The Consumer Financial Protection Bureau on Tuesday withdrew a legal brief it had filed in support of New York Attorney General Letitia James in her wire fraud case against Citibank.
The brief, filed in May, has been withdrawn because it “advances an interpretation of the Electronic Funds Transfer Act that has never been embraced by any federal court prior,” CFPB attorneys said.
In May, the CFPB interpreted the EFTA can be applied to online transactions that include a wire transfer, despite an exclusion found in EFTA and another exclusion found in the CFPB’s Regulation E, which protects consumers using electronic fund and remittance transfers.
“The Bureau has concluded that the filing of this Statement of Interest was inappropriate,” its motion to withdraw stated Tuesday. “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.”
Further, “by adopting this position … in a proceeding in which it is not even a party,” the CFPB had insulated its novel position from judicial review under the Administrative Procedure Act, the bureau said Tuesday.
Citi’s attorney Jeffrey Wall, a partner at law firm Sullivan & Cromwell, wrote the court Wednesday, noting that since EFTA’s enactment, regulators have consistently understood that it excludes consumer wire transfers.
“The only exception was the Bureau’s 2024 position, which has now been withdrawn,” Wall wrote.
The CFPB and New York attorney general’s office did not respond to requests for comment.
Wall noted in his letter that the CFPB’s change in position from one presidential administration to another “highlights the importance and difficulty of this question presented and the need for prompt and authoritative appellate guidance.”
It’s no surprise that the Trump-era CFPB would go against prior actions of the agency under Biden. Since January, the agency has ditched its lawsuit against Capital One, as well as eight other lawsuits it brought on behalf of consumers.
This week, the bureau asked a federal judge to vacate a settlement with Townstone Financial and return $105,000 to the mortgage firm accused of redlining. Acting Director Russ Vought said the bureau had “abused its power, used radical ‘equity’ arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them.”
