Credit Union Industry Opposes Proposed Changes to Electronic Funds Transfer Act

Recently introduced legislation in Congress would change the definition of an unauthorized transfer and result in dramatically increased fraud costs for credit unions. The Protecting Consumers from Payment Scams Act (S. 4943 and H.R. 9303) would change the definition of an unauthorized transfer in the Electronic Funds Transfer Act (EFTA).

America’s Credit Unions has contacted congressional leaders to oppose this bill and the League has reached out to our delegation to share our strong opposition. We don’t expect the legislation to move forward this session, but the dramatic implications for credit unions means this is an issue we want to be in front of and monitoring closely.

Fraud is one of the fastest rising costs for credit unions. Fraud losses nationally were nearly $12 billion in 2021 and are expected to be $19 billion in 2031. The new definition in the EFTA would require credit unions to reimburse consumers for fraudulently induced transfers, undelivered merchant goods, and consumer-based errors for misdirected payments. It would also define merchant charges for undelivered goods as errors along with misdirected payments resulting from information a consumer initially provided. EFTA’s current carveout for wire transfers would also change, with the bill treating remittance transfers the same as other electronic fund transfers subject to EFTA’s framework for error resolution and consumer reimbursement.

The League will continue to work with America’s Credit Unions, our league partners, and Maine’s congressional delegation to oppose this effort to shift the burden for fraud onto financial institutions.