Reg E Flashcards
Reg E Quick Reference Guide
The Law
Electronic Funds Transfer Act (EFTA) of 1978
The Procedures
Regulation E- Subpart A and Subpart B
Reason for Being
Outlines rules and procedures for electronic funds transfer (EFT) and provides guidelines for issuers and sellers of electronic debit cards.
Primary Objective
Protection of individual consumers engaging in EFT’s
Applicability
Consumer accounts that are used primarily for household purposes
Exclusions
Transactions subject to UCC Article 4A, checks, domestic wire transfers, securities, automatic transfers by account-holding institution, telephone-initiated transfers, small institutions
EFT – Electronic Fund Transfer
“…any transfer of funds initiated through an electronic terminal, telephone, computer…for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit an account…” -
Preauthorized Electronic Fund Transfer
Means an EFT authorized in advance to recur at substantially regular intervals – (Recurring ACH entry)
Access Device
A card, code or other means of access to a consumer’s account…that may be used by the consumer to initiate EFTs
Access Device Exclusion
Checks used as source documents for EFTs – ACH entry – ARC, BOC, POP (are allowed)
Record Retention
Retain evidence of compliance with Act for a period of not less than 2 years – examples include: disclosures, periodic statements, error resolution
General Disclosure – Initial
Financial institution provides to consumer at time of EFT contract or prior to first EFT entry – includes: liability, contact information, business days, types of EFTs and limitations, fees, stop payment, liability of institution, error resolution, etc.
General Disclosure – Annual
Error resolution notice – annual disclosure can be replaced by error resolution notice included on periodic statement
General Disclosure Change in Terms
21 days in advance of change in terms such as: increased fees, increased liability, restriction on EFT types, dollar or frequency limits
Periodic Statements
Financial institution shall send a periodic statement for each monthly cycle in which an EFT has occurred and at least quarterly if no transfer has occurred. Must include: amount, date, type, terminal location, name of third party to or from funds were transferred, account number, fees, balances, address and telephone number for inquiries. Exclusions include: passbook accounts and intra-institutional transfers
EFT Authorization
Notice or Oral or Silent – example on Silent – Credit entries Authorization must be identifiable as such. Terms of authorization must be clear and readily understandable.
Preauthorized EFT Authorization
May be authorized only by a written, signed or similarly authenticated authorization by the consumer. Copy of authorization must be provided to consumer.
Consumer Liability
Consumer must report an unauthorized EFT within 60 days of the financial institution’s transmittal of the periodic statement to avoid liability for subsequent transfers. Consumers are generally not liable for unauthorized EFT within first 60 days (not dependent upon when they notice error).
Tiered Liability for Unauthorized EFTs with Access Device
Timely notice given of loss or theft – within 2 business days of discovery = the lesser of $50 or the amount of unauthorized transfers that occur before notice to the financial institution. Timely Notice Not Provided – the lesser of $500 or the sum of: $50 or the amount of unauthorized transfers that occur within the 2 business days, whichever is less; and the amount of unauthorized transfers that occur after the close of 2 business days and before notice to the institution.
Errors According to Regulation E
Unauthorized EFT, incorrect EFT, omission of EFT from statement, computational or bookkeeping error by financial institution, receipt of incorrect amount from an electronic terminal, EFT not identified correctly on statement, additional information needed by consumer to determine if erroneous.
Error Resolution Timeframes
Oral or written notice to financial institution:
10 business days of receipt of notice of error to investigate/complete
1 business day to correct error after determination
3 business days report results to consumer
Error Resolution Timeframes – DFI Investigation Not Completed Within 10 Business Days
Financial institution needs additional time to investigate:
The institution may take up to 45 days (calendar) from receipt of notice of error to investigate/complete.
Provisional credit must be given to consumer during initial 10 business days.
Institution must inform consumer within 2 business days of provisional credit.
Institution has 1 business day to correct error after determination.
Institution has 3 business days to report results to consumer.
Error Resolution Timeframes –
Exceptions
Financial institution needs additional time to investigate:
The applicable time is 20 business (versus 10 business days) days to investigate if the notice of error involves a consumer account opened within last 30 days after the first deposit was made.
The applicable time is 90 calendar days (versus 45 calendar days) to investigate if the notice of error involves an EFT:
Not initiated within a state;
Resulted from a Point-of-Sale debit card transaction; or
Occurred on consumer account within 30 days of opening
Exceptions to Provisional Credit Requirement
An institution need not provisionally credit the consumer’s
account if:
Financial institution requires written confirmation of an oral notice of error by consumer but does not receive; or
The alleged error involves an account that is subject to Reg T
Debiting of Provisional Credit
Financial institution determines no error has occurred and debits provisional credit:
Institution must notify Consumer of the date and amount of the debiting
Institution must notify consumer that institution will honor transactions (without charge the consumer as a result of an overdraft) for 5 business days after notification
Stop Payment
Consumer may place a stop payment of a preauthorized EFT by notifying the financial institution orally or in writing at least 3 days before the date of the transfer. Financial institution may require written confirmation by the consumer with 14 days of the oral notification.
Reg E also covers?
ATM Withdrawals, Gift Cards and Gift Certificates, Government Agency access devices, Overdraft Services not subject to Reg Z, Payroll Card Accounts
Reg E Subpart B
The CFPB added the Sub Part B detail in 2012 to Reg E Requirements for Remittance Transfers, new remittance protections set forth in the Dodd-Frank Act, effective October 28, 2013.
Remittance Transfers
A “remittance transfer” means the electronic transfer of funds requested by a sender to a designated recipient that is sent by a remittance transfer provider. The term applies regardless of whether the sender holds an account with the remittance transfer provider, and regardless of whether the transaction is also an
electronic fund transfer.
Remittance Transfer Error, Cancellation and Refund
Oral or written request to cancel a remittance transfer from the sender can be received by the provider no later than 30 minutes after the sender makes payment in connection with the remittance transfer if: Request to cancel enables the provider to identify the sender’s name, and address or telephone number associated with transfer to be cancelled or the Transfer was not completed and picked up by recipient.
