REG E: ELECTRONIC FUNDS TRANSFER

Question 1

Regulation E defines an “electronic funds transfer” as any transfer of funds initiated through certain mediums for the purpose of ordering, instructing, or
authorizing a credit union to debit or credit a share draft/checking, share/savings, or other member asset account. What are the four methods for transferring funds provided in this definition?

Answer 1

Any transfer of funds initiated through 1) an electronic terminal, 2) telephone, 3) computer, or 4) magnetic tape.

Question 2

In order for a member to be held liable for the use of an access device it must be an “accepted access device.” How does Reg E define an “accepted access
device”?

Answer 2

An access device becomes an accepted access device when the member to whom the device was issued: 1) requests and receives, or signs, uses, or authorizes another to use the device in the manner intended, 2) requests validation of an unsolicited access device, or 3) receives an access device that is a renewal or substitution for an accepted access device.

Question 3

Certain automatic transfers are exempt from Reg E. List the four exempt transactions.

Answer 3

Transfers: 1) between a member’s accounts at the credit union, 2) from the member’s account to the credit union (loan payments), 3) into the member’s
account (crediting a dividend), and 4) to another family member’s account at the credit union.

Question 4

When must the credit union provide initial Reg E disclosures to members?

Answer 4

When a member contracts for an EFT service on or before the time the EFT service is first used.

Question 5

Regulation E requires that specific items be included in the initial disclosure of terms and conditions. List six of them.

Answer 5

Consumer liability, the credit union’s telephone number and address, the credit union’s business days, the types of transfers and applicable limitations, any fees and charges, the member’s right to documentation, the member’s right to stop
payment, confidentiality, the error-resolution procedure notice; the credit union’s liability regarding stop payments; ATM surcharge notice; and electronic check conversions.

Question 6

What type of changes to EFT services would require the credit union to mail a change in terms notice? When must this notice be mailed?

Answer 6

A change in terms notice is required when the credit union changes a term or condition disclosed in the initial disclosure if the change restricts EFT services,
increases fees or charges, increases member liability, places stricter limits on the dollar amount or frequency of transfers permitted.
Must be mailed 21 days before the change becomes effective.

Question 7

Before a member can be held liable for a transaction made with an access device as defined by Regulation E, the device must be an “accepted access device.”
What are the three ways in which an access device becomes “accepted”?

Answer 7

An access device becomes an “accepted access device” when: 1) the member requests and receives, or signs, uses, or authorizes another to use the device in the intended manner, 2) the member validates an unsolicited access device, and 3) the member receives the access device as a renewal or substitution for another accepted access device.

Question 8

If your credit union charges a fee to nonmembers who use an ATM you operate, you must disclose (on the screen) the fact that a fee will be charged along with the amount of the fee. What option must be given to the nonmember along with the on-screen fee notice?

Answer 8

The nonmember must be given the option of canceling the transaction and no fee can be charged to their account.

Question 9

What transaction-specific information must appear on the member’s receipt for each EFT transaction made at an electronic terminal?

Answer 9

The amount of the transfer; the date of the transfer; the type of transfer and type of account involved; a number or code that uniquely identifies the member, the account, or the access device used; the location of the terminal; name of any third party receiving or sending funds.

Question 10

What are the Regulation E requirements regarding when member periodic statements must be sent?

Answer 10

A statement must be sent each month an EFT occurs or quarterly if there is no EFT activity.

Question 11

If a member notices an error in a funds transfer from their account, what are the requirements for reporting that error to the credit union?

Answer 11

The error notification can be made either orally or in writing and must be made within 60 days of the date of the periodic statement or transmittal containing the error.

Question 12

What is the time frame for a credit union to investigate a member notification of an EFT error?

Answer 12

The reported error must be investigated promptly and the results reported to the member within 10 business days (20 business days for new accounts less than 30 days old).
The investigation can take up to 45 days if: 1) the funds are provisionally re-credited to the member’s account by the end of the initial 10 business days, 2) the member is notified of the credit within two business days of the recrediting, 3) the member has full use of the recredited funds during the
investigation.

Question 13

What is the credit union’s responsibility if the investigation determines that an error has occurred? Is it different if no error occurred?

Answer 13

Within one business day, the credit union must: 1) correct the error, 2) credit any interest due, 3) refund any charges made to the account, and 4) provide an oral or written report of the correction to the member. If there was a provisional credit
made to the account, the member must be notified that the provisional credit is final within three business days after completing the investigation.
If it is determined that no error occurred or the error was for a different amount or happened in a different manner, the member must be notified in writing
within three business days after the investigation is completed.

Question 14

If a member notifies the credit union within two business days of discovering a loss or theft of an access device, what is the member’s liability?

Answer 14

The lesser of $50 or the amount of money or property obtained through unauthorized use before the notification was made to the credit union.

Question 15

Generally an access device can only be issued to a member by a specific request or as a renewal or substitution. Under what four conditions can an unsolicited access device be issued to a member?

Answer 15

An unsolicited access device can be issued if it: 1) is not validated, 2) is accompanied by a clear explanation that the access device is not validated and how it can be disposed of if the member does not wish to use the device, 3) is accompanied by a complete initial Reg E disclosure, and 4) can be activated only upon the oral or written request of the member and only after verification of
the member’s identity.

Question 16

An electronic check conversion transaction can only proceed when it has been authorized by the consumer. How does the consumer authorize the transaction?

Answer 16

A consumer authorizes the transaction when he receives the appropriate notice, and then “goes forward with the transaction.” The notice must tell the consumer that:
* The check will be processed as a one-time EFT; and
* The funds may be debited from the consumer’s account as soon as the same day payment is received, and, as applicable, that the consumer’s check will not be returned by the financial institution holding the account.

Question 17

What can credit unions provide to payroll account card users instead of the customary periodic statement?

Answer 17

Credit unions can provide the following instead of the customary periodic statement for payroll account card users:
1. Provide access to the account balance through a readily available telephone line;
2. Provide access to an electronic history (such as through a website) of the member’s account transactions that covers at least 60 days preceding the date the member electronically accesses the account (i.e., enters a user identification code or a password or otherwise complies with a security
procedure used by an institution to verify a consumer’s identity); and
3. Provide promptly upon the member’s oral or written request, a written history of the member’s account transactions that covers at least 60 days preceding the date of receipt of the request.

Question 18

A credit union cannot charge a fee on a member’s account for paying an ATM or one-time debit card overdraft, unless the credit union does the following
(list the 4-step opt-in requirement):
1) _______________________________________________________
2) _______________________________________________________
3) _______________________________________________________
4) _______________________________________________________

Answer 18

A credit union cannot charge a fee on a member’s account for paying an ATM or one-time debit card overdraft, unless the credit union (list the 4-step opt-in requirement):
1. Provides the member with a notice in writing (or electronically, if the member agrees) segregated from all other information, describing the credit union’s
overdraft service(s).
2. Provides a reasonable opportunity for the member to affirmatively consent, or opt in, to the service for ATM and one-time debit card transactions.
3. Obtains the member’s affirmative consent, or opt-in, to the credit union’s payment of ATM or one-time debit card transactions.
4. Provides the member with confirmation of his consent in writing (or electronically, he agrees), which includes a statement informing the member of the right to revoke such consent.

Question 19

The gift card provisions prohibit dormancy, inactivity, and service fees on gift cards unless:

Answer 19

The gift card provisions prohibit dormancy, inactivity, and service fees on gift
cards unless:
1. there has been at least one year of inactivity on the card;
2. no more than one such fee is charged per month; and
3. the consumer is given clear and conspicuous disclosures about the fees.

Question 20

What disclosures are required when a credit union provides remittance transfer services to a consumer?

Answer 20

Reg E requires the credit union to provide a prepayment disclosure and a receipt, which can be combined into a single disclosure and provided before the payment is made. However, the credit union still must provide proof of payment when
payment is made for the remittance transfer.

Question 21

Disclosures must generally be provided in English, and in each of the foreign languages that the provider principally uses to ____________, _____________, or ____________ remittance transfer services at a particular office where the sender
conducts a transaction or asserts an error.

Answer 21

Disclosures must generally be provided in English, and in each of the foreign languages that the provider principally uses to advertise, solicit, or market remittances at a particular office where the sender conducts a transaction or
asserts an error.

Question 22

A sender of a remittance transfer must provide a timely notice of an error to the provider within ______ days of the disclosed date of availability, or within _____ days after receiving additional requested information from the provider. The credit union must investigate the claim and correct any error within _____ days after sender provides a notice of error; and report the results to the sender
within _____ business days after completing its investigation. If the credit union determines an error occurred, it should correct the error, within _____ business day or as soon as reasonably practicable.

Answer 22

A sender of a remittance transfer must provide a timely notice of an error to the provider within 180 days of the disclosed date of availability, or within 60 days after receiving additional requested information from the provider.
-The credit union must investigate the claim and correct any error within 90 days after sender provides a notice of error; and report the results to the sender within 3 business days after completing its investigation.
-If the credit union determines an error occurred, it should correct the error, within 1 business day or as soon as reasonably practicable.

Question 23

A sender may provide an oral or written request to cancel a remittance transfer no later than _____minutes from payment in connection with the remittance transfer.

Answer 23

A sender may provide an oral or written request to cancel a remittance transfer no later than 30 minutes from payment in connection with the remittance transfer.

Question 24

To cancel a transfer scheduled at least three business days in advance, including a preauthorized transfer, how many days before the date of the transfer must the sender notify the remittance transfer provider that he/she wants to cancel?

Answer 24

For a transfer scheduled at least three business days before the transfer date, a sender must notify the remittance transfer provider at least three business days before the scheduled date of the transfer to cancel the transfer.