WASHINGTON—Credit unions are concerned with—and strongly oppose—legislation to amend the Electronic Fund Transfer Act (EFTA), America’s Credit Unions wrote to House and Senate leaders.
The legislation, ACU President/CEO Jim Nussle said in the letters, would shift losses to credit unions and other financial institutions at the same time they are spending more money than ever to fight fraud and protect consumers.
H.R. 9303/S. 4943 seeks to define an unauthorized transfer as one that includes a fraudulently induced transfer, and would require credit unions and other financial institutions to reimburse consumers for this type of fraud.
In addition, as America’s Credit Unions noted, the legislation would also define merchant charges for undelivered goods as errors, along with misdirected payments resulting from information a consumer initially provided and would change the current carveout for wire transfers, treating remittance transfers the same as other electronic fund transfers subject to the EFTA’s framework for error resolution and consumer reimbursement.
‘Radical Changes’
“Collectively, these radical changes to the EFTA’s careful delineation of financial institution responsibility would impose severe costs on credit unions and dramatically alter their ability to absorb future losses,” Nussle told Congress.. “Moreover, the bill’s failure to address the root causes which have perpetuated criminal activity and left consumers vulnerable would mean a greater share of cooperative resources are directed towards covering fraud that proliferates outside the domain of credit union control.”
FTC Report is Cited
In support of the trade group’s arguments, Nussle cited a 2023 Federal Trade Commission report showing investment scams, followed by online shopping, were the top sources of money lost to fraud.
According to Nussle, proposals such as H.R. 9303/S. 4943 to expand financial institution liability under the EFTA to further encompass fraudulently induced transfers “neither prevent fraud nor incentivize coordination between regulators, law enforcement, and companies outside the financial sector who can help improve American resilience to scams.”