BPI, ABA and NYBA Urge CFPB to Reconsider Stance on EFTA Wire-Transfer Exemption

Dear Mr. Frotman:

We write on behalf of The Clearing House Association, the Bank Policy Institute, the New York Bankers Association, and the American Bankers Association (collectively, the “Associations”) to address the Consumer Financial Protection Bureau’s (“Bureau”) recent amicus brief and blog post contending that the originating portions of consumer wire transfers do not fall within the Electronic Fund Transfer Act’s (“EFTA”) wire-transfer exemption.[1] The amicus brief and blog post—which were made without any opportunity for notice and comment required by the Administrative Procedure Act (“APA”)—reflect a complete reversal from the Bureau’s regulations and longstanding position of it and its predecessor regulatory agencies that the originating portions of consumer wire transfers are part and parcel of the wire-transfer exemption from EFTA and are therefore governed by Article 4A of the Uniform Commercial Code (“UCC”). 

The Bureau has never before expressed the view that a consumer’s payment order to her bank to initiate a wire transfer is covered by EFTA.  In fact, regulators’ prior statements on this issue—dating back to 1990—are precisely the opposite.  See 55 Fed. Reg. 40791, 40804 (1990) (explanation of the Federal Reserve that UCC Article 4A applies to a “payment order” from a “consumer account” directing a funds transfer through the Fedwire Funds Service because EFTA and its implementing regulation “do not apply to fund transfers through Fedwire”).  Moreover, since the Bureau’s inception, the Bureau itself has accepted that it is “Article 4A of the U[CC],” not EFTA, that provides “consumers” with rights and protections “in connection with an unauthorized [wire] transfer,” including “improperly executed payment orders.”  77 Fed. Reg. 6194, 6211-12 (Feb. 7, 2012); see also id. (explaining that “until the Dodd-Frank Act [remittance] provisions become effective, wire transfers are entirely exempt from the EFTA and Regulation E” and remarking that the Bureau “believes UCC Article 4A will no longer apply” to remittance transfers (alone) as a result of the Dodd-Frank Act amendments (emphasis added)).  The Associations believe the Bureau’s prior position is the only plausible interpretation of the statute, one supported by both the legislative record and numerous cases interpreting the statute.  See New York v. Citibank, N.A., 24-659 (S.D.N.Y.), Dkt. No. 20. 

To read the full comment letter, please click here, or click on the download button below.

[1] See New York v. Citibank, N.A., 24-659 (S.D.N.Y.), Dkt. No. 28 (supporting New York Attorney General’s position that EFTA excludes only so-called “bank-to-bank [wire] transfers”); CFPB, Banks’ Responsibility for Scams (May 29, 2024), https://www.consumerfinance.gov/about-us/blog/banks-responsibility-for-scams/ (asserting that EFTA excludes “only bank to bank wire transfers from EFTA’s consumer protections”).