Photo: Sebra/Adobe Stock
A coalition of key financial services organizations, led by America’s Credit Unions and the New York Credit Union Association, along with the American Bankers Association, Bank Policy Institute and The Clearing House Association, filed an amicus brief Monday in support of Citibank’s appeal concerning a major interpretation of the Electronic Fund Transfer Act (EFTA).
The case originates from litigation by the New York Attorney General’s Office alleging that Citibank violated the EFTA by failing to protect consumers from scam-initiated wire transfers through its online banking platform. Citibank argues that the EFTA does not apply to such transfers because they fall under Uniform Commercial Code Article 4A, as opposed to EFTA.
In their brief filed with the Second Circuit Court of Appeals, the trade group coalition reiterated that expanding the EFTA’s scope to wire transfers “is contrary to decades of case law and regulatory guidance.” They warn that such a shift could force credit unions and banks “to scramble to determine their legal obligations and to expend a tremendous amount of time and resources to reorganize their operations.”
For credit unions, this case carries significant implications. If wire-transfer activity is brought under EFTA, institutions may face heightened liability, stricter disclosures, and higher compliance costs. Some smaller credit unions could even curtail or eliminate wire services altogether rather than absorb the risk. As America’s Credit Unions noted, “a seismic shift … could force some credit unions to stop offering wire transfers altogether.”
The litigation remains pending, and the coalition has pledged to keep credit unions apprised of further developments.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.