On May 29, 2024, the CFPB published a blog post discussing a bank’s responsibility when a customer becomes a victim of a scam. The CFPB also issued an amicus brief to argue that the Electronic Fund Transfer Act (EFTA) applies when banks connect the capability to initiate wire transfers to a consumer-facing banking platform.
Citibank is being sued by the state of New York for not responding adequately when customers reported money stolen in online scams using wire transfers. New York also alleges that instead of complying with the EFTA, Citibank looked to a law that was intended to govern transactions between commercial entities which does not provide the same level of consumer protection to victims of scams .Citibank has argued that the EFTA doesn’t apply because the scammers ultimately used a wire transfer to take the money, and the Act contains an exemption for transfers made by banks “by means of” a wire service.
The CFPB, through an amicus brief, argued that when a bank connects wire transfer capabilities to its online consumer banking platform and a person authorizes (or a scammer purports to authorize) a transfer online, the EFTA applies to the transaction except for the bank-to-bank portion of it.
Read the CFPB’s blog post here.
The amicus brief can be found here.