Regulation E: Electronic Fund Transfers (2024)

As an expert and enthusiast, I can provide you with information related to the concepts used in the article you provided. However, I don't have the ability to demonstrate first-hand expertise or provide evidence of my knowledge. My responses are generated based on patterns and information present in the data I was trained on. Please keep in mind that while I strive to provide accurate and up-to-date information, my responses may not always reflect the most current regulations or legal requirements. It's always a good idea to consult official sources or seek professional advice for specific compliance matters. With that being said, let's dive into the concepts mentioned in the article.

Regulation E: Electronic Fund Transfers

Regulation E is a set of rules established by the Consumer Financial Protection Bureau (CFPB) in the United States. Its purpose is to establish the rights, liabilities, and responsibilities of participants in electronic fund transfer systems. The regulation covers various types of electronic fund transfers, including those initiated through automated teller machines (ATMs), point-of-sale (POS) terminals, telephones, computers, or magnetic tapes. These transfers can involve actions such as debiting or crediting a consumer's asset account, direct deposits, social security payments, and more.

Key Sections of Regulation E

The article mentions several key sections of Regulation E. Here's a brief overview of each section:

Section 205.1 - Authority and purpose: This section states that the primary objective of Regulation E is to protect individual consumers who engage in electronic fund transfers.

Section 205.2 - Definitions: This section defines key terms used throughout the regulation. It helps establish a common understanding of the terminology used in electronic fund transfers.

Section 205.3 - Coverage: This section lists the types of transactions covered by the regulation. It includes transfers initiated through electronic terminals, telephones, computers, or magnetic tapes, which order, instruct, or authorize a financial institution to debit or credit an account. Examples of covered transfers include POS and ATM transfers, direct deposits or withdrawals, telephone transfers, and transfers initiated through a debit card transaction.

Section 205.4 - General disclosure requirements; jointly offered services: This section allows financial institutions to combine the disclosure information required by Regulation E with that required by other laws, such as the Truth in Lending Act or the Truth in Savings Act. The combined disclosure should be clear, understandable, and provided in a written form that consumers can keep.

Section 205.5 - Issuance of access devices: This section stipulates that a depository institution may issue an access device (such as a debit card) only if a consumer has requested it either orally or in writing.

Section 205.6 - Liability of consumer for unauthorized transfers: This section limits a consumer's liability for unauthorized electronic fund transfers, such as those resulting from the loss or theft of an access device, to $50. However, if the consumer fails to notify the depository institution in a timely manner, the amount of liability may increase to $500 or even become unlimited.

Section 205.7 - Initial disclosures: Financial institutions are required to provide consumers with initial disclosures of the terms and conditions of electronic fund transfer services. These disclosures should include information about the consumer's liability for unauthorized transfers, the types of transfers available, any limits on frequency or dollar amount, fees charged by the institution, and error-resolution procedures. Institutions must also provide a summary of various consumer rights under the regulation.

Section 205.8 - Change-in-terms notice; error-resolution notice: If there are adverse changes in fees, consumer liability, types of transfers available, or limits on transfers, the institution must provide a change-in-terms notice at least twenty-one days before the changes take effect. The institution must also periodically send reminders of the error-resolution procedures. It may choose to send a detailed notice annually or provide an abbreviated notice with each account statement.

Section 205.9 - Receipts at electronic terminals; periodic statements: This section requires financial institutions to provide consumers with documentation in two forms: terminal receipts and periodic statements. Consumers should receive a receipt when they initiate an electronic transfer and receive monthly periodic statements that include information such as the type of transfer, the amount and date of the transaction, the location of the terminal, and other relevant details.

Section 205.10 - Preauthorized transfers: Financial institutions must provide consumers with some form of notice when electronic transfers recur at substantially regular intervals. Examples include direct deposit of salaries or benefits and preauthorized payments of bills.

Section 205.11 - Procedures for resolving errors: If a consumer notifies an institution of an error involving an electronic fund transfer, the institution must investigate and resolve the claim within specified deadlines. Errors covered by this requirement include unauthorized transfers, incorrect transfers, and omissions from account statements.

Section 205.12 - Relation to other laws: This section states that with regard to the issuance of access devices, consumer liability, and the unsolicited issuance of credit cards, financial institutions must take into account the provisions set forth in Regulation Z (Truth in Lending). The Federal Reserve Board has the authority to determine whether state laws related to electronic fund transfers are preempted if they are inconsistent with the act and Regulation E.

Section 205.13 - Administrative enforcement; record retention: This section indicates which federal agency enforces the regulation for specific classes of institutions. It also requires institutions to retain records for a period of not less than two years from the date disclosures are required to be made or an action is required to be taken.

Section 205.14 - Electronic fund transfer service provider not holding consumer's account: This section states that a person providing an electronic fund transfer service to a consumer but not holding the consumer's account is subject to many of the same requirements outlined in the regulation.

Section 205.15 - Electronic fund transfer of government benefits: If a government agency directly or indirectly issues an access device to a consumer for initiating an electronic fund transfer of government benefits from an account, it is subject to the requirements of the regulation. However, needs-tested benefits in a program established under state or local law, or administered by a state or local agency, may have different rules.

Appendix A, B, C, and Supplement I: These sections provide additional information, such as model disclosure clauses and forms, federal enforcement agencies, issuance of staff interpretations, and official staff interpretations (commentary).

It's important to note that this overview is not comprehensive, and for a detailed understanding of Regulation E, it's advisable to consult the full text of the regulation, available on the Government Printing Office website or seek professional legal advice if needed.