Banking Associations Criticize CFPB's EFTA Interpretation

The Bank Policy Institute, The Clearing House Association, the New York Bankers Association and the American Bankers Association ("Associations") challenged the CFPB's assertion that "the originating portions of consumer wire transfers do not fall within the Electronic Fund Transfer Act ("EFTA") wire-transfer exemptions."

In the letter to the CFPB, the Associations argued that the agency's interpretation of the statute, submitted in a filing before the US District Court for the Southern District of New York, deviates from established legal and regulatory precedents. In the case, the New York Attorney General alleged that a bank failed to "respond adequately" to customers who reported fraudulent wire transfers. The bank countered that the EFTA excludes "bank-to-bank wire transfers," and therefore, the wire transfers in question were not covered by EFTA. The CFPB weighed in, asserting that when a bank provides its customers with wire-transfer capabilities, EFTA applies. 

The Associations argued that subjecting such wire transfers to the EFTA "reflect[s] 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."  The Associations also argued that the CFPB interpretation is effectively the promulgation of a new rule, which would require notice and an opportunity to comment under the Administrative Procedures Act.