The Electronic Funds Transfer Act (EFTA) requires banks, credit unions, and similar financial institutions to reimburse their customers for unauthorized electronic transfers of money from the customers’ accounts. Several credit union customers saw money transferred out of their accounts as part of a scam called “SIM Swap,” which, it was claimed, took advantage of T-Mobile’s failure to properly validate certain requests for replacement SIM Cards. After the credit union reimbursed the customers, it sued T-Mobile for indemnification or contribution, claiming that the credit union shouldn’t have to suffer as a result of T-Mobile’s errors.
Today, the Sixth Circuit held that the EFTA itself does not provide for an implied right to indemnification or contribution, nor does “federal common law” or Michigan’s version of the EFTA — which the CFPB found to be preempted in relevant part.