2 such as traffic tickets or student loans, in “virtual currency.” The overwhelming

6 22. No government has a sovereign monopoly on the creation of

10 as they are sufficiently skilled at programming computers. Indeed, stripped down of

14 23. “Blockchain” software is the technological foundation of

6 25. In 2011, a computer scientist named Charlie Lee created Litecoin as

18 26. Nobody has a monopoly, control or oversight on the invention of

1 27. There is no central authority to validate transactions or ownership. In

6 ownership. Likewise, the “Ethereum” cryptocurrency of today is not the same

10 ownership. In both cases, a “forking” of the blockchain and corresponding

14 are now two distinct cryptocurrencies instead of one.

1 30. Ultimately, despite cryptos’ lack of government endorsement, economic

2 status, centralized oversight, acceptability as payment, or even cognitive accessibility

10 transactions. See, e.g., https://www.ccn.com/big-banks-are-investing-heavily-in-

18 applications. Accordingly, the U.S. Internal Revenue Service deems cryptos to be

1 Crypto Sellers As Credit Card Merchants

2 32. In recent years, as virtual currencies began to spread from a small

10 Coinbase.com is owned and operated by San Francisco-based Coinbase, Inc., a

10 delivery, or for other reasons.

14 35. BOA issues a number of different credit cards to consumers nationwide,

18 according to their “introductory offers” and “rewards” features. These include

2 higher APR for “Cash Advances.”

1 d. Overdraft Protection Cash Advance: by a transfer of

2 funds to a deposit account pursuant to an overdraft protection

6 money orders, travelers checks, or to obtain cash, each from a non-

10 chips, or bail bonds, with your card or account number

18 39. At all relevant times, BOA’s Written Contracts defined “Purchases” as

1 Purchases include Account Fees, as well as Transaction Fees and adjustments

2 associated with any Purchase.

10 card merchant constitute a “Cash Advance” under BOA’s longstanding definition in

1 (e) Such transactions did not constitute a “Same-Day Online Cash

6 (f) Such transactions did not constitute an “Overdraft Protection Cash

10 Equivalents” because cryptos are not “foreign currency,” “money orders,”

14 transfers,” such as those that may be executed through PayPal or Venmo.

2 Galavis’s Coinbase purchases as “Purchase” transactions under his Written Contract.

6 understanding these transactions to be “Purchase” transactions as they had been in the

18 immediately after he executed his post-January 23 crypto purchases — that such

23 credit card transaction with its customers.

1 telecommunications network. It is Visa’s vast VisaNet system that connects

6 Visa depicted the parties involved in a credit card transaction as follows:

1 disclosed and charges such transactions to its cardholders as “Purchases.” Such

14 charges would apply under the Written Contract.

2 terms on their accounts. 15 U.S.C. § 1637(i)(2). In interpreting TILA and

14 cryptocurrencies as “Cash Advance” transactions, not “Purchase” transactions under

10 merchants, based on the various MCC descriptions contained in the DSM.

14 primary business based on annual sales volume measured in local

18 for a range of purposes, including activity tracking, reporting, and risk

1 1. Select the MCC that most accurately describes the merchant’s

6 MCC, the merchant must either:

16 MCC when no other MCC applies to its business. Miscellaneous

20 and Specialty Retail Shops. MCCs are used for a variety of

2 of an account, the purchase of foreign currency, money orders or travelers cheques.”