Reg E Flashcards
What type of fund transfers does Reg E cover?
Transfer that are initiated through an electronic terminal, telephone, computer or magnetic tape.
What is a covered foreign remittance transfer?
- More than $15
- Made by a consumer in the US
- Sent to a person or company in a foreign country
- Includes many types of transfers (wires, ACHs)
How often must a payor give notice to a consumer when a consumer’s account is scheduled to be credited or debited by a preauthorized transfer?
at least once every 60 days.
Final resolution for Reg E unauthorized transactions must occur within __ _________ days.
45 calendar
Under Regulation E, when a bank imposes a change that increases fees or charges related to electronic fund transfers, or restricts availability of electronic transfers, it must provide notice to its customers. How many days in advance of the change must the bank notify customers?
a. 10
b. 15
c. 21
d. 30
c. 21
If an institution forgets to give the initial Reg E disclosure, what is the consumer’s liability for unauthorized transactions?
$0. If proper disclosure wasn’t given originally, there’s no liability.
First National Bank investigated Mr. Gilberts allegation of a $500 EFT error. The bank provisionally credited the account during the investigation. The bank determined that no error was made and notified Mr. Gilbert on April 5 of the results of the investigation. On April 6, the bank debited Mr. Gilberts account for $500, which before this debit had a balance of $700. On April 7, checks for $600 and $800 are presented for payment against the account, payable to third parties. On April 8, Mr. Gilbert comes into the bank to withdraw $100. What should First National do?
a. Return both the $600 and the $800 checks and honor the cash withdrawal
b. Pay both checks and honor the cash withdrawal
c. Pay the $600 check and honor the cash withdrawal
d. Pay the $600 check and refuse the cash withdrawal
d. Pay the $600 check and refuse the cash withdrawal
The bank must honor checks payable to third parties for five business days after the transmittal of the notice of the investigation. The bank does not have to honor checks that would not have been paid if the debit had not occurred. Therefore, the $800 check would not be paid. Because the $600 check would have been paid but for the debit of the $500, the bank must pay the $600. The $600 check the bank does have to pay now overdraws the account by $400. (Remember, the account has a real balance of $200.) The bank, therefore, does not have to honor a cash withdrawal—there are no funds in the account and only checks payable to third parties fall under this rule.
You are doing a review of the bank’s consumer deposit account periodic statements for Regulation E compliance. As part of the review, you should check for:
a. The actual date the transfer was conducted
b. The authorization code for the transaction
c. The total amount of credits applied
d. The amount of any fees assessed for EFTs
d. The amount of any fees assessed for EFTs
What is the base liability for unauthorized transactions?
$50 base liability. This is often waived by the institution or by Visa/Mastercard (contractual provision).
The customer must notify the institution within __ days of the delivery of the periodic statement containing the transaction or else face _________ liability for the transactions after that.
60
unlimited
Your bank has decided to discontinue offering debit cards to business customers. Debit cards are currently in the hands of only about 100 business customers who have business checking accounts at the bank. You are asked about what kind of notice, if any, is needed to these customers to discontinue the debit cards that these customers already have. Your first step should be to:
a. Review Regulation B adverse action notice requirements
b. Review Regulation Z change in terms notification requirements
c. Review the cardholder agreement for notification requirements
d. Review Regulation E change in terms notification requirements
c. Review the cardholder agreement for notification requirements
Reg E isn’t relevant because these are business customers and Reg E applies to consumers. I think the most important source is going to be the cardholder agreement that was provided to the customers when they received their cards. That will determine what, if any, disclosure notice is going to be necessary.
Can a bank have special terms or conditions on an account depending on whether or not the consumer opts in to debit card overdraft protection?
No. This is prohibited by Reg E. The bank must offer the same terms whether or not the consumer opts in.
When must a customer give notice of an unauthorized transaction?
Within 60 days of when the periodic statement containing the transaction was delivered.
First National Bank has an overdraft privilege program available to its deposit customers. Under this program the bank generally pays checks, ACH items and recurring debit card transactions presented against accounts up to a pre-set limit. The bank does not pay overdrafts originated as ATM transactions or as one-time debit card transactions. From time to time, however, point of sale transactions initiated by debit cards are presented as preapproved items and, according to the rules of the card association, the bank must pay the transaction as presented. Therefore the bank does have a few overdrafts originated as one-time debit card transactions. Which of the following is a true statement for the bank?
a. The bank must provide an opt in notice to all its customers
b. The bank does not have to provide an opt in notice, but it cannot charge an overdraft fee on the inadvertent overdrafts created by ATM and debit card transactions
c. The bank does not have to provide an opt in notice to its customers and it may still charge for inadvertent overdrafts created by ATM and one-time debit card transactions
d. If the bank pays overdrafts originated by check, it must also pay those originated by ATM and one-time debit transactions
b. The bank does not have to provide an opt in notice, but it cannot charge an overdraft fee on the inadvertent overdrafts created by ATM and debit card transactions
Institutions that do not authorize payments of overdrafts on ATM or one-time debit transactions are not required to give the notice of affirmative consent to opt-in, but they may not charge a fee for those transactions.
Which of the following actions is prohibited under EFTA/Regulation E?
a. Imposing a fee for EFTs
b. Requiring a consumer to authorize payments to a credit account as a condition of an extension of credit
c. Requiring a consumer to provide a written confirmation of an oral stop payment order
d. Requiring a consumer to request an access device in writing
b. Requiring a consumer to authorize payments to a credit account as a condition of an extension of credit
If a consumer wants to stop payment on a preauthorized EFT, the consumer must notify the bank…
a. At least 3 business days before the transfer is scheduled to occur
b. At least 1 day before the transfer is scheduled to occur
c. At least 14 days before the transfer is scheduled to occur
d. At least 10 days before the transfer is scheduled to occur
a. At least 3 business days before the transfer is scheduled to occur
The receipt of an EFT must include which of the following terms, as applicable?
a. Posting date of the transaction
b. Institution’s toll-free telephone number
c. Calendar date of the transaction
d. Institution’s address
c. Calendar date of the transaction
What is a preauthorized transfer?
A transfer that is authorized in advance to occur at substantially regular intervals.
The receipt of an EFT must include which of the following terms, as applicable?
a. Posting date of the transaction
b. Institution’s toll-free telephone number
c. Calendar date of the transaction
d. Institution’s address
c. Calendar date of the transaction
Mr. Edwards has a First National Bank debit card. The card allows him to withdraw funds from his checking account to pay for goods or services by using major credit card networks. Providers of services that accept MasterCard or VISA will accept Mr. Edwards debit card. Mr. Edwards travels often. In March, while at home, he reviews his checking account statement and notices three ATM transactions whereby funds were debited from his account using the debit card. The transactions were made in San Diego during February. Mr. Edwards never went to San Diego. None of his family members have debit cards. He called the bank and asked to be reimbursed for the $750 that was taken from his account but not authorized by him. What may the bank do?
a. Point out to him the language in his account agreement where he agrees to be liable for all withdrawals, whether or not authorized, and tell him that they will not credit his account for the funds
b. Tell him that they will investigate and the funds should be credited within 20 business days
c. Provisionally credit the account within 10 business days and take up to 45 days to investigate the unauthorized debit
d. Provisionally credit the account within 20 business days
c. Provisionally credit the account within 10 business days and take up to 45 days to investigate the unauthorized debit
This is an unauthorized transfer of funds. The bank cannot contract with the customer for the customer to waive his or her rights. Time periods for error resolutions are not extended for ATM transactions using debit cards initiated within a state.
With one exception, the following transactions are considered electronic funds transfers for purposes of Regulation E. Which transaction is NOT considered an EFT?
a. Withdrawing cash from a checking account through an ATM
b. Paying for groceries through a point-of-sale debit of funds from a checking account
c. Transferring funds from a savings account to a checking account at an ATM
d. Transferring funds from a savings account to a checking account by the customer’s telephone call to a bank officer and asking for the funds to be transferred
d. Transferring funds from a savings account to a checking account by the customer’s telephone call to a bank officer and asking for the funds to be transferred
All of the choices listed are covered by Regulation E except the transfer of funds initiated by a telephone call from the consumer to the bank.
A customer calls to notify the bank that a withdrawal made at an ATM located in a local supermarket has been debited from the wrong account. The bank employee applies the point-of-sale error resolution procedures. What should the bank do?
a. Ask the supermarket to credit the customer’s account
b. Freeze the customer’s account until the problem can be resolved
c. Retrain the employee to distinguish point-of-sale transactions from ATM transactions
d. Provide immediate credit, and file a SAR
c. Retrain the employee to distinguish point-of-sale transactions from ATM transactions
The employee used the wrong procedures. The ATM transaction is not a point-of-sale transaction, so the bank should first retrain the employee.