HR-9331-119
Placed on the Union Calendar, Calendar No. 692.
Sponsored by Young Kim (R-CA)
What it does
This bill would amend the Expedited Funds Availability Act to let banks delay making deposited check or wire transfer funds available if the bank has "reasonable suspicion" the transaction involves fraud, with holds up to 10 days initially and up to 45 days extended (or up to 60 days for high-risk accounts). It also directs the Federal Reserve Board and Consumer Financial Protection Bureau to jointly write implementing rules, study state funds-availability laws, and report to Congress, with the new fraud-hold provisions taking effect only after those rules are finalized.
Who benefits
Banks and credit unions, which gain legal authority to hold suspected fraudulent deposits longer without violating funds-availability rules; the Treasury and depository institutions, which may avoid losses from fraudulent checks; and consumers broadly, to the extent delayed holds prevent fraud losses from being passed on through fees or account closures.
Who is hurt
Depositors—including individuals and small businesses—whose legitimate funds could be delayed up to 45 or 60 days if a bank mistakenly flags a transaction as suspicious, potentially causing overdrafts, missed bill payments, or cash-flow problems; the bill does include a limited overdraft-fee waiver protection for wire transfer recipients not properly notified. Consumer advocates may also note reduced predictability in funds availability compared to current fixed timelines.
Supporters argue
Supporters argue that check and wire fraud losses have risen sharply and that banks currently must release funds on fixed timelines even when fraud indicators are present, forcing institutions to either absorb losses or violate consumer-protection deadlines. They contend the bill's "reasonable suspicion" standard, capped hold periods, mandatory notice requirements, and required joint Federal Reserve/CFPB rulemaking strike a balance that protects both financial institutions and legitimate depositors from a genuine and growing fraud problem.
Opponents argue
Opponents argue that a subjective "reasonable suspicion" standard could lead banks to over-flag transactions, disproportionately delaying funds for low-income depositors, small businesses, and nonlocal check recipients who rely on quick access to cash for rent, payroll, or bills. They contend that holds of up to 45 or 60 days—far longer than current law generally allows—shift the burden of fraud prevention onto consumers who did nothing wrong, with only limited overdraft-fee relief as a safeguard.
Constitutional context
Congress regulates depository institutions and interstate payment systems under the Commerce Clause (Art. I, §8, cl. 3), and this bill directs the Federal Reserve Board and CFPB to issue implementing regulations; post-Loper Bright v. Raimondo (2024), any such rules would face independent judicial review of whether the agencies' interpretation of "reasonable suspicion" and hold periods stays within the statute's terms.
Checks and balances
Congress delegates rulemaking authority to the Federal Reserve Board and CFPB jointly, with statutory caps on hold periods (10/45/60 days) and required reporting to Senate Banking and House Financial Services Committees, plus GAO study oversight, limiting how far the agencies can extend the fraud-hold exception.
Historical precedent
The Expedited Funds Availability Act of 1987 itself established the current funds-availability timelines this bill amends, but no directly comparable federal fraud-hold exception of this scope has been enacted before.