Proposed S.3898 Amendment to the Electronic Fund Transfer Act Would Shift Risk of Loss to Banks

Richard L. Santalesa writes:

Just a step below widows and orphans on the sympathy scale, at least when it comes to ripoffs and theft, sit school districts, boards and local municipalities. And in a era of tight budgets, when school districts are robbed of tax monies from halfway around the world via ACH/wire fraud, state and federal politicians take notice. After the Duanesburg Central School District in upstate New York, a district with 1,000 students and an annual budget of approximately $15 million, suffered a brazen cybertheft of $3 million in December 2009, which eventually left the school district potentially on the hook for over $400K of un-recovered funds (details about the Duanesburg cybertheft here and here and here), the District approached State officials on the issue (here) and then federal representatives, including Senator Schumer.


Boiled down, S.3898 essentially modifies FDIC Regulation E implementing portions of the EFTA to extend the $50 limitation of loss from ACH/wire fraud currently covering individual consumers to school districts and municipalities. Notably in a Senate still dominated by 57 democrats, Senator Schumer stands as S.3898’s sole sponsor headed into a lame-duck session of Congress that is likely to see the House, and possibly the Senate, change hands.

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