Today, we’re doing something a little different and turning the blog over to someone who brings real insight and experience to the topic. Our guest contributor brings deep expertise on wire transfers, Regulation E, and Article 4A and unpacks why a closely watched federal case in New York could have real implications for credit unions. Please welcome Mitch Pollack, the New York Credit Union Association’s General Counsel and managing member and founder of Mitchell Pollack & Associates.

For decades, credit unions and banks have operated under clear and predictable rules for fund transfers. Consumer electronic fund transfers are governed by Regulation E, while wire transfers fall under UCC Article 4A. That distinction has rarely been questioned—until now.

The New York Attorney General’s lawsuit in New York v. Citibank challenges whether a wire transfer initiated by a consumer, through online or mobile banking, remains an Article 4A transaction, or whether it should instead be treated as a Regulation E electronic fund transfer.

The New York Attorney General’s Theory

The Attorney General alleges that Citibank failed to adequately prevent account takeovers, allowed fraudsters to initiate wire transfers from compromised consumer accounts, and improperly denied reimbursement by asserting that Regulation E did not apply.

The state’s central argument is that when a consumer initiates a wire through online or mobile banking, the transaction qualifies as an “electronic fund transfer” under the Electronic Fund Transfer Act—despite long-standing industry practice and case law treating wire transfers exclusively under Article 4A.

To support this position, the Attorney General advances a “transaction-splitting” theory, dividing a wire transfer into three steps:

1. The consumer submits payment instructions through online or mobile banking;
2. The financial institution processes the payment and sends funds through a wire network; and
3. The recipient’s account is credited

Under this approach, steps one and three are characterized as Regulation E transactions, even if the wire itself remains governed by Article 4A.

Citibank moved to dismiss the Complaint arguing that Regulation E doesn’t apply and UCC Article 4A governs wire transfers. The U.S. District Court for the Southern District of New York declined to dismiss the Regulation E claims at the pleading stage, allowing the theory to proceed. This was not a decision on the merits. The case is now on appeal before the Second Circuit, with final briefing due in January 2026.

Why Credit Unions Should Care

Article 4A was designed to promote certainty, speed, and finality in wire transfers. It allocates risk based on whether the financial institution employed commercially reasonable security procedures and acted in good faith. When those standards are met, courts have historically placed fraud losses on the customer, rather than treating the institution as an insurer.

The Attorney General’s lawsuit seeks to upend that framework by reclassifying consumer-initiated wires as Regulation E transactions. If that position ultimately prevails, the implications for credit unions could be significant:

• Article 4A’s loss-allocation rules may no longer apply to consumer wires;
• The commercially reasonable security defense may lose its protective value;
• Regulation E notice, investigation, and reimbursement requirements could be imposed on wire transfers; and
• The long-standing principle of finality in wire payments could be eroded.

In practical terms, this would increase fraud exposure, operational burden, and reimbursement risk for credit unions offering online or mobile wire capabilities.

What Credit Unions Should Do Now

While the Citibank case remains unresolved, credit unions should treat it as a regulatory warning sign and take proactive steps to mitigate potential exposure—particularly for consumer-initiated wire transfers through online or mobile banking.

Review consumer wire disclosures and agreements. Ensure account agreements, wire transfer disclosures, and online banking terms clearly describe how consumer-initiated wires are handled, including governing law, security procedures, and member responsibilities. Ambiguities may be scrutinized if Regulation E arguments gain traction.

Reevaluate wire fraud controls for consumer channels. Assess whether existing wire security procedures—especially those tied to online and mobile banking—remain commercially reasonable in light of evolving fraud tactics. This includes authentication, anomaly detection, callback procedures, and transaction monitoring.

Document good-faith compliance efforts. Maintain clear records showing how wire transfers are reviewed, approved, and processed, and how security controls are evaluated and updated. Demonstrating good-faith adherence to Article 4A standards remains critical.

Train staff on consumer wire risk. Front-line staff should be trained to identify account takeover indicators and social engineering red flags, particularly when members request urgent or unusual wire transfers.

Monitor legal and regulatory developments. A Second Circuit decision could reshape expectations nationwide. Credit unions should stay engaged through Association updates and be prepared to adjust policies quickly if the legal landscape shifts.

The New York Credit Union Association Response

Recognizing the stakes, the Association—along with other industry participants—filed an amicus brief supporting Citibank’s position that Article 4A governs consumer-initiated wire transfers. We will continue to closely monitor the case. A decision from the Second Circuit could come in early 2026 and may have broad implications for wire transfer risk management across the credit union system.

Until Next Time

From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

Throughout the 2025 legislative session, the New York Credit Union Association has conducted a comprehensive advocacy campaign to advance legislation supporting credit union members while protecting the industry from statutory overreach. The Association’s multifaceted efforts now face their ultimate test as Governor Hochul decides the fate of 161 bills awaiting her action.

(And for those faithful readers who don’t have time to read this full post, click here to register for the webinar on January 14th.)

Comprehensive Advocacy Strategy

The Association’s 2025 legislative work encompassed the full range of advocacy activities to serve New York’s credit union community:

• Championed member-friendly legislation to expand credit union services and reduce operational burdens
• Opposed bills that would impose unnecessary statutory requirements on credit unions
  Engaged proactively with bill sponsors to seek amendments and carve-outs protecting credit unions
• Testified at committee hearings to educate lawmakers about credit union operations and member benefits
• Built coalitions with consumer groups, business organizations, and other financial services stakeholders
• Submitted detailed position papers analyzing legislation’s impact on credit union members and operations
• Educated members about pending legislation and mobilized grassroots advocacy efforts

Four Bills at The Top of the Opposition List

While the Association’s advocacy agenda included supporting numerous pro-credit union measures, four bills required particularly intensive opposition efforts due to their potential negative impact on credit union operations:

S6953B – The RAISE Act (Artificial Intelligence Regulation)
The Association worked extensively with Senator Gounardes’ office, committee staff, and stakeholder groups to seek appropriate exemptions for financial institutions. Despite the Association’s detailed advocacy explaining how the bill’s training requirements and compliance obligations could disproportionately burden credit unions, the legislation advanced without adequate protections for member-owned cooperatives. Similar legislation has been vetoed across the country and with the talk of federal legislation voiding state AI legislation, the future of RAISE is uncertain. This legislation is pending the Governor’s signature, and the Association (along with many other business groups) is actively advocating for a veto.

S929 – New York HIPA (Health Information Protection)
The Association’s advocacy team engaged intensively with Senator Krueger’s office and stakeholders to push for explicit carve-outs for financial institutions and insurance carriers. The Association’s analysis demonstrated how the broad language could inadvertently capture credit unions processing health-related information, creating duplicative privacy requirements that conflict with existing federal frameworks. The Association has joined a large coalition requesting this bill be vetoed.

S1353B – Coerced Debt Relief
The Association mounted perhaps its most comprehensive opposition campaign around Senator Cleare’s coerced debt legislation. The Association worked with bill sponsors, committee staff, and stakeholder groups to seek amendments that would protect legitimate collection activities while still addressing genuine economic abuse. Despite extensive engagement, the bill’s expansive definition of “coercion” remained problematic for credit union operations. Hopefully if this is signed into law, subsequent chapter amendments will ease some of the burden.

S8416 – FAIR Business Practices Act
The Association engaged extensively with Senator Comrie’s office and the Attorney General’s staff to seek modifications to the legislation’s vague standards for “unfair” practices. The Association’s advocacy emphasized how credit unions’ cooperative structure and member-focused mission distinguish them from for-profit institutions, warranting different treatment under enforcement provisions.

The Stakeholder Engagement Challenge

The Association’s advocacy work requires careful navigation of complex stakeholder dynamics by balancing supporting consumer protection goals while ensuring credit unions aren’t inadvertently harmed by well-intentioned legislation. This requires extensive engagement with consumer advocacy groups, legislative staff, and other financial services organizations to build understanding of credit union operations and member benefits.

Federal Validation of the Association’s Balanced Approach

NCUA’s recently announced Deregulation Project validates the Association’s balanced advocacy approach. While the federal credit union regulator works to eliminate obsolete and burdensome requirements, the Association has consistently advocated for legislation that supports credit union members while opposing measures that would create unnecessary statutory burdens. This alignment between federal burden reduction efforts and the Association’s  state-level advocacy reinforces the Association’s strategic approach.

What the Association’s Comprehensive Advocacy Achieved

The Association’s sustained advocacy efforts throughout 2025 accomplished multiple critical objectives:

• Advanced member interests through support of beneficial legislation
• Protected operational flexibility by opposing or seeking amendments to problematic bills
• Educated lawmakers about credit union operations, member benefits, and cooperative principles
• Built upon relationships with legislators, staff, and stakeholder organizations
• Demonstrated thought leadership on complex financial services policy issues
• Mobilized grassroots engagement from credit union members and leaders
• Confirmed the Association as the authoritative voice on credit union policy in New York

The Final Test

Now, after months the Association’s comprehensive advocacy work supporting good bills and opposing problematic ones, key decisions rest with Governor Hochul.

Lessons in Comprehensive Legislative Advocacy

The Association’s 2025 campaign demonstrates the sophistication required in modern legislative advocacy. The Association successfully managed a complex portfolio of legislative priorities, supporting measures that benefit members while opposing those that would impose unnecessary burdens. This comprehensive approach enhanced the Association’s credibility and effectiveness with lawmakers and stakeholders.

But Wait, There’s More!

The Association is hosting a webinar on Wednesday, January 14th at 11:00 a.m. to provide further insight on these legislative changes, answer questions, and provide practical guidance on what credit unions should be prepared for in 2026. This session will equip attendees with the insights needed to navigate compliance impacts, operational adjustments, and emerging opportunities stemming from New York State’s latest legislative actions.

Register Here!

Until Next Time

From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

It may not feel as iconic as the passing and legacy of Giorgio Armani and what he built in fashion but the NCUA’s recent removal of disparate impact from its Fair Lending Guide represents a significant structural shift that credit unions should not overlook. 

Quick Refresher: What Is Disparate Impact?

It’s the idea that even if a policy looks neutral on its face, it can still be discriminatory if it disproportionately harms a protected group. The Supreme Court affirmed its role in fair housing law in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. (2015). For years, federal regulators used it as a cornerstone of fair lending oversight.

So, What Happened?

The NCUA’s September 4 announcement follows Executive Order 14281, “Restoring Equality of Opportunity and Meritocracy”, which earlier this year directed federal agencies to step back from disparate impact enforcement. Since then:

• CFPB announced through an internal memorandum in April that it will no longer pursue disparate impact cases, instead focusing on intentional discrimination.
• OCC removed disparate impact from its Comptroller’s Handbook in July
• FDIC followed suit with its Consumer Compliance Examination Manual in August.

Now the NCUA has joined them, stating it will no longer review credit unions’ policies, data, or risk assessments for disparate impact.

What This Means For Credit Unions

The immediate relief:

• Examiners won’t request disparate impact risk analyses.
• NCUA documentation requirements for disparate impact may ease, but robust documentation remains essential for defending against private litigation and state enforcement actions.
• Risk management frameworks can be designed without this specific overlay.

The reality check:

• Disparate impact claims are still alive under federal law. Private litigants and the DOJ can bring them.
• New York continues to recognize disparate impact under both the New York State Human Rights Law and the New York City Human Rights Law.
• Reputational risk remains real. Members and communities expect equitable access to credit, regardless of what’s in an examiner’s checklist.

How To Navigate The New Landscape

• Don’t toss the data. Monitoring for disparities is still smart risk management.
• Document business reasons. If a policy has uneven effects, be ready to show why.
• Watch state rules. States like New York are likely to fill the void left by the federal regulatory shift.
• Consult with qualified legal counsel to understand your specific compliance obligations under the changed regulatory environment.
• Stay connected to your mission. Equity and inclusion aren’t just regulatory issues. They’re at the heart of the credit union difference.

The Bottom Line

The NCUA (as well as the CFPB and other prudential regulators) may have stepped back, but credit unions can’t afford to. The law—the Equal Credit Opportunity Act and the Fair Housing Act—is still the law and courts have consistently recognized disparate impact claims.

And remember, regulatory winds can shift quickly. A different administration could put disparate impact enforcement right back on the table.

So, even as examiners change their checklists, credit unions need to stay vigilant. Because when it comes to lending fairly, credit unions will do the right thing.

Let’s Make This Useful

I want this blog to be as relevant as possible to the people reading it. So:

• Got a topic you’d like me to break down?
• Burning desire to know more about that headline you read the other day?
• Have an industry-related question you want addressed?

Reach out to me at jeremy.newman@nycua.org  Let’s talk.

Until Next Time

From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.