On November 10, a national bank filed a brief with the U.S. Court of Appeals for the 2nd Circuit, challenging a district court’s denial of its motion to dismiss claims brought by the New York attorney general under the EFTA. The case centers on whether the EFTA applies to electronically initiated consumer wire transfers and certain intrabank transfers. As previously covered by InfoBytes, the district court granted the bank’s request for interlocutory appeal and stayed the proceedings, citing the significance of the legal issues and their potential impact on the banking industry.

In its appellate brief, the bank argued the EFTA expressly exempts consumer wire transfers from its coverage. The bank maintained that Article 4A of the Uniform Commercial Code provides the governing framework and consumer protections for wire transfers, not the EFTA. The bank asserted that the district court’s acceptance of the state attorney general’s theory — viewing a wire transfer as multiple separate transactions, only part of which is exempt from the EFTA — was artificial and unsupported by law or practice. The brief further argued that this approach would render the statutory exemption in 15 U.S.C. § 1693a(7)(B) meaningless and was inconsistent with the statute’s “text, context, and history.” Moreover, the bank argued that the attorney general’s interpretation would require a “sea change” in the financial services industry.

The bank also challenged the district court’s decision to allow the EFTA claims related to intrabank transfers, arguing that such transfers do not meet the statutory definition of “unauthorized electronic fund transfers” because they do not result in a net loss to the consumer and that the EFTA’s reimbursement framework was not designed for internal transfers. The bank requested that the 2nd Circuit reverse the district court’s denial of its motion to dismiss the EFTA claims, arguing that the existing regulatory and legal frameworks already provide adequate consumer protections for wire transfers.