Can You Recover Emotional Distress Damages Under the EFTA? Yes. Here’s Why.

Banks and their lawyers routinely pretend otherwise. This article explains why they are wrong.

A case from our office

We recently represented a consumer whose checking account was hit with a string of unauthorized transactions over about a week. She called her bank right away to dispute them. Rather than promptly crediting her account, the bank trickled her money back in pieces over the following two and a half months, with the last credit arriving only after we filed an arbitration demand.

When the bank’s lawyers made their settlement offer, it covered roughly the amount the bank still had not credited, plus a little extra. In their view, that was all she had lost.

Then they sent us the recording of her original dispute call. On it, our client is crying.

That recording is exactly the kind of evidence the EFTA’s damages provision is designed to capture. And the bank produced it itself.

The statute: “any actual damage”

The EFTA’s civil liability section makes a bank that violates the Act liable for “any actual damage sustained by such consumer as a result of such failure.” 15 U.S.C. § 1693m(a)(1).

Congress did not say “out-of-pocket loss” or “economic damage.” It said “any actual damage.” Nothing in the text limits recovery to the money taken.

The case law

1. EFTA cases. Courts applying the EFTA have recognized emotional distress as recoverable compensatory damages. See Okocha v. HSBC Bank USA, N.A., 700 F. Supp. 2d 369, 376 (S.D.N.Y. 2010).
2. The rest of the Consumer Credit Protection Act. The EFTA is one of several statutes housed in the Consumer Credit Protection Act, alongside the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), and the Truth in Lending Act. Courts read identical language in these parallel statutes to carry the same meaning. See Johnson v. W. Suburban Bank, 225 F.3d 366, 379 (3d Cir. 2000). Emotional distress is a familiar category of “actual damages” under the FCRA and the FDCPA, which use the same phrase.

There is no principled reason the EFTA should be the one statute in the family where “actual damages” means only the money taken.

What banks argue, and why it fails

1. “Actual damages” means economic loss only. The statute says “any actual damage,” and Congress knew how to write “economic” or “out-of-pocket” when it wanted to. It did not.
2. The question is unsettled. In a 2025 non-precedential summary order, the Second Circuit was asked to decide whether emotional distress damages are available under the EFTA and declined to reach the issue because the bank won on a separate defense. Newman v. JPMorgan Chase Bank, N.A., No. 24-1914 (2d Cir. Nov. 13, 2025) (summary order). The court did not reject emotional distress damages; it simply did not decide the question.
3. The consumer is exaggerating. That is a question of proof, not of law. Contemporaneous evidence, like a recorded call in which the consumer is audibly distressed, answers it.

Trebling can multiply the number

The EFTA also lets consumers recover three times their actual damages when a bank fails to provisionally recredit the account within ten business days and either did not make a good faith investigation or did not have a reasonable basis for believing the account was not in error, or when it knowingly and willfully concludes there was no error when that conclusion could not reasonably have been drawn from the evidence. 15 U.S.C. § 1693f(e). Because trebling applies to actual damages under § 1693m(a)(1), emotional distress damages can be trebled too.

On top of that, consumers can recover statutory damages of $100 to $1,000 and their costs and reasonable attorney’s fees. 15 U.S.C. § 1693m(a)(2)(A), (a)(3). In most cases, the bank pays the lawyer, not you.

How to protect your claim

1. Dispute in writing and keep copies. Note the date of every call and who you spoke with.
2. Write down how it affected you. Lost sleep, missed payments, fights with family, time off work. Notes made at the time carry real weight.
3. Tell your doctor or therapist if the stress is affecting your health, and keep those records.
4. Ask for the call recordings. As our client’s case shows, the bank’s own recordings can be powerful evidence.

Talk to us

If your bank has refused or delayed reimbursing unauthorized transactions, contact Kane Law Firm for a free case review. EFTA claims carry fee-shifting, which means the bank, not you, pays our fees when we win.

This article is for general information only and is not legal advice. Prior results do not guarantee a similar outcome. Attorney Advertising.