Treatment of fraudulently induced electronic fund transfers

(a)

Definitions

Section 903 of the Electronic Fund Transfer Act (15 U.S.C. 1693a) is amended—(1)in paragraph (7)—(A)by striking subparagraphs (B) and (E);(B)by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively;(C)in subparagraph (B), as so redesignated, by adding or at the end; and(D)in subparagraph (C), as so redesignated, by striking or at the end;(2)by striking paragraph (9) and inserting the following:

(9)the term financial institution means—(A)a State or National bank, a State or Federal savings and loan association, a mutual savings bank, a State or Federal credit union, or any other person who, directly or indirectly, holds an account belonging to a consumer; or(B)any person that—(i)issues an accepted card or other means of access or provides other means to facilitate an electronic fund transfer; and(ii)agrees, directly or indirectly, with a consumer to provide electronic fund transfer services;

; and

(3)by striking paragraph (12) and inserting the following:

(12)the term unauthorized or fraudulently induced electronic fund transfer—(A)means an electronic fund transfer from a consumer's account initiated by—(i)a person other than the consumer without actual authority to initiate such transfer; or(ii)the consumer, if the consumer’s authorization or initiation of the electronic fund transfer was fraudulently induced; and(B)does not include any electronic fund transfer—(i)initiated by a natural person other than the consumer who was furnished with the card, code, or other means of access to such consumer’s account by such consumer, unless—(I)the consumer has notified the financial institution involved that transfers by such other person are no longer authorized; or(II)the consumer was fraudulently or coercively induced to furnish the card, code, or other means of access;(ii)initiated by a consumer who has fraudulent intent, or anyone acting in concert with such a consumer; or(iii)which constitutes an error committed by a financial institution.

(b)

Definition of error

Section 908(f) of the Electronic Fund Transfer Act (15 U.S.C. 1693f(f)) is amended—(1)in paragraph (2), by inserting , including a mistake or other error made by a consumer before the semicolon;(2)by redesignating paragraphs (6) and (7) as paragraphs (8) and (9), respectively; and(3)by inserting after paragraph (5) the following:

(6)the consumer’s inability to access funds in a frozen, closed, or otherwise inaccessible account, except as required by a court order or law enforcement or unless the financial institution determines that the consumer obtained the funds through unlawful or fraudulent means;(7)a reflection on a periodic statement of goods or services not accepted by the consumer or the designee of the consumer or not delivered to the consumer or the designee of the consumer;

(c)

Consumer liability for unauthorized or fraudulently induced transfers

Section 909 of the Electronic Fund Transfer Act (15 U.S.C. 1693g) is amended—(1)in the heading, by striking

unauthorized transfers

and inserting

unauthorized or fraudulently induced electronic fund transfers

;(2)by striking unauthorized electronic fund transfer each place such term appears and inserting unauthorized or fraudulently induced electronic fund transfer;(3)by striking unauthorized electronic fund transfers each place such term appears and inserting unauthorized or fraudulently induced electronic fund transfers; (4)in subsection (a)—(A)by striking unauthorized transfer and inserting unauthorized or fraudulently induced electronic fund transfer; and(B)by inserting fraudulently induced transfer or before loss or theft each place such term appears;(5)in subsection (b)—(A)by striking financial institution to show that and inserting “financial institution—

(1)to show that

;

(B)by striking was authorized or, if the electronic fund transfer was unauthorized, then the burden of proof is upon the financial institution and inserting “was authorized or was not fraudulently induced, as applicable; or

(2)if the showing under paragraph (1) is not made,

; and

(C)by striking , if the transfer was initiated after the effective date of section 905,; and(6)by adding at the end the following:

(f)

Shared liability of institutions involved in an unauthorized or fraudulently induced electronic fund transfer

(1)

Crediting of consumer account

A financial institution shall reimburse the consumer for the amount of an electronic fund transfer that was unauthorized or fraudulently induced, subject to any liability of the consumer under subsection (a).(2)

Liability sharing

Subject to paragraph (3) and with respect to a loss suffered by a financial institution in connection with crediting a consumer’s account for an electronic fund transfer that was unauthorized or fraudulently induced, the liability for such loss shall be evenly shared between the financial institution holding the consumer’s account and the financial institution that received the transfer.(3)

Liability of certain institutions that materially support other financial institutions

(A)

Rulemaking

The Bureau may issue—(i)a rule to identify certain financial institutions or classes of financial institutions described in section 903(9)(B) that materially support other financial institutions in carrying out electronic fund transfers; and(ii)such other rules as the Bureau determines are necessary or appropriate to implement the shared liability provisions under this subsection. (B)

Liability

With respect to a loss described in paragraph (2) in connection with an electronic fund transfer, if any financial institution identified under subparagraph (A) is described in section 903(9)(B) with respect to such transfer, each financial institution and the 2 financial institutions described in paragraph (2) shall evenly share the liability for such loss.

(d)

Rule of Construction

Nothing in this Act or the amendments made by this Act may be construed to limit the authority of the Bureau of Consumer Financial Protection or the applicability of relevant consumer financial protection laws that may otherwise impose requirements that are being amended by this Act.