Also known as: funds transfer · fund transfer · fund transfers · wire transfer
Written by attorneys — see sources below.
A series of transactions beginning with the originator's payment order and intended to make payment to the beneficiary. The transfer is completed upon acceptance of a payment order by the beneficiary's bank.
Flora Ford fell behind on her mortgage payments to Fairfield Bank. Two days before the scheduled foreclosure sale she arranged for an electronic funds transfer covering the missed installments. The bank received the funds in time and the foreclosure proceedings stopped.
Fabian Flynn instructed Wachovia Bank to wire funds to an account he believed belonged to a business associate. The bank executed the order using the account number supplied even though the name did not match. Flynn later discovered the mismatch and sued the bank for negligence.
Eric Eisenberg was the victim of a fraudulent investment scheme perpetrated by Douglas Walter Reid. Reid falsely represented to Eisenberg that he was a senior vice president of Bear Stearns Companies and convinced Eisenberg to make a putative investment. At Reid’s direction, Eisenberg transferred $1,000,000 via electronic wire to a Wachovia branch bank in North Carolina for deposit in an account bearing the name “Douglas Walter Reid dba Bear Stearns,” “For Further Credit to BEAR STEARNS.” The electronic transfer was made through the Fedwire wire service operated by the Federal Reserve Bank. Wachovia accepted the transfer and deposited the funds to the credit of the specified account, which had been opened by and was under the control of Reid. Reid withdrew almost all of Eisenberg’s funds and converted them to his own use. Wachovia’s customer agreements do not restrict the name under which a new customer may open a bank account. The Wachovia employee who opened Reid’s account did not verify that Reid was authorized to operate under the name Bear Stearns. Reid possessed no such authority and was not in any way affiliated with Bear Stearns. Eisenberg filed a complaint against Wachovia in federal court on the basis of diversity jurisdiction, asserting two claims of negligence. The first claim alleged that Wachovia negligently allowed Reid to establish and operate a fraudulent bank account and negligently failed to train its employees to detect fraud. The second claim alleged that Wachovia was vicariously liable for its employee’s negligence in allowing Reid to open the bank account without proper verification. Wachovia moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The district court granted the motion and dismissed the complaint with prejudice. Eisenberg appealed to the Fourth Circuit.
View caseA funds transfer is completed when the beneficiary's bank accepts a payment order for the benefit of the beneficiary named in the originator's order.
Article 4A does not apply to any part of a funds transfer governed by the Electronic Fund Transfer Act except for certain remittance transfers that are not electronic fund transfers under that statute.
If the beneficiary's bank does not know the name and number refer to different persons it may rely on the number as the proper identification and need not verify whether they match.
A receiving bank that issues an order for more than the sender's order may still collect the correct amount from the sender if the conditions of acceptance are met and may recover any excess from the beneficiary under mistake and restitution principles.
…the event of a delay in transmission would not do everything in its power to minimize the consequences of the delay. Electronic funds transfers are not so unusual as to automatically place a bank on notice of extraordinary consequences if such a transfer goes awry. Swiss Bank did not have enough information to infer that if it lost…