PA 17-40—SB 816

Judiciary Committee

AN ACT CONCERNING THE APPLICATION OF THE UNIFORM COMMERCIAL CODE TO CERTAIN FUNDS TRANSFERS UNDER THE ELECTRONIC FUND TRANSFER ACT

SUMMARY: This act addresses a gap in how state and federal law apply to remittance transfers (see BACKGROUND) by allowing state law to apply whenever federal law does not.

State law (Uniform Commercial Code (UCC) Article 4A) generally governs commercial fund transfers but, under prior law, did not apply if any part of the transfer was governed by the federal Electronic Fund Transfer Act (EFTA). EFTA applies to remittance transfers, which are a type of electronic transfer of funds, but in some circumstances EFTA does not govern all parts of a remittance transfer.

The act applies state law (specifically, UCC Article 4A) to a remittance transfer unless the transfer is covered by EFTA as an electronic fund transfer. The act applies EFTAʼs provisions when there is an inconsistency between state and federal law regarding a fund transfer.

EFFECTIVE DATE: October 1, 2017

BACKGROUND

Remittance Transfers

Federal law defines a “remittance transfer” as the electronic transfer of funds, to a designated recipient, that is initiated by a remittance transfer provider at the request of a sender located in any state whether or not the (1) sender holds an account with the remittance transfer provider or (2) remittance transfer is also an electronic fund transfer (15 U.S.C. 1693o-1).

UCC Article 4A

Article 4A of the UCC governs funds transfers. It establishes the rights and responsibilities of the parties to a funds transfer, including the partiesʼ payment obligations and allocation of risk of loss for unauthorized or improperly executed payment orders. Article 4A was drafted principally to govern funds transfers involving commercial entities (CGS 42a-4A-101 et seq.).

EFTA

EFTA (P.L. 95-630) provides a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer systems. Its primary objective is the protection of individual consumer rights (15 U.S.C. 1693 et seq.).

Under EFTA, an “electronic fund transfer” is any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, computer, or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account (15 U.S.C. 1693a).

Dodd-Frank Act Amendments

The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) amended EFTA to create new protections for consumers who send remittance transfers, including transfers to designated recipients located in a foreign country. It thus excluded from the UCC some remittance transfers previously covered by the UCC.