December 22, 2025

Can Banks Be Held Responsible for Wire Transfer Fraud in Texas? Understanding Duties, Defenses, and Recovery Options

Banks can be held responsible for wire transfer fraud in Texas in certain situations, but liability depends heavily on which law governs the transfer and whether the bank followed the agreed security process. 

Most business wire disputes are governed by Texas Business & Commerce Code Chapter 4A, which is designed to allocate risk based on security procedures, “commercial reasonableness,” and good faith. In contrast, consumer protections under Regulation E generally do not apply to Fedwire or similar wire systems used primarily between financial institutions or businesses. Courts have applied that exclusion to dismiss consumer EFTA claims based on wires.

If you are dealing with a disputed transfer, time matters. A skilled business litigation attorney in Texas can review the wire details, account terms, and the bank’s security steps to determine whether a refund claim, breach claim, or injunctive relief is realistic under Texas law.

The Bank’s Duties

Chapter 4A defines a “security procedure” as an agreed process for verifying authenticity or detecting errors which is typically multi-factor authentication, callbacks, tokens, dual approval, or other controls. If the bank’s process was not commercially reasonable for the customer’s profile, or if the bank did not follow the procedure it agreed to use, the bank may have meaningful exposure.

Even when the bank argues the order was “effective,” Chapter 4A also contains rules that can limit enforcement where the fraud was not caused by someone entrusted by the customer or by a compromise tied to the customer’s own transmitting systems or information. These disputes are fact-driven, and documentation matters.

Businesses working with a business lawyer in McAllen often benefit from an early “paper trail” plan through wire records, security logs, online access history, and the bank’s written procedures, then comparing them against the account agreement and any written limits on acceptance.

The Customer’s Duties and Deadlines

Chapter 4A includes a refund-and-notice structure for unauthorized payment orders. In general, a customer may have a right to a refund from the bank in defined circumstances, but the statute also imposes a duty to report issues and includes timing rules that can bar relief if notice is not provided within the statutory window.

A lawyer in McAllen TX starts with the timeline. The key dates are when the customer learned about the wire and when the customer notified the bank. The bank’s response after notice also matters. Delay can reduce recovery.

Common Defenses in Texas Wire Fraud Litigation

Banks defending wire claims typically rely on a short list of arguments grounded in Chapter 4A and the customer agreement:

• Commercially reasonable security procedure + compliance. The bank argues the procedure met the statutory standard and was followed in good faith, making the order effective even if unauthorized.
  
• Customer-caused loss. The bank points to compromised credentials, internal employee access, or weak internal controls, and argues the loss is traceable to the customer’s environment.
  
• Contract limits and disclaimers. The bank argues the customer’s online agreement or wire terms limit duties beyond the security procedure and required reporting.
  
• Wrong statute. In consumer-filed cases, banks may argue Regulation E does not cover the wire system used; courts have accepted that position where the transfer fits the wire exclusion.

A plaintiff response is usually strongest when it is document-driven. Show deviations from the agreed process, show why the procedure was not commercially reasonable for the account’s risk profile, or prove the bank ignored written restrictions on acceptance.

Recovery Options 

Even when the originator bank denies reimbursement, there may be additional options depending on where the money went and how quickly action starts:

• Wire recall and hold requests. Banks can send return/recall communications; success depends on speed and whether funds remain available.
  
• Court relief to freeze funds. Article 4A recognizes the possibility of an injunction or restraining order in appropriate circumstances.
  
• Claims involving misdescription or beneficiary issues. If the beneficiary name/account mismatch rules are triggered, different liability questions may apply.
  
• Commercial claims against participants. Depending on facts, claims may include breach of contract, statutory Chapter 4A remedies, and fraud-based claims against wrongdoers or intermediaries.
  

A business attorney in McAllen, TX will usually advise that the “best” remedy is the one supported by proof: wire instructions, bank confirmations, authentication records, internal email or vendor change requests, and device/IP evidence.

Wire Transfer Fraud Lawyer in McAllen, TX

Wire fraud cases in Texas often turn on whether the bank followed a commercially reasonable security procedure and whether statutory notice and refund requirements were met under Chapter 4A, not just on whether the customer intended the transfer. Villeda Law Group can assess both plaintiff and defense options; contact us today to discuss next steps.