What exactly would he file for? He has received a refund for the unused nights, and it is clearly in Hotwire's ToU to reserve the right to cancel a reservation for "fraudulent" activities. He could claim he suffered emotional and financial distress due to being made out to be a thief at the hotel and his debit card being authorized for an additional $350 than initially planned, but I honestly don't see anything illegal on the part of Hotwire.

They were just doing their jobs in trying to protect Hotwire users from thieves or hackers.