House Bill 264, titled the Wire Fraud Prevention Act, amends North Carolina’s Uniform Commercial Code provisions governing funds transfers. The bill changes the definition of a “security procedure” to require verbal verification of payment orders or amendments/cancellations with the customer, and, when the receiving bank is the beneficiary’s bank, with the beneficiary as well. It also allows security procedures to include tools such as algorithms, codes, encryption, call-back procedures, and similar devices, while making clear that signature comparison alone is not enough.
The bill revises the rules for unauthorized payment orders. If a bank accepts an unauthorized order that is not effective or enforceable against the customer, the bank must refund the payment and pay interest, subject to a customer notice deadline. If the order is unauthorized but still effective as the customer’s order under existing law, the bank must refund 25% of the payment within 30 days of discovering the unauthorized nature of the order. The bill also limits the ability of banks and customers to vary these refund obligations by agreement.
HB264 further changes the obligations of a beneficiary’s bank when it accepts a payment order. For newly opened beneficiary accounts, if the payment exceeds $100,000 and the account was opened within the prior year, the bank must release only 25% of the payment immediately and hold the remaining 75% for 10 funds-transfer business days without interest. The bill also preserves existing notice and interest rules when a bank fails to notify a beneficiary of receipt of a payment order, and it keeps the general right to payment and certain damages largely nonwaivable.
The bill’s impact is to impose stronger anti-fraud safeguards and slower disbursement rules for certain high-value or newly opened accounts, while increasing banks’ refund exposure for unauthorized transfers. It would affect banks, customers, beneficiaries, and funds-transfer systems operating under Article 4A of Chapter 25 of the General Statutes, and it applies prospectively to funds transfers beginning on or after October 1, 2025.
There is no recorded committee transcript or vote history in the provided materials, so sentiment cannot be measured from debate or roll call. Based on the bill’s structure, it appears aimed at fraud prevention and consumer protection, but it also creates operational burdens and delayed access to funds for financial institutions and beneficiaries, which may be the main source of concern.
HB264 amends Article 4A of Chapter 25 of the North Carolina General Statutes, specifically the provisions on security procedures, refunds for unauthorized payment orders, and beneficiary bank obligations. It would require banks to use more robust verification methods, impose partial refund requirements in some unauthorized-transfer scenarios, and mandate delayed release of large payments into recently opened beneficiary accounts. The bill limits contractual variation of these protections and applies only to funds transfers commencing on or after October 1, 2025.
No committee discussion or votes were provided, so there is no direct record of support or opposition in the supplied materials. The bill’s title and provisions suggest a pro-fraud-prevention, pro-consumer-protection intent, but the added verification duties and delayed payment rules could draw concern from banks, payment processors, and business recipients that rely on fast settlement.
The main points of contention are likely to be the new bank verification requirements, the mandatory 25% refund rule for certain unauthorized but effective payment orders, and the requirement to hold back 75% of large payments to newly opened accounts for 10 business days. Financial institutions may object to the compliance burden, reduced flexibility, and potential interference with ordinary funds-transfer operations, while consumer advocates would likely support the added protections against wire fraud and account takeover schemes. Beneficiaries receiving large transfers may also object to delayed access to funds.