Washington, D.C. — The American Bankers Association (ABA), Bank Policy Institute (BPI), New York Bankers Association (NYBA), and The Clearing House Association responded today to CFPB General Counsel Seth Frotman’s blog post regarding the state of New York’s lawsuit against Citibank over alleged wire transfer scams affecting some bank customers.
A central issue in the case is determining which law applies when a scammer steals money from a customer’s bank account via a wire transfer. In contrast to its previous guidance, the CFPB now argues that the Electronic Fund Transfer Act (EFTA)—a federal law providing consumer protections for specific types of electronic payments—applies in the New York v. Citibank case because the bank linked wire transfer capabilities to its online banking platform, and a fraudster initiated an unauthorized wire transfer online. However, this interpretation contradicts established law. The EFTA explicitly does not apply to wire transfers, which are instead governed by Article 4A of the Uniform Commercial Code (UCC).
"’Banks are dedicated to protecting consumers from fraud and scams, as demonstrated by the extensive consumer education campaigns they conduct and the significant investments they have made to ensure strong cybersecurity safeguards,’” ABA, BPI, NYBA and TCH stated in a joint statement. “They also investigate and report scammers to law enforcement while working closely with their customers to remedy the situation. The CFPB has the law wrong here: Wire transfers are excluded from the Electronic Fund Transfer Act. The CFPB cannot reinterpret a statute and reverse decades of settled law in an amicus brief and then use a blog post to suggest that its position is the law. The Bureau is supposed to be educating consumers, not confusing them."
The lawsuit alleges that Citibank inadequately responded to customers' reports that scammers stole money through unauthorized wire transfers from their online accounts. A critical question is whether such transactions fall under EFTA's governance.
It remains well-settled that EFTA does not cover wire transfers; these transactions are explicitly excluded from EFTA’s scope by Congress, which has chosen not to expand EFTA's coverage accordingly. Instead, such transactions are governed by Article 4A of UCC.
According to ABA, BPI, NYBA and TCH's amicus brief in this case, applying EFTA more broadly would impose additional costs on customers by forcing financial institutions to act as insurers against all unauthorized online wire transfers—potentially leading to higher costs and reduced convenience for consumers making payments.
The Bank Policy Institute represents universal banks, regional banks, and major foreign banks operating in the United States through public policy research and advocacy on regulatory matters including cybersecurity issues.
The American Bankers Association represents America's $24 trillion banking industry comprising small, regional, and large banks employing approximately 2.1 million people while safeguarding $19 trillion in deposits.
The New York Bankers Association includes community, regional, and large banks across New York State employing nearly 150,000 individuals while managing $2.6 trillion in deposits.
The Clearing House Association provides advocacy on payment-related issues through informed thought leadership alongside its sister company responsible for core payment system infrastructure clearing over $2 trillion daily.
Sean Oblack – Bank Policy Institute (sean.oblack@bpi.com)
Sarah Grano – American Bankers Association (sgrano@aba.com)
Karen Armstrong – New York Bankers Association (karmstrong@nyba.com)
Gregory MacSweeney – The Clearing House Association (gregory.macsweeney@theclearinghouse.org)