Whether 'know' in UCC § 4A-207 imposes a due diligence standard or requires actual knowledge, and whether UCC § 4A-207 allows a defrauded party to file a claim against a financial institution without privity

An FBI report found that the funds stolen in internet scams were usually “sent directly to a financial institution ... which directly contributed to the increase in global exposed losses.” This case involves a question of national importance in which the courts of appeal have diverged: when does a financial institution bear responsibility for the loss when it allows scammers to use a custodial account to abscond with stolen funds. Uniform Commercial Code (UCC) Article 4A governs fund transfers. Section 4A-207 imposes liability against a financial institution when it “knows” that an incoming deposit is a misdirected transfer but fails to return it. The questions presented are: 1. Whether “know” in UCC § 4A-207 imposes a due diligence standard as the Eleventh Circuit and several district courts have held, or whether it requires actual knowledge by an employee, as the Fourth Circuit held below. And if the district court applied the wrong standard, did the Fourth Circuit abuse its discretion by not remanding to allow the district court to apply the correct standard? 2. Whether UCC § 4A-207 allows the defrauded party to file a claim against the financial institution, as at least one district court has held, or whether it imposes a “privity” requirement, as the Fourth Circuit held below. And even if § 4A-207 requires privity, did the Fourth Circuit abuse its discretion by considering a privity argument that was never made in district court or in the appellant’s opening brief, which if timely raised could have been cured by joining the party in privity?