Electronic Fund Transfer Act
The People of New York v. Citibank N.A.
Date: Nov. 17, 2025
Issue: Does the Electronic Fund Transfer Act (EFTA) govern wire transfers?
Case Summary: ABA filed a coalition amicus brief urging the Second Circuit to reverse the district court’s denial of Citibank’s motion to dismiss the New York Attorney General’s (NYAG) EFTA claims.
The New York attorney general (NYAG) sued Citi, alleging it violated EFTA for having insufficient online security measures to protect against scammers and unlawfully refusing to reimburse them for fraud losses from wire transfers. Under EFTA, consumers may dispute outgoing electronic payments and receive refunds for unauthorized withdrawals. According to NYAG, Citi allegedly failed to use sufficiently strong data security measures to protect consumer financial accounts, respond appropriately to red flags, or limit theft by scammers. NYAG also claimed that Citi allegedly reacted ineffectively to fraud alerts, misled consumers, and summarily denied their claims.
Citi moved to dismiss, arguing EFTA does not apply because Article 4A of the Uniform Commercial Code (UCC) governs wire transfers. However, the Southern District of New York granted and denied Citi’s motion in part. The court concluded Subsection (7)(B) of EFTA applies only to interbank fund movements, not consumer-initiated payment orders. Citibank moved the district court to certify its opinion and order for interlocutory appeal to the Second Circuit and to stay the action in the interim. ABA filed a coalition amicus brief supporting Citi’s motion, which the court granted on April 25, 2025. On May 2, 2025, Citi petitioned the Second Circuit for interlocutory review. ABA filed another coalition amicus brief, this time urging the Second Circuit to grant Citi’s petition. On September 3, 2025, the Second Circuit granted Citi’s petition for interlocutory review.
ABA’s most recent coalition amicus brief presented three main arguments. First, ABA argued the NYAG’s novel theory that EFTA governs wire transfers ignores the history of the comprehensive and carefully developed scheme regulating fund transfers. ABA explained a settled regime governing funds transfers exists: EFTA covers certain consumer electronic transfers but expressly exempts wire transfers, while Article 4A provides the exclusive, comprehensive legal framework for wire transfers. In addition, the origins and development of Article 4A confirm EFTA was never understood to govern wire transfers. Before Article 4A’s adoption, experts and regulators widely recognized a legal gap because EFTA did not cover wire transfers, and Article 4A filled that gap by providing a framework consistently applied to both business and consumer wires. Finally, the NYAG’s interpretation disregards this history and decades of consistent case law and regulatory guidance, noting the Federal Reserve, CFPB, consumer groups, and all 50 states had repeatedly recognized that EFTA did not cover wire transfers and that Article 4A governed instead.
Second, ABA argued the NYAG’s interpretation threatens significant uncertainty and instability for wire transfers. The NYAG’s position would undo the long-settled division between EFTA and Article 4A, stripping consumer wire transfers out of Article 4A’s comprehensive framework and reviving the fragmented, unpredictable patchwork of rules that existed before 1989. This disruption would destabilize systems that now process more than $6 trillion in daily transfers and rely on Article 4A’s clarity, predictability, and nationally uniform rules, ABA warned.
Finally, ABA argued that if allowed to stand, the NYAG’s position would restrict consumers’ ability to initiate wire transfers electronically. Wire transfers give consumers a fast, secure way to make large, time-critical payments, such as home down payments, and many people rely on the convenience of sending these wires online. But ABA warned that applying EFTA’s near-strict-liability regime to high-value wire transfers would expose banks to far greater financial risk than the small-dollar transactions EFTA typically covers. In turn, this would force banks to shoulder massive potential reimbursement and provisional-credit obligations. Faced with this risk, banks would likely impose strict limits, increase fees, or stop offering online wire transfers altogether, leaving many consumers without practical access to an essential payment method.
Bottom Line: Citibank requested the Second Circuit reverse the district court’s denial of its motion to dismiss the NYAG’s EFTA claims, arguing the existing regulatory and legal frameworks already provide adequate consumer protection for wire transfers.
Document: Brief
