The Consumer Financial Protection Bureau’s (CFPB) rumored plan to expand Regulation E and the Electronic Fund Transfer Act (EFTA) is unlawful, would contravene the bill’s text, and would run afoul of the Administrative Procedures Act, CUNA wrote to the CFPB Tuesday.

CUNA sent its comments in response to reports the CFPB is considering a rewrite of Regulation E and the EFTA under which credit unions would be liable for the actions of illegal actors if a consumer/member initiates a money transfer.

“CUNA and the credit unions it represents strongly support efforts to stop fraudulent schemes, robust compliance programs to limit this activity, and all efforts at the federal level to mandate safe and reliable payment platforms,” the letter reads. “But expanding current law to punish member-owned credit unions for the actions of a rogue fraudulent actor, despite no fault of the credit union or other members, is not only unwise: it is unlawful,” it adds.

CUNA notes the CFPB cannot impose liability not in the EFTA without Congressional revisions, nor can it revise Regulation E to impose liability on credit unions without going through the formal rulemaking process.

“CUNA asserts that the aforementioned changes, imposing new credit union liability and new requirements through the rumored guidance would not be the act of promulgating guidance at all, it would be issuing a legislative rule without going through the formal rulemaking processes,” the letter reads.

It also adds that a rulemaking process will benefit the CFPB, credit unions, and consumers—besides the legal obligation—as it will allow the CFPB to hear from stakeholders and ensure its regulations reflect sound policy.

CUNA also notes the expansive burden of forcing credit unions to pay for the misdeeds of fraudulent actors “would put a major strain on credit union resources and their ability to collaborate with payments platforms and expand consumer choice.”