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Bill Summary · HB 264

Summary — HB 264 (Wire Fraud Prevention Act) — North Carolina (2025)

Status: Introduced March 4, 2025; text provides an effective date of October 1, 2025 (applies to funds transfers commencing on or after that date).

Purpose and intent
- Strengthen protections for senders and recipients of electronic funds transfers by clarifying bank duties when payment orders are unauthorized or disputed, tightening required “security procedures,” and creating specific refund, timing and notice rules designed to reduce losses from wire fraud (e.g., business‑email‑compromise and impersonation schemes).

Key provisions and changes
1. Security procedures (G.S. 25‑4A‑201)
- Defines “security procedure” to require, at minimum, verbal verification of a payment order or an amendment/cancellation with the customer — and, when the receiving (beneficiary’s) bank is the verifier, with the beneficiary as well.
- Permits other elements (algorithms, codes, encryption, call‑back, etc.). Explicitly states that signature comparison alone is not a security procedure.

  1. Refunds and customer duties (G.S. 25‑4A‑204)

    • If a receiving bank accepts a payment order issued in the name of its customer that is unauthorized or unenforceable, the bank must refund the payment to the extent it cannot enforce payment and pay interest on the refundable amount from the date it received payment to the refund date.
    • A customer loses entitlement to interest if the customer failed to exercise ordinary care and did not notify the bank within a “reasonable time” not exceeding 90 days after notice of the debit or acceptance.
    • New narrow remedy: where an order is not authorized under one subsection but nevertheless effective under another (statutory distinction in 25‑4A‑202), the receiving bank must refund 25% of the payment within 30 days of discovering the payment was not authorized.

  2. Beneficiary’s bank obligations and timing (G.S. 25‑4A‑404)

    • Beneficiary’s bank must pay accepted orders on the payment date (or next funds‑transfer business day if accepted after close of business).
    • For beneficiary accounts opened less than one year and payment amounts > $100,000, the bank may pay only 25% of the amount on the payment date and must pay the remainder 10 funds‑transfer business days later (no interest on the delayed portion).
    • Beneficiaries must be notified of receipt of an order by midnight of the next funds‑transfer business day; failure to notify obligates the bank to pay interest on the amount from the date notice should have been given until the beneficiary learns of receipt.
    • If the bank refuses payment after demand and had notice that consequential damages would result, the beneficiary may recover those damages unless the bank had reasonable doubt about the beneficiary’s right to payment.
    • Rights to payment and damages may not be contracted away; notification timing can be modified by prior agreement or system rule if the beneficiary was informed before initiation.

Affected parties
- Receiving banks (banks of the sender), beneficiary banks (banks of the recipient), customers/senders, beneficiaries/recipients, and funds‑transfer system operators. The bill increases operational and compliance obligations for banks (e.g., verbal verification, staged payouts, faster refunds) and strengthens protections for victims of unauthorized transfers.

Procedural/timing notes
- The bill amends multiple sections of the Uniform Commercial Code (G.S. Chapter 25, Article 4A) as cited.
- Effective date in the bill: October 1, 2025; applies to funds transfers commencing on or after that date.
- Drafting instruction: Revisor to publish explanatory comments as annotations to the statutes.

Potential impacts (practical considerations)
- Likely to reduce some wire‑fraud losses to consumers/recipients but may increase banks’ operational costs (call‑backs, monitoring, staged payment processes), credit/liquidity exposure, and decision‑making risk about holding/delaying high‑value transfers.
- May shift certain fraud‑risk burdens to banks and encourage stronger authentication and transaction‑monitoring practices.

Compiled from official sources — confirm details with the bill’s official record.

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