The American Bankers Association, New York Bankers Association and two other associations last week urged a federal court to dismiss a lawsuit brought against Citibank by the New York attorney general’s office, saying the office is misinterpreting the federal law at the heart of the case. The NYAG sued Citibank last year for allegedly failing to protect and reimburse victims of wire fraud. The NYAG claimed the Electronic Funds Transfer Act applied to Citi’s facilitation of consumer wire transactions. But in an amicus brief filed with the Southern District of New York, the associations said the NYAG’s actions disregard the fact that the EFTA does not apply to wire transfers, which are governed instead by state laws adopting the Uniform Commercial Code.
The associations argued that the NYAG’s claim seeks to impose through litigation “an extraordinary policy change that could upend the current framework governing wires.” It contradicts the text of EFTA and the UCC and “would upend decades of legal precedent and industry practice,” potentially harming consumers in the process.
Applying Regulation E—the federal regulation on electronic fund transfers—to online or mobile consumer wires “would create a fractured and costly legal framework, confuse consumers and upend the predictability the marketplace depends [on] for these large payments,” they said. “As a result, consumers may lose the ability to quickly and efficiently make large wire transfers when buying homes, making other large purchases or switching banks.”
