Regulation E Flashcards
What does Regulation E carry out!
The purpose of the electronic fund transfer act (EFTA)
What is the primary objective of the EFTA?
The protection of individual consumers engaging in electronic funds transfers
What does Reg E apply to?
Electronic fund transfers (EFTs) from and to an account established for personal, family, or household purposes
Corporate accounts are not subject to Reg E; it applies only to consumer accounts.
What must a consumer do to authorize a one-time electronic fund transfer?
The consumer must authorize the transfer
This is done when converting a paper check or other paper instrument.
What are examples of ACH e-check conversion options?
- POP (Point-of-Purchase) transactions
- BOC (Back-Office-Conversion) transactions
These transactions involve using a consumer’s check as a source of information for the transfer.
What is a preauthorized electronic fund transfer?
A consumer authorizes in advance to recur at substantially regular intervals
This type of transfer is set up to happen repeatedly.
What does notification for a one-time electronic fund transfer involve?
The consumer provides a check to a merchant or other payee for the MICR encoding
This includes the routing number, the consumer’s account number, and the serial number.
What are the requirements for disclosures under Reg E?
- Must be clear and readily understandable
- Must be in writing
- Must be in a form the consumer may keep
Disclosures may be provided electronically if compliant with the E-Sign Act.
What types of items are excluded from coverage under Reg E?
- Checks
- Check guarantee or authorization
- Wire / Similar transfers
- Securities and commodities transfers
- Automatic transfers by account-holding institution
- Telephone-initiated transfers
These exclusions clarify what is not considered an electronic funds transfer.
True or False: Reg E applies to corporate accounts.
False
Reg E applies only to consumer accounts.
Fill in the blank: Disclosures must be in a form the consumer may _______.
keep
This ensures that consumers have access to the information.
What is required for a financial institution regarding abbreviations in disclosures?
Financial institutions may use commonly accepted or readily understandable abbreviations
This helps in complying with disclosure requirements.
What is the asset threshold for small institutions regarding preauthorized transfers?
$100 million or less on the preceding December 31
This threshold determines the applicability of certain regulations for small financial institutions.
How many days in advance must a bank notify consumers of changes that adversely affect them?
21 days before the effective date
This requirement ensures that consumers are informed of significant changes to their terms of agreement.
How often must a bank provide an error resolution notice to consumers?
Once a year
This notice informs consumers of their rights regarding error resolution for electronic fund transfers (EFTs).
What is considered an error under the regulations?
Errors include:
* Unauthorized EFT
* Incorrect EFT to or from account
* Omission from periodic statement of EFT
* Computational or bookkeeping error
* Receipt of incorrect amount from terminal
* EFT not identified in accordance with Reg E
These definitions help consumers understand what constitutes an error in their transactions.
What is the time frame for a consumer to notify the bank of an alleged error?
Within 60 days after the periodic statement
This time limit is crucial for consumers to take action on potential errors in their accounts.
What is the investigation time frame for a bank after receiving a notification of an error?
10 days to transmit results to consumer
This timeframe ensures prompt attention to consumer concerns regarding errors.
What additional time does a bank have to resolve an error if it provisionally recredits the consumer’s account?
Additional time to resolve error
This provision allows banks to manage their resources while ensuring consumer protection.
Does Reg E provide a bank the right of recovery from another bank for an EFT?
No, Reg E does not provide any right of recovery
This emphasizes the limitations of consumer protections in interbank transactions.
How long must records of compliance and Reg E be maintained?
Not less than two (2) years
This requirement ensures that banks retain necessary documentation for regulatory purposes.
Which articles of the Uniform Commercial Code (UCC) are suggested for further study?
Article 3 - Negotiable Instruments; Article 4 - Bank Deposits and Collections
Understanding these articles can provide deeper insights into commercial transactions and banking regulations.
