CFPB Withdraws Statement of Interest in Citibank Case Involving Wire Transfers and Regulation E Exemption

By Alex Wade

March 27, 2025

On par with the current deregulation environment under the Trump administration, the CFPB, in a somewhat surprising move, filed a Motion to Withdraw Consumer Financial Bureau’s Statement of Interest (“Statement”) on March 25, 2025, in the New York Attorney General v. Citibank, N.A. case, currently pending in the Southern District of New York, Case No. 1:24-cv-00659.  As a reminder, this is the case where the NYAG alleged that Citibank violated the Electronic Fund Transfer Act (“EFTA”) by failing to follow the statute’s requirements when customers fell victim to wire fraud schemes, among other claims.  Please see our prior blog post discussing this case.

There were some very interesting nuggets in the CFPB’s Statement, wherein the CFPB completely reversed course from its prior aggressive stance that the EFTA can be applied to online-initiated transactions that include a wire transfer despite the exclusion found in the EFTA.  Notably, the CFPB stated, in pertinent part:

• The Statement of Interest the Bureau filed in this matter advances an interpretation of the EFTA that has never been embraced by any federal court prior to this case and has never previously been articulated by the Bureau or by the Federal Reserve.
• The Statement represents an unsuitable method of advancing a novel and significant interpretation of the EFTA that could impose significant liability on regulated parties without fair notice.
• The Statement of Interest upended the long-held understanding of Regulation E without notice and comment. Worse, by adopting this position in a “Statement of Interest” in a proceeding in which it is not even a party, the Bureau insulated this novel position from judicial review under the Administrative Procedure Act’s arbitrary and capricious standard. In doing so, the Bureau’s unprecedented interpretation was not informed by the process for legislative rulemaking defined in the APA. Instead, the Bureau announced a significant new interpretation that alters rights and obligations through a filing in a suit in which the Bureau is not even a party.

These were certainly strong words coming from the CFPB.  This clear reversal of the CFPB’s position is a step in the right direction in restoring the long-standing position taken by financial institutions that the EFTA exempts wire transfers from its coverage.

Unfortunately, the withdrawal of the Statement has no bearing on the outcome of the underlying case since the case will still be decided by a trier of fact, irrespective of the CFPB’s position (unless the parties settle the case).  We anticipate that the NYAG will continue to litigate the case, knowing that it already received a favorable ruling from Judge Paul Oetken, who previously denied, in part Citibank’s motion to dismiss.

Nonetheless, the withdrawal of the Statement should deflate the sails of the NYAG, which no longer has the backing of the CFPB.  Without the backing of the CFPB, that may change the tenor of the case and at the very least, provide Citibank with additional arguments in support of its defense.

Please note that the case is still moving forward with Citibank filing its Answer to the NYAG’s Complaint on March 24, 2025, while simultaneously seeking to appeal the court’s prior ruling denying its motion to dismiss.  As such, financial institutions should continue to monitor this important case.  Of course, SW&M is here to help financial institutions navigate the various nuances in the EFTA and its applicability to wire services in light of this pending case.

About the Author

Alex Wade

Alex Wade is a Senior Associate Attorney at SW&M and is part of the firm’s Regulatory Compliance and Litigation Management practice groups. Using his experience in consumer defense, complex business litigation, governmental liability, insurance entity defense and personal injury law, […]

Learn More