On Tuesday, March 25, 2025, the Consumer Financial Protection Bureau (CFPB or Bureau) filed a motion in a suit brought by the New York attorney general against a major national bank seeking to withdraw a Statement of Interest the Bureau filed last year, which advanced a “novel” interpretation of the Electronic Fund Transfer Act’s (EFTA) applicability to online-initiated wire transfers. The CFPB called its prior Statement “inappropriate,” noting that it could “impose significant liability on regulated parties without fair notice.”
The New York attorney general’s suit, which was filed in January 2024, alleged that, among other things, the bank failed to reimburse customers for unauthorized wire transactions as required by EFTA and its implementing regulation, Regulation E. The lawsuit claimed that even though EFTA and Regulation E expressly exempt bank-to-bank wire transfers (15 U.S.C. § 1693a(7)(B); 12 C.F.R. § 1005.3(c)(3)), EFTA applies to a bank’s electronic debits of consumers’ accounts, which occur prior to the wire transfer between the debiting and receiving bank. In its Statement of Interest filed in May 2024, the CFPB supported the New York attorney general’s interpretation of the law. Specifically, the CFPB argued that when banks connect wire transfer capabilities to consumer-facing online banking platforms, a resulting online-initiated wire transaction meets the definition of a covered “electronic fund transfer” under EFTA, and only the bank-to-bank wire portion of that transaction is excluded from Regulation E coverage; the remaining electronic fund transfer is subject to Regulation E.
However, in the CFPB’s recent motion, the CFPB “disclaims” the position it advanced in its prior Statement of Interest, arguing that its former position “has never been embraced by any federal court prior to this case,” was “never previously [] articulated by the Bureau or by the Federal Reserve,” and is inconsistent with the exclusionary language of EFTA and Regulation E and with the long history of regulating wire transfers pursuant to Article 4-A of the Uniform Commercial Code. Further, the CFPB contended that its prior position was the embodiment of regulation-by-enforcement because the Bureau purported to “upend[] the long-held understanding of Regulation E without notice and comment . . . through a filing in a suit” and “insulated [its] novel [former] position from judicial review under the Administrative Procedure Act’s arbitrary and capricious standard.”
In response, the New York attorney general argued that “the Bureau’s motion to withdraw is irrelevant to any matter currently pending before this Court,” since its prior Statement of Interest had been filed to aid the court’s evaluation of the defendant bank’s motion to dismiss, which “was denied months ago in an opinion and order that scarcely mentioned the Bureau’s statement of interest.” The attorney general also pushed back on the notion that the Bureau’s former interpretation of the law was “novel,” noting that “the Federal Reserve promulgated official commentary nearly thirty-five years ago that explicitly contemplated EFTA ‘applying to particular parts of an overall wire transfer’.”
The CFPB’s latest motion is presumably welcomed by industry groups, including the Clearing House, Bank Policy Institute, and American Bankers Association, among others, which reacted negatively to the Bureau’s previous Statement of Interest.
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