[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR205.17]
[Page 140-163]
TITLE 12--BANKS AND BANKING
CHAPTER II--FEDERAL RESERVE SYSTEM
PART 205_ELECTRONIC FUND TRANSFERS (REGULATION E)--Table of Contents
Sec. 205.17 Requirements for electronic communication.
(a) Definition. Electronic communication means a message transmitted
electronically between a financial institution and a consumer in a
format that allows visual text to be displayed on equipment, for
example, a personal computer monitor.
(b) General rule. In accordance with the Electronic Signatures in
Global and National Commerce Act (the E-Sign Act), 15 U.S.C. 7001 et
seq., and the rules of this part, a financial institution may provide by
electronic communication any disclosure required by this part to be in
writing.
(c) Address or location to receive electronic communication. A
financial institution that uses electronic communication to provide
disclosures required by this part shall:
(1) Send the disclosure to the consumer's electronic address; or
(2) Make the disclosure available at another location such as an
Internet web site; and
(i) Alert the consumer of the disclosure's availability by sending a
notice to the consumer's electronic address (or to a postal address, at
the financial institution's option). The notice shall identify the
account involved and the address of the Internet web site or other
location where the disclosure is available; and
(ii) Make the disclosure available for at least 90 days from the
date the disclosure first becomes available or from the date of the
notice alerting the consumer of the disclosure, whichever comes later.
(d) Redelivery. When a disclosure provided by electronic
communication is returned to a financial institution undelivered, the
financial institution shall take reasonable steps to attempt redelivery
using information in its files.
(e) Persons other than financial institutions. Persons other than a
financial institution that are required to comply
[[Page 141]]
with this part may use electronic communication in accordance with the
requirements of Sec. 205.17, as applicable.
[Reg. E, 66 FR 17793, Apr. 4, 2001]
Appendix A to Part 205--Model Disclosure Clauses and Forms
Table of Contents
A---Model Clauses for unsolicited issuance (Sec. 205.5(b)(2))
A-2--Model clauses for initial disclosures (Sec. 205.7(b))
A-3--Model forms for error resolution notice (Sec. Sec. 205.7(b)(10)
and 205.8(b))
A-4--Model form for service-providing institutions (Sec.
205.14(b)(1)(ii))
A-5--Model forms for government agencies (Sec. 205.15(d)(1) and (2))
A-1--Model Clauses For Unsolicited Issuance (Sec. 205.5(b)(2))
(a) Accounts using cards. You cannot use the enclosed card to
transfer money into or out of your account until we have validated it.
If you do not want to use the card, please (destroy it at once by
cutting it in half).
[Financial institution may add validation instructions here.]
(b) Accounts using codes. You cannot use the enclosed code to
transfer money into or out of your account until we have validated it.
If you do not want to use the code, please (destroy this notice at
once).
[Financial institution may add validation instructions here.]
A-2--Model Clauses For Initial Disclosures (Sec. 205.7(b))
(a) Consumer Liability (Sec. 205.7(b)(1)). (Tell us AT ONCE if you
believe your [card] [code] has been lost or stolen. Telephoning is the
best way of keeping your possible losses down. You could lose all the
money in your account (plus your maximum overdraft line of credit). If
you tell us within 2 business days, you can lose no more than $50 if
someone used your [card][code] without your permission. (If you believe
your [card] [code] has been lost or stolen, and you tell us within 2
business days after you learn of the loss or theft, you can lose no more
than $50 if someone used your [card] [code] without your permission.)
If you do NOT tell us within 2 business days after you learn of the
loss or theft of your [card] [code], and we can prove we could have
stopped someone from using your [card] [code] without your permission if
you had told us, you could lose as much as $500.
Also, if your statement shows transfers that you did not make, tell
us at once. If you do not tell us within 60 days after the statement was
mailed to you, you may not get back any money you lost after the 60 days
if we can prove that we could have stopped someone from taking the money
if you had told us in time.
If a good reason (such as a long trip or a hospital stay) kept you
from telling us, we will extend the time periods.
(b) Contact in event of unauthorized transfer (Sec. 205.7(b)(2)).
If you believe your [card] [code] has been lost or stolen or that
someone has transferred or may transfer money from your account without
your permission, call:
[Telephone number]
or write:
[Name of person or office to be notified]
[Address]
(c) Business days (Sec. 205.7(b)(3)). For purposes of these
disclosures, our business days are (Monday through Friday) (Monday
through Saturday) (any day including Saturdays and Sundays). Holidays
are (not) included.
(d) Transfer types and limitations (Sec. 205.7(b)(4))--(1) Account
access. You may use your [card][code] to:
(i) Withdraw cash from your [checking] [or] [savings] account.
(ii) Make deposits to your [checking] [or] [savings] account.
(iii) Transfer funds between your checking and savings accounts
whenever you request.
(iv) Pay for purchases at places that have agreed to accept the
[card] [code].
(v) Pay bills directly [by telephone] from your [checking] [or]
[savings] account in the amounts and on the days you request.
Some of these services may not be available at all terminals.
(2) Limitations on frequency of transfers.--(i) You may make only
[insert number, e.g., 3] cash withdrawals from our terminals each
[insert time period, e.g., week].
(ii) You can use your telephone bill-payment service to pay [insert
number] bills each [insert time period] [telephone call].
(iii) You can use our point-of-sale transfer service for [insert
number] transactions each [insert time period].
(iv) For security reasons, there are limits on the number of
transfers you can make using our [terminals] [telephone bill-payment
service] [point-of-sale transfer service].
(3) Limitations on dollar amounts of transfers--(i) You may withdraw
up to [insert dollar amount] from our terminals each [insert time
period] time you use the [card] [code].
(ii) You may buy up to [insert dollar amount] worth of goods or
services each [insert time period] time you use the [card] [code] in our
point-of-sale transfer service.
(e) Fees (Sec. 205.7(b)(5))--(1) Per transfer charge. We will
charge you [insert dollar amount] for each transfer you make using our
[automated teller machines] [telephone bill-payment service] [point-of-
sale transfer service].
(2) Fixed charge. We will charge you [insert dollar amount] each
[insert time period] for
[[Page 142]]
our [automated teller machine service] [telephone bill-payment service]
[point-of-sale transfer service].
(3) Average or minimum balance charge. We will only charge you for
using our [automated teller machines] [telephone bill-payment service]
[point-of-sale transfer service] if the [average] [minimum] balance in
your [checking account] [savings account] [accounts] falls below [insert
dollar amount]. If it does, we will charge you [insert dollar amount]
each [transfer] [insert time period].
(f) Confidentiality (Sec. 205.7(b)(9)). We will disclose
information to third parties about your account or the transfers you
make:
(i) Where it is necessary for completing transfers, or
(ii) In order to verify the existence and condition of your account
for a third party, such as a credit bureau or merchant, or
(iii) In order to comply with government agency or court orders, or
(iv) If you give us your written permission.
(g) Documentation (Sec. 205.7(b)(6))--(1) Terminal transfers. You
can get a receipt at the time you make any transfer to or from your
account using one of our [automated teller machines] [or] [point-of-sale
terminals].
(2) Preauthorized credits. If you have arranged to have direct
deposits made to your account at least once every 60 days from the same
person or company, (we will let you know if the deposit is [not] made.)
[the person or company making the deposit will tell you every time they
send us the money] [you can call us at (insert telephone number) to find
out whether or not the deposit has been made].
(3) Periodic statements. You will get a [monthly] [quarterly]
account statement (unless there are no transfers in a particular month.
In any case you will get the statement at least quarterly).
(4) Passbook account where the only possible electronic fund
transfers are preauthorized credits. If you bring your passbook to us,
we will record any electronic deposits that were made to your account
since the last time you brought in your passbook.
(h) Preauthorized payments (Sec. 205.7(b) (6), (7) and (8); Sec.
205.10(d))--(1) Right to stop payment and procedure for doing so. If you
have told us in advance to make regular payments out of your account,
you can stop any of these payments. Here's how:
Call us at [insert telephone number], or write us at [insert
address], in time for us to receive your request 3 business days or more
before the payment is scheduled to be made. If you call, we may also
require you to put your request in writing and get it to us within 14
days after you call. (We will charge you [insert amount] for each stop-
payment order you give.)
(2) Notice of varying amounts. If these regular payments may vary in
amount, [we] [the person you are going to pay] will tell you, 10 days
before each payment, when it will be made and how much it will be. (You
may choose instead to get this notice only when the payment would differ
by more than a certain amount from the previous payment, or when the
amount would fall outside certain limits that you set.)
(3) Liability for failure to stop payment of preauthorized transfer.
If you order us to stop one of these payments 3 business days or more
before the transfer is scheduled, and we do not do so, we will be liable
for your losses or damages.
(i) Financial institution's liability (Sec. 205.7(b)(8)). If we do
not complete a transfer to or from your account on time or in the
correct amount according to our agreement with you, we will be liable
for your losses or damages. However, there are some exceptions. We will
not be liable, for instance:
(1) If, through no fault of ours, you do not have enough money in
your account to make the transfer.
(2) If the transfer would go over the credit limit on your overdraft
line.
(3) If the automated teller machine where you are making the
transfer does not have enough cash.
(4) If the [terminal] [system] was not working properly and you knew
about the breakdown when you started the transfer.
(5) If circumstances beyond our control (such as fire or flood)
prevent the transfer, despite reasonable precautions that we have taken.
(6) There may be other exceptions stated in our agreement with you.
(j) ATM fees (Sec. 205.7(b)(11)). When you use an ATM not owned by
us, you may be charged a fee by the ATM operator [or any network used]
(and you may be charged a fee for a balance inquiry even if you do not
complete a fund transfer).
A-3--Model Forms For Error Resolution Notice (Sec. Sec. 205.7(b)(10)
and 205.8(b))
(a) Initial and annual error resolution notice (Sec. Sec.
205.7(b)(10) and 205.8(b)).
In Case of Errors or Questions About Your Electronic Transfers
Telephone us at [insert telephone number] Write us at [insert address]
[or E-mail us at [insert electronic mail address]] as soon as you can,
if you think your statement or receipt is wrong or if you need more
information about a transfer listed on the statement or receipt. We must
hear from you no later than 60 days after we sent the FIRST statement on
which the problem or error appeared.
(1) Tell us your name and account number (if any).
(2) Describe the error or the transfer you are unsure about, and
explain as clearly as you can why you believe it is an error or why you
need more information.
(3) Tell us the dollar amount of the suspected error.
[[Page 143]]
If you tell us orally, we may require that you send us your
complaint or question in writing within 10 business days.
We will determine whether an error occurred within 10 business days
after we hear from you and will correct any error promptly. If we need
more time, however, we may take up to 45 days to investigate your
complaint or question. If we decide to do this, we will credit your
account within 10 business days for the amount you think is in error, so
that you will have the use of the money during the time it takes us to
complete our investigation. If we ask you to put your complaint or
question in writing and we do not receive it within 10 business days, we
may not credit your account.
For errors involving new accounts, point-of-sale, or foreign-
initiated transactions, we may take up to 90 days to investigate your
complaint or question. For new accounts, we may take up to 20 business
days to credit your account for the amount you think is in error.
We will tell you the results within three business days after
completing our investigation. If we decide that there was no error, we
will send you a written explanation. You may ask for copies of the
documents that we used in our investigation.
(b) Error resolution notice on periodic statements (Sec. 205.8(b)).
A-4--Model Form For Service-providing Institutions (Sec.
205.14(b)(1)(ii))
ALL QUESTIONS ABOUT TRANSACTIONS MADE WITH YOUR (NAME OF CARD) CARD
MUST BE DIRECTED TO US (NAME OF SERVICE PROVIDER), AND NOT TO THE BANK
OR OTHER FINANCIAL INSTITUTION WHERE YOU HAVE YOUR ACCOUNT. We are
responsible for the [name of service] service and for resolving any
errors in transactions made with your [name of card] card.
We will not send you a periodic statement listing transactions that
you make using your [name of card] card. The transactions will appear
only on the statement issued by your bank or other financial
institution. SAVE THE RECEIPTS YOU ARE GIVEN WHEN YOU USE YOUR [NAME OF
CARD] CARD, AND CHECK THEM AGAINST THE ACCOUNT STATEMENT YOU RECEIVE
FROM YOUR BANK OR OTHER FINANCIAL INSTITUTION. If you have any questions
about one of these transactions, call or write us at [telephone number
and address] [the telephone number and address indicated below].
IF YOUR [NAME OF CARD] CARD IS LOST OR STOLEN, NOTIFY US AT ONCE by
calling or writing to us at [telephone number and address].
A-5--Model Forms For Government Agencies(Sec. 205.15(d)(1) and (2))
(a) Disclosure by government agencies of information about obtaining
account balances and account histories (Sec. 205.15(d)(1)(i) and (ii)).
You may obtain information about the amount of benefits you have
remaining by calling [telephone number]. That information is also
available [on the receipt you get when you make a transfer with your
card at (an ATM)(a POS terminal)][when you make a balance inquiry at an
ATM][when you make a balance inquiry at specified locations].
You also have the right to receive a written summary of transactions
for the 60 days preceding your request by calling [telephone number].
[Optional: Or you may request the summary by contacting your
caseworker.]
(b) Disclosure of error resolution procedures for government
agencies that do not provide periodic statements (Sec.
205.15(d)(1)(iii) and (d)(2)).
In Case of Errors or Questions About Your Electronic Transfers
Telephone us at [telephone number] Write us at [insert address] [or E-
mail us at [insert electronic mail address]] as soon as you can, if you
think an error has occurred in your [EBT][agency's name for program]
account. We must hear from you no later than 60 days after you learn of
the error. You will need to tell us:
Your name and [case] [file] number.
Why you believe there is an error, and the dollar
amount involved.
Approximately when the error took place.
If you tell us orally, we may require that you send us your complaint or
question in writing within 10 business days.
We will determine whether an error occurred within 10 business days
after we hear from you and will correct any error promptly. If we need
more time, however, we may take up to 45 days to investigate your
complaint or question. If we decide to do this, we will credit your
account within 10 business days for the amount you think is in error, so
that you will have the use of the money during the time it takes us to
complete our investigation. If we ask you to put your complaint or
question in writing and we do not receive it within 10 business days, we
may not credit your account.
For errors involving new accounts, point-of-sale, or foreign-
initiated transactions, we may take up to 90 days to investigate your
complaint or question. For new accounts, we may take up to 20 business
days to credit your account for the amount you think is in error.
We will tell you the results within three business days after
completing our investigation. If we decide that there was no error, we
will send you a written explanation. You
[[Page 144]]
may ask for copies of the documents that we used in our investigation.
If you need more information about our error resolution procedures,
call us at [telephone number][the telephone number shown above].
[Reg. E, 61 FR 19669, May 2, 1996, as amended at 63 FR 52118, Sept. 29,
1998; 66 FR 13412, Mar. 6, 2001; 66 FR 17793, Apr. 4, 2001]
Appendix B to Part 205--Federal Enforcement Agencies
The following list indicates which Federal agency enforces
Regulation E (12 CFR part 205) for particular classes of institutions.
Any questions concerning compliance by a particular institution should
be directed to the appropriate enforcing agency. Terms that are not
defined in the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall
have the meaning given to them in the International Banking Act of 1978
(12 U.S.C. 3101).
National banks, and Federal branches and Federal agencies of foreign
banks
District office of the Office of the Comptroller of the Currency
where the institution is located.
State member banks, branches and agencies of foreign banks (other than
Federal branches, Federal agencies, and insured state branches of
foreign banks), commercial lending companies owned or controlled by
foreign banks, and organizations operating under section 25 or 25(a) of
the Federal Reserve Act
Federal Reserve Bank serving the District in which the institution
is located.
Nonmember insured banks and insured state branches of foreign banks
Federal Deposit Insurance Corporation regional director for the
region in which the institution is located.
Savings institutions insured under the Savings Association Insurance
Fund of the FDIC and federally-chartered savings banks insured under the
Bank Insurance Fund of the FDIC (but not including state-chartered
savings banks insured under the Bank Insurance Fund)
Office of Thrift Supervision Regional Director for the region in
which the institution is located.
Federal Credit Unions
Division of Consumer Affairs, National Credit Union Administration,
1775 Duke Street, Alexandria, Virginia 22314-3428
Air Carriers
Assistant General Counsel for Aviation Enforcement and Proceedings,
Department of Transportation, 400 Seventh Street, S.W., Washington, D.C.
20590.
Brokers and Dealers
Division of Market Regulation, Securities and Exchange Commission,
Washington, D.C. 20549.
Retailers, Consumer Finance Companies, Certain Other Financial
Institutions, and all others not covered above
Federal Trade Commission, Electronic Fund Transfers, Washington,
D.C. 20580.
Appendix C to Part 205--Issuance of Staff Interpretations
Official Staff Interpretations
Pursuant to section 915(d) of the act, the Board has designated the
director and other officials of the Division of Consumer and Community
Affairs as officials ``duly authorized'' to issue, at their discretion,
official staff interpretations of this part. Except in unusual
circumstances, such interpretations will not be issued separately but
will be incorporated in an official commentary to this part, which will
be amended periodically.
Requests for Issuance of Official Staff Interpretations
A request for an official staff interpretation shall be in writing
and addressed to the Director, Division of Consumer and Community
Affairs, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551. The request shall contain a complete statement of all
relevant facts concerning the issue, including copies of all pertinent
documents.
Scope of Interpretations
No staff interpretations will be issued approving financial
institutions' forms or statements. This restriction does not apply to
forms or statements whose use is required or sanctioned by a government
agency.
Supplement I to Part 205--Official Staff Interpretations
Section 205.2--Definitions
2(a) Access Device
1. Examples. The term access device includes debit cards, personal
identification numbers (PINs), telephone transfer and telephone bill
payment codes, and other means that may be used by a consumer to
initiate an electronic fund transfer (EFT) to or from a consumer
account. The term does not include magnetic tape or other devices used
internally by a financial institution to initiate electronic transfers.
[[Page 145]]
2. Checks used to capture information. The term ``access device''
does not include a check or draft used to capture the MICR (Magnetic Ink
Character Recognition) encoding to initiate a one-time ACH debit. For
example, if a consumer authorizes a one-time ACH debit from the
consumer's account using a blank, partially completed, or fully
completed and signed check for the merchant to capture the routing,
account, and serial numbers to initiate the debit, the check is not an
access device. (Although the check is not an access device under
Regulation E, the transaction is nonetheless covered by the regulation.
See comment 3(b)-1(v).)
2(b) Account
1. Consumer asset account. The term consumer asset account includes:
i. Club accounts, such as vacation clubs. In many cases, however,
these accounts are exempt from the regulation under Sec. 205.3(c)(5)
because all electronic transfers to or from the account have been
preauthorized by the consumer and involve another account of the
consumer at the same institution.
ii. A retail repurchase agreement (repo), which is a loan made to a
financial institution by a consumer that is collateralized by government
or government-insured securities.
2. Examples of accounts not covered by Regulation E (12 CFR part
205) include:
i. Profit-sharing and pension accounts established under a trust
agreement, which are exempt under Sec. 205.2(b)(2).
ii. Escrow accounts, such as those established to ensure payment of
items such as real estate taxes, insurance premiums, or completion of
repairs or improvements.
iii. Accounts for accumulating funds to purchase U.S. savings bonds.
Paragraph 2(b)(2)
1. Bona fide trust agreements. The term bona fide trust agreement is
not defined by the act or regulation; therefore, financial institutions
must look to state or other applicable law for interpretation.
2. Custodial agreements. An account held under a custodial agreement
that qualifies as a trust under the Internal Revenue Code, such as an
individual retirement account, is considered to be held under a trust
agreement for purposes of Regulation E.
2(d) Business Day
1. Duration. A business day includes the entire 24-hour period
ending at midnight, and a notice required by the regulation is effective
even if given outside normal business hours. The regulation does not
require, however, that a financial institution make telephone lines
available on a 24-hour basis.
2. Substantially all business functions. ``Substantially all
business functions'' include both the public and the back-office
operations of the institution. For example, if the offices of an
institution are open on Saturdays for handling some consumer
transactions (such as deposits, withdrawals, and other teller
transactions), but not for performing internal functions (such as
investigating account errors), then Saturday is not a business day for
that institution. In this case, Saturday does not count toward the
business-day standard set by the regulation for reporting lost or stolen
access devices, resolving errors, etc.
3. Short hours. A financial institution may determine, at its
election, whether an abbreviated day is a business day. For example, if
an institution engages in substantially all business functions until
noon on Saturdays instead of its usual 3:00 p.m. closing, it may
consider Saturday a business day.
4. Telephone line. If a financial institution makes a telephone line
available on Sundays for reporting the loss or theft of an access
device, but performs no other business functions, Sunday is not a
business day under the ``substantially all business functions''
standard.
2(h) Electronic Terminal
1. Point-of-sale (POS) payments initiated by telephone. Because the
term electronic terminal excludes a telephone operated by a consumer, a
financial institution need not provide a terminal receipt when:
i. A consumer uses a debit card at a public telephone to pay for the
call.
ii. A consumer initiates a transfer by a means analogous in function
to a telephone, such as by home banking equipment or a facsimile
machine.
2. POS terminals. A POS terminal that captures data electronically,
for debiting or crediting to a consumer's asset account, is an
electronic terminal for purposes of Regulation E even if no access
device is used to initiate the transaction. (See Sec. 205.9 for receipt
requirements.)
3. Teller-operated terminals. A terminal or other computer equipment
operated by an employee of a financial institution is not an electronic
terminal for purposes of the regulation. However, transfers initiated at
such terminals by means of a consumer's access device (using the
consumer's PIN, for example) are EFTs and are subject to other
requirements of the regulation. If an access device is used only for
identification purposes or for determining the account balance, the
transfers are not EFTs for purposes of the regulation.
2(k) Preauthorized Electronic Fund Transfer
1. Advance authorization. A ``preauthorized electronic fund
transfer'' under Regulation E
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is one authorized by the consumer in advance of a transfer that will
take place on a recurring basis, at substantially regular intervals, and
will require no further action by the consumer to initiate the transfer.
In a bill-payment system, for example, if the consumer authorizes a
financial institution to make monthly payments to a payee by means of
EFTs, and the payments take place without further action by the
consumer, the payments are preauthorized EFTs. In contrast, if the
consumer must take action each month to initiate a payment (such as by
entering instructions on a touch-tone telephone or home computer), the
payments are not preauthorized EFTs.
2(m) Unauthorized Electronic Fund Transfer
1. Transfer by institution's employee. A consumer has no liability
for erroneous or fraudulent transfers initiated by an employee of a
financial institution.
2. Authority. If a consumer furnishes an access device and grants
authority to make transfers to a person (such as a family member or co-
worker) who exceeds the authority given, the consumer is fully liable
for the transfers unless the consumer has notified the financial
institution that transfers by that person are no longer authorized.
3. Access device obtained through robbery or fraud. An unauthorized
EFT includes a transfer initiated by a person who obtained the access
device from the consumer through fraud or robbery.
4. Forced initiation. An EFT at an automated teller machine (ATM) is
an unauthorized transfer if the consumer has been induced by force to
initiate the transfer.
5. Reversal of direct deposits. The reversal of a direct deposit
made in error is not an unauthorized EFT when it involves:
i. A credit made to the wrong consumer's account;
ii. A duplicate credit made to a consumer's account; or
iii. A credit in the wrong amount (for example, when the amount
credited to the consumer's account differs from the amount in the
transmittal instructions).
Section 205.3--Coverage
3(a) General
1. Accounts covered. The requirements of the regulation apply only
to an account for which an agreement for EFT services to or from the
account has been entered into between:
i. The consumer and the financial institution (including an account
for which an access device has been issued to the consumer, for
example);
ii. The consumer and a third party (for preauthorized debits or
credits, for example), when the account-holding institution has received
notice of the agreement and the fund transfers have begun.
2. Automated clearing house (ACH) membership. The fact that
membership in an ACH requires a financial institution to accept EFTs to
accounts at the institution does not make every account of that
institution subject to the regulation.
3. Foreign applicability. Regulation E applies to all persons
(including branches and other offices of foreign banks located in the
United States) that offer EFT services to residents of any state,
including resident aliens. It covers any account located in the United
States through which EFTs are offered to a resident of a state. This is
the case whether or not a particular transfer takes place in the United
States and whether or not the financial institution is chartered in the
United States or a foreign country. The regulation does not apply to a
foreign branch of a U.S. bank unless the EFT services are offered in
connection with an account in a state as defined in Sec. 205.2(l).
3(b) Electronic Fund Transfer
1. Fund transfers covered. The term electronic fund transfer
includes:
i. A deposit made at an ATM or other electronic terminal (including
a deposit in cash or by check) provided a specific agreement exists
between the financial institution and the consumer for EFTs to or from
the account to which the deposit is made.
ii. A transfer sent via ACH. For example, social security benefits
under the U.S. Treasury's direct-deposit program are covered, even if
the listing of payees and payment amounts reaches the account-holding
institution by means of a computer printout from a correspondent bank.
iii. A preauthorized transfer credited or debited to an account in
accordance with instructions contained on magnetic tape, even if the
financial institution holding the account sends or receives a composite
check.
iv. A transfer from the consumer's account resulting from a debit-
card transaction at a merchant location, even if no electronic terminal
is involved at the time of the transaction, if the consumer's asset
account is subsequently debited for the amount of the transfer.
v. A transfer via ACH where a consumer has provided a check to
enable the merchant or other payee to capture the routing, account, and
serial numbers to initiate the transfer, whether the check is blank,
partially completed, or fully completed and signed; whether the check is
presented at POS or is mailed to a merchant or other payee or lockbox
and later converted to an EFT; or whether the check is retained by the
consumer, the merchant or other payee, or the payee's financial
institution.
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vi. A payment made by a bill payer under a bill-payment service
available to a consumer via computer or other electronic means, unless
the terms of the bill-payment service explicitly state that all
payments, or all payments to a particular payee or payees, will be
solely by check, draft, or similar paper instrument drawn on the
consumer's account, and the payee or payees that will be paid in this
manner are identified to the consumer.
2. Fund transfers not covered. The term electronic fund transfer
does not include:
i. A payment that does not debit or credit a consumer asset account,
such as a payroll allotment to a creditor to repay a credit extension
(which is deducted from salary).
ii. A payment made in currency by a consumer to another person at an
electronic terminal.
iii. A preauthorized check drawn by the financial institution on the
consumer's account (such as an interest or other recurring payment to
the consumer or another party), even if the check is computer-generated.
3. Authorization of one-time EFT initiated using MICR encoding on a
check. A consumer authorizes a one-time EFT (in providing a check to a
merchant or other payee for the MICR encoding), where the consumer
receives notice that the transaction will be processed as an EFT and
completes the transaction. Examples of notice include, but are not
limited to, signage at POS and written statements.
3(c) Exclusions From Coverage
Paragraph 3(c)(1)--Checks
1. Re-presented checks. The electronic re-presentment of a returned
check is not covered by Regulation E because the transaction originated
by check. Regulation E does apply, however, to any fee authorized by the
consumer to be debited electronically from the consumer's account
because the check was returned for insufficient funds. Authorization
occurs where the consumer has received notice that a fee imposed for
returned checks will be debited electronically from the consumer's
account.
2. Check used to capture information for a one-time EFT. See comment
3(b)-1(v).
Paragraph 3(c)(2)--Check Guarantee or Authorization
1. Memo posting. Under a check guarantee or check authorization
service, debiting of the consumer's account occurs when the check or
draft is presented for payment. These services are exempt from coverage,
even when a temporary hold on the account is memo-posted electronically
at the time of authorization.
Paragraph 3(c)(3)--Wire or Other Similar Transfers
1. Fedwire and ACH. If a financial institution makes a fund transfer
to a consumer's account after receiving funds through Fedwire or a
similar network, the transfer by ACH is covered by the regulation even
though the Fedwire or network transfer is exempt.
2. Article 4A. Financial institutions that offer telephone-initiated
Fedwire payments are subject to the requirements of UCC section 4A-202,
which encourages verification of Fedwire payment orders pursuant to a
security procedure established by agreement between the consumer and the
receiving bank. These transfers are not subject to Regulation E and the
agreement is not considered a telephone plan if the service is offered
separately from a telephone bill-payment or other prearranged plan
subject to Regulation E. The Board's Regulation J (12 CFR part 210)
specifies the rules applicable to funds handled by Federal Reserve
Banks. To ensure that the rules for all fund transfers through Fedwire
are consistent, the Board used its preemptive authority under UCC
section 4A-107 to determine that subpart B of Regulation J (12 CFR part
210), including the provisions of Article 4A, applies to all fund
transfers through Fedwire, even if a portion of the fund transfer is
governed by the EFTA. The portion of the fund transfer that is governed
by the EFTA is not governed by subpart B of Regulation J (12 CFR part
210).
3. Similar fund transfer systems. Fund transfer systems that are
similar to Fedwire include the Clearing House Interbank Payments System
(CHIPS), Society for Worldwide Interbank Financial Telecommunication
(SWIFT), Telex, and transfers made on the books of correspondent banks.
Paragraph 3(c)(4)--Securities and Commodities Transfers
1. Coverage. The securities exemption applies to securities and
commodities that may be sold by a registered broker-dealer or futures
commission merchant, even when the security or commodity itself is not
regulated by the Securities and Exchange Commission or the Commodity
Futures Trading Commission.
2. Example of exempt transfer. The exemption applies to a transfer
involving a transfer initiated by a telephone order to a stockbroker to
buy or sell securities or to exercise a margin call.
3. Examples of nonexempt transfers. The exemption does not apply to
a transfer involving:
i. A debit card or other access device that accesses a securities or
commodities account such as a money market mutual fund and
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that the consumer uses for purchasing goods or services or for obtaining
cash.
ii. A payment of interest or dividends into the consumer's account
(for example, from a brokerage firm or from a Federal Reserve Bank for
government securities).
Paragraph 3(c)(5)--Automatic Transfers by Account-Holding Institution
1. Automatic transfers exempted. The exemption applies to:
i. Electronic debits or credits to consumer accounts for check
charges, stop-payment charges, NSF charges, overdraft charges,
provisional credits, error adjustments, and similar items that are
initiated automatically on the occurrence of certain events.
ii. Debits to consumer accounts for group insurance available only
through the financial institution and payable only by means of an
aggregate payment from the institution to the insurer.
iii. EFTs between a thrift institution and its paired commercial
bank in the state of Rhode Island, which are deemed under state law to
be intra-institutional.
iv. Automatic transfers between a consumer's accounts within the
same financial institution, even if the account holders on the two
accounts are not identical.
2. Automatic transfers not exempted. Transfers between accounts of
the consumer at affiliated institutions (such as between a bank and its
subsidiary or within a holding company) are not intra-institutional
transfers, and thus do not qualify for the exemption.
Paragraph 3(c)(6)--Telephone-Initiated Transfers
1. Written plan or agreement. A transfer that the consumer initiates
by telephone is covered by Regulation E if the transfer is made under a
written plan or agreement between the consumer and the financial
institution making the transfer. A written statement available to the
public or to account holders that describes a service allowing a
consumer to initiate transfers by telephone constitutes a plan--for
example, a brochure, or material included with periodic statements. The
following, however, do not by themselves constitute a written plan or
agreement:
i. A hold-harmless agreement on a signature card that protects the
institution if the consumer requests a transfer.
ii. A legend on a signature card, periodic statement, or passbook
that limits the number of telephone-initiated transfers the consumer can
make from a savings account because of reserve requirements under
Regulation D (12 CFR part 204).
iii. An agreement permitting the consumer to approve by telephone
the rollover of funds at the maturity of an instrument.
2. Examples of covered transfers. When a written plan or agreement
has been entered into, a transfer initiated by a telephone call from a
consumer is covered even though:
i. An employee of the financial institution completes the transfer
manually (for example, by means of a debit memo or deposit slip).
ii. The consumer is required to make a separate request for each
transfer.
iii. The consumer uses the plan infrequently.
iv. The consumer initiates the transfer via a facsimile machine.
v. The consumer initiates the transfer using a financial
institution's audio-response or voice-response telephone system.
Paragraph 3(c)(7)--Small Institutions
1. Coverage. This exemption is limited to preauthorized transfers;
institutions that offer other EFTs must comply with the applicable
sections of the regulation as to such services. The preauthorized
transfers remain subject to sections 913, 915, and 916 of the act and
Sec. 205.10(e), and are therefore exempt from UCC Article 4A.
Section 205.4--General Disclosure Requirements; Jointly Offered Services
4(a) Form of Disclosures
1. General. Although no particular rules govern type size, number of
pages, or the relative conspicuousness of various terms, the disclosures
must be in a clear and readily understandable written form that the
consumer may retain. Numbers or codes are considered readily
understandable if explained elsewhere on the disclosure form.
2. Foreign language disclosures. Disclosures may be made in
languages other than English, provided they are available in English
upon request.
Section 205.5--Issuance of Access Devices
1. Coverage. The provisions of this section limit the circumstances
under which a financial institution may issue an access device to a
consumer. Making an additional account accessible through an existing
access device is equivalent to issuing an access device and is subject
to the limitations of this section.
5(a) Solicited Issuance
Paragraph 5(a)(1)
1. Joint account. For a joint account, a financial institution may
issue an access device to each account holder if the requesting holder
specifically authorizes the issuance.
2. Permissible forms of request. The request for an access device
may be written or oral (for example, in response to a telephone
solicitation by a card issuer).
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Paragraph 5(a)(2)
1. One-for-one rule. In issuing a renewal or substitute access
device, a financial institution may not provide additional devices. For
example, only one new card and PIN may replace a card and PIN previously
issued. If the replacement device permits either additional or fewer
types of electronic fund transfer services, a change-in-terms notice or
new disclosures are required.
2. Renewal or substitution by a successor institution. A successor
institution is an entity that replaces the original financial
institution (for example, following a corporate merger or acquisition)
or that acquires accounts or assumes the operation of an EFT system.
5(b) Unsolicited Issuance
1. Compliance. A financial institution may issue an unsolicited
access device (such as the combination of a debit card and PIN) if the
institution's ATM system has been programmed not to accept the access
device until after the consumer requests and the institution validates
the device. Merely instructing a consumer not to use an unsolicited
debit card and PIN until after the institution verifies the consumer's
identity does not comply with the regulation.
2. PINS. A financial institution may impose no liability on a
consumer for unauthorized transfers involving an unsolicited access
device until the device becomes an ``accepted access device'' under the
regulation. A card and PIN combination may be treated as an accepted
access device once the consumer has used it to make a transfer.
3. Functions of PIN. If an institution issues a PIN at the
consumer's request, the issuance may constitute both a way of validating
the debit card and the means to identify the consumer (required as a
condition of imposing liability for unauthorized transfers).
4. Verification of identity. To verify the consumer's identity, a
financial institution may use any reasonable means, such as a
photograph, fingerprint, personal visit, signature comparison, or
personal information about the consumer. However, even if reasonable
means were used, if an institution fails to verify correctly the
consumer's identity and an imposter succeeds in having the device
validated, the consumer is not liable for any unauthorized transfers
from the account.
Section 205.6--Liability of Consumer for Unauthorized Transfers
6(a) Conditions for Liability
1. Means of identification. A financial institution may use various
means for identifying the consumer to whom the access device is issued,
including but not limited to:
i. Electronic or mechanical confirmation (such as a PIN).
ii. Comparison of the consumer's signature, fingerprint, or
photograph.
2. Multiple users. When more than one access device is issued for an
account, the financial institution may, but need not, provide a separate
means to identify each user of the account.
6(b) Limitations on Amount of Liability
1. Application of liability provisions. There are three possible
tiers of consumer liability for unauthorized EFTs depending on the
situation. A consumer may be liable for (1) up to $50; (2) up to $500;
or (3) an unlimited amount depending on when the unauthorized EFT
occurs. More than one tier may apply to a given situation because each
corresponds to a different (sometimes overlapping) time period or set of
conditions.
2. Consumer negligence. Negligence by the consumer cannot be used as
the basis for imposing greater liability than is permissible under
Regulation E. Thus, consumer behavior that may constitute negligence
under state law, such as writing the PIN on a debit card or on a piece
of paper kept with the card, does not affect the consumer's liability
for unauthorized transfers. (However, refer to comment 2(m)-2 regarding
termination of the authority of given by the consumer to another
person.)
3. Limits on liability. The extent of the consumer's liability is
determined solely by the consumer's promptness in reporting the loss or
theft of an access device. Similarly, no agreement between the consumer
and an institution may impose greater liability on the consumer for an
unauthorized transfer than the limits provided in Regulation E.
Paragraph 6(b)(1)--Timely Notice Given
1. $50 limit applies. The basic liability limit is $50. For example,
the consumer's card is lost or stolen on Monday and the consumer learns
of the loss or theft on Wednesday. If the consumer notifies the
financial institution within two business days of learning of the loss
or theft (by midnight Friday), the consumer's liability is limited to
$50 or the amount of the unauthorized transfers that occurred before
notification, whichever is less.
2. Knowledge of loss or theft of access device. The fact that a
consumer has received a periodic statement that reflects unauthorized
transfers may be a factor in determining whether the consumer had
knowledge of the loss or theft, but cannot be deemed to represent
conclusive evidence that the consumer had such knowledge.
3. Two-business-day rule. The two-business-day period does not
include the day the consumer learns of the loss or theft or any day
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that is not a business day. The rule is calculated based on two 24-hour
periods, without regard to the financial institution's business hours or
the time of day that the consumer learns of the loss or theft. For
example, a consumer learns of the loss or theft at 6 p.m. on Friday.
Assuming that Saturday is a business day and Sunday is not, the two-
business-day period begins on Saturday and expires at 11:59 p.m. on
Monday, not at the end of the financial institution's business day on
Monday.
Paragraph 6(b)(2)--Timely Notice Not Given
1. $500 limit applies. The second tier of liability is $500. For
example, the consumer's card is stolen on Monday and the consumer learns
of the theft that same day. The consumer reports the theft on Friday.
The $500 limit applies because the consumer failed to notify the
financial institution within two business days of learning of the theft
(which would have been by midnight Wednesday). How much the consumer is
actually liable for, however, depends on when the unauthorized transfers
take place. In this example, assume a $100 unauthorized transfer was
made on Tuesday and a $600 unauthorized transfer on Thursday. Because
the consumer is liable for the amount of the loss that occurs within the
first two business days (but no more than $50), plus the amount of the
unauthorized transfers that occurs after the first two business days and
before the consumer gives notice, the consumer's total liability is $500
($50 of the $100 transfer plus $450 of the $600 transfer, in this
example). But if $600 was taken on Tuesday and $100 on Thursday, the
consumer's maximum liability would be $150 ($50 of the $600 plus $100).
Paragraph 6(b)(3)--Periodic Statement; Timely Notice Not Given
1. Unlimited liability applies. The standard of unlimited liability
applies if unauthorized transfers appear on a periodic statement, and
may apply in conjunction with the first two tiers of liability. If a
periodic statement shows an unauthorized transfer made with a lost or
stolen debit card, the consumer must notify the financial institution
within 60 calendar days after the periodic statement was sent;
otherwise, the consumer faces unlimited liability for all unauthorized
transfers made after the 60-day period. The consumer's liability for
unauthorized transfers before the statement is sent, and up to 60 days
following, is determined based on the first two tiers of liability: up
to $50 if the consumer notifies the financial institution within two
business days of learning of the loss or theft of the card and up to
$500 if the consumer notifies the institution after two business days of
learning of the loss or theft.
2. Transfers not involving access device. The first two tiers of
liability do not apply to unauthorized transfers from a consumer's
account made without an access device. If, however, the consumer fails
to report such unauthorized transfers within 60 calendar days of the
financial institution's transmittal of the periodic statement, the
consumer may be liable for any transfers occurring after the close of
the 60 days and before notice is given to the institution. For example,
a consumer's account is electronically debited for $200 without the
consumer's authorization and by means other than the consumer's access
device. If the consumer notifies the institution within 60 days of the
transmittal of the periodic statement that shows the unauthorized
transfer, the consumer has no liability. However, if in addition to the
$200, the consumer's account is debited for a $400 unauthorized transfer
on the 61st day and the consumer fails to notify the institution of the
first unauthorized transfer until the 62nd day, the consumer may be
liable for the full $400.
Paragraph 6(b)(4)--Extension of Time Limits
1. Extenuating circumstances. Examples of circumstances that require
extension of the notification periods under this section include the
consumer's extended travel or hospitalization.
Paragraph 6(b)(5)--Notice to Financial Institution
1. Receipt of notice. A financial institution is considered to have
received notice for purposes of limiting the consumer's liability if
notice is given in a reasonable manner, even if the consumer notifies
the institution but uses an address or telephone number other than the
one specified by the institution.
2. Notice by third party. Notice to a financial institution by a
person acting on the consumer's behalf is considered valid under this
section. For example, if a consumer is hospitalized and unable to report
the loss or theft of an access device, notice is considered given when
someone acting on the consumer's behalf notifies the bank of the loss or
theft. A financial institution may require appropriate documentation
from the person representing the consumer to establish that the person
is acting on the consumer's behalf.
3. Content of notice. Notice to a financial institution is
considered given when a consumer takes reasonable steps to provide the
institution with the pertinent account information. Even when the
consumer is unable to provide the account number or the card number in
reporting a lost or stolen access device or an unauthorized transfer,
the notice effectively limits the consumer's liability if the consumer
otherwise identifies sufficiently the account in question. For example,
the consumer may identify the account
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by the name on the account and the type of account in question.
Section 205.7--Initial Disclosures
7(a) Timing of Disclosures
1. Early disclosures. Disclosures given by a financial institution
earlier than the regulation requires (for example, when the consumer
opens a checking account) need not be repeated when the consumer later
enters into an agreement with a third party who will initiate
preauthorized transfers to or from the consumer's account, unless the
terms and conditions differ from those that the institution previously
disclosed. On the other hand, if an agreement is directly between the
consumer and the account-holding institution, disclosures must be given
in close proximity to the event requiring disclosure, for example, when
the consumer contracts for a new service.
2. Lack of advance notice of a transfer. Where a consumer authorizes
a third party to debit or credit the consumer's account, an account-
holding institution that has not received advance notice of the transfer
or transfers must provide the required disclosures as soon as reasonably
possible after the first debit or credit is made, unless the institution
has previously given the disclosures.
3. Addition of new accounts. If a consumer opens a new account
permitting EFTs at a financial institution, and the consumer already has
received Regulation E disclosures for another account at that
institution, the institution need only disclose terms and conditions
that differ from those previously given.
4. Addition of EFT services. If an EFT service is added to a
consumer's account and is subject to terms and conditions different from
those described in the initial disclosures, disclosures for the new
service are required. The disclosures must be provided when the consumer
contracts for the new service or before the first EFT is made using the
new service.
5. Addition of service in interchange systems. If a financial
institution joins an interchange or shared network system (which
provides access to terminals operated by other institutions),
disclosures are required for additional EFT services not previously
available to consumers if the terms and conditions differ from those
previously disclosed.
6. Disclosures covering all EFT services offered. An institution may
provide disclosures covering all EFT services that it offers, even if
some consumers have not arranged to use all services.
7(b) Content of Disclosures
Paragraph 7(b)(1)--Liability of Consumer
1. No liability imposed by financial institution. If a financial
institution chooses to impose zero liability for unauthorized EFTs, it
need not provide the liability disclosures. If the institution later
decides to impose liability, however, it must first provide the
disclosures.
2. Preauthorized transfers. If the only EFTs from an account are
preauthorized transfers, liability could arise if the consumer fails to
report unauthorized transfers reflected on a periodic statement. To
impose such liability on the consumer, the institution must have
disclosed the potential liability and the telephone number and address
for reporting unauthorized transfers.
3. Additional information. At the institution's option, the summary
of the consumer's liability may include advice on promptly reporting
unauthorized transfers or the loss or theft of the access device.
Paragraph 7(b)(2)--Telephone Number and Address
1. Disclosure of telephone numbers. An institution may use the same
or different telephone numbers in the disclosures for the purpose of:
i. Reporting the loss or theft of an access device or possible
unauthorized transfers;
ii. Inquiring about the receipt of a preauthorized credit;
iii. Stopping payment of a preauthorized debit;
iv. Giving notice of an error.
2. Location of telephone number. The telephone number need not be
incorporated into the text of the disclosure; for example, the
institution may instead insert a reference to a telephone number that is
readily available to the consumer, such as ``Call your branch office.
The number is shown on your periodic statement.'' However, an
institution must provide a specific telephone number and address, on or
with the disclosure statement, for reporting a lost or stolen access
device or a possible unauthorized transfer.
Paragraph 7(b)(4)--Types of Transfers; Limitations
1. Security limitations. Information about limitations on the
frequency and dollar amount of transfers generally must be disclosed in
detail, even if related to security aspects of the system. If the
confidentiality of certain details is essential to the security of an
account or system, these details may be withheld (but the fact that
limitations exist must still be disclosed). For example, an institution
limits cash ATM withdrawals to $100 per day. The institution may
disclose that daily withdrawal limitations apply and need not disclose
that the limitations may
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not always be in force (such as during periods when its ATMs are off-
line).
2. Restrictions on certain deposit accounts. A limitation on account
activity that restricts the consumer's ability to make EFTs must be
disclosed even if the restriction also applies to transfers made by
nonelectronic means. For example, Regulation D (12 CFR Part 204)
restricts the number of payments to third parties that may be made from
a money market deposit account; an institution that does not execute
fund transfers in excess of those limits must disclose the restriction
as a limitation on the frequency of EFTs.
3. Preauthorized transfers. Financial institutions are not required
to list preauthorized transfers among the types of transfers that a
consumer can make.
Paragraph 7(b)(5)--Fees
1. Disclosure of EFT fees. An institution is required to disclose
all fees for EFTs or the right to make them. Others fees (for example,
minimum-balance fees, stop-payment fees, or account overdrafts) may, but
need not, be disclosed (but see Regulation DD, 12 CFR Part 230. An
institution is not required to disclose fees for inquiries made at an
ATM since no transfer of funds is involved.
2. Fees also applicable to non-EFT. A per-item fee for EFTs must be
disclosed even if the same fee is imposed on nonelectronic transfers. If
a per-item fee is imposed only under certain conditions, such as when
the transactions in the cycle exceed a certain number, those conditions
must be disclosed. Itemization of the various fees may be provided on
the disclosure statement or on an accompanying document that is
referenced in the statement.
3. Interchange system fees. Fees paid by the account-holding
institution to the operator of a shared or interchange ATM system need
not be disclosed, unless they are imposed on the consumer by the
account-holding institution. Fees for use of an ATM that are debited
directly from the consumer's account by an institution other than the
account-holding institution (for example, fees included in the transfer
amount) need not be disclosed. (See Sec. 205.7(b)(11) for the general
notice requirement regarding fees that may be imposed by ATM operators
and by a network used to complete the transfer.)
Paragraph 7(b)(9)--Confidentiality
1. Information provided to third parties. An institution must
describe the circumstances under which any information relating to an
account to or from which EFTs are permitted will be made available to
third parties, not just information concerning those EFTs. The term
``third parties'' includes affiliates such as other subsidiaries of the
same holding company.
Paragraph 7(b)(10)--Error Resolution
1. Substantially similar. The error resolution notice must be
substantially similar to the model form in appendix A of part 205. An
institution may use different wording so long as the substance of the
notice remains the same, may delete inapplicable provisions (for
example, the requirement for written confirmation of an oral
notification), and may substitute substantive state law requirements
affording greater consumer protection than Regulation E.
2. Extended time-period for certain transactions. To take advantage
of the longer time periods for resolving errors under Sec. 205.11(c)(3)
(for new accounts as defined in Regulation CC (12 CFR part 229),
transfers initiated outside the United States, or transfers resulting
from POS debit-card transactions), a financial institution must have
disclosed these longer time periods. Similarly, an institution that
relies on the exception from provisional crediting in Sec. 205.11(c)(2)
for accounts subject to Regulation T (12 CFR part 220) must have
disclosed accordingly.
Section 205.8--Change-in-Terms Notice; Error Resolution Notice
8(a) Change-in-Terms Notice
1. Form of notice. No specific form or wording is required for a
change-in-terms notice. The notice may appear on a periodic statement,
or may be given by sending a copy of a revised disclosure statement,
provided attention is directed to the change (for example, in a cover
letter referencing the changed term).
2. Changes not requiring notice. The following changes do not
require disclosure:
i. Closing some of an institution's ATMs;
ii. Cancellation of an access device.
3. Limitations on transfers. When the initial disclosures omit
details about limitations because secrecy is essential to the security
of the account or system, a subsequent increase in those limitations
need not be disclosed if secrecy is still essential. If, however, an
institution had no limits in place when the initial disclosures were
given and now wishes to impose limits for the first time, it must
disclose at least the fact that limits have been adopted. (See also
Sec. 205.7(b)(4) and the related commentary.)
4. Change in telephone number or address. When a financial
institution changes the telephone number or address used for reporting
possible unauthorized transfers, a change-in-terms notice is required
only if the institution will impose liability on the consumer for
unauthorized transfers under Sec. 205.6. (See also Sec. 205.6(a) and
the related commentary.)
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8(b) Error Resolution Notice
1. Change between annual and periodic notice. If an institution
switches from an annual to a periodic notice, or vice versa, the first
notice under the new method must be sent no later than 12 months after
the last notice sent under the old method.
2. Exception for new accounts. For new accounts, disclosure of the
longer error resolution time periods under Sec. 205.11(c)(3) is not
required in the annual error resolution notice or in the notice that may
be provided with each periodic statement as an alternative to the annual
notice.
Section 205.9--Receipts at Electronic Terminals; Periodic Statements
9(a) Receipts at Electronic Terminals
1. Receipts furnished only on request. The regulation requires that
a receipt be ``made available.'' A financial institution may program its
electronic terminals to provide a receipt only to consumers who elect to
receive one.
2. Third party providing receipt. An account-holding institution may
make terminal receipts available through third parties such as merchants
or other financial institutions.
3. Inclusion of promotional material. A financial institution may
include promotional material on receipts if the required information is
set forth clearly (for example, by separating it from the promotional
material). In addition, a consumer may not be required to surrender the
receipt or that portion containing the required disclosures in order to
take advantage of a promotion.
4. Transfer not completed. The receipt requirement does not apply to
a transfer that is initiated but not completed (for example, if the ATM
is out of currency or the consumer decides not to complete the
transfer).
5. Receipts not furnished due to inadvertent error. If a receipt is
not provided to the consumer because of a bona fide unintentional error,
such as when a terminal runs out of paper or the mechanism jams, no
violation results if the financial institution maintains procedures
reasonably adapted to avoid such occurrences.
6. Multiple transfers. If the consumer makes multiple transfers at
the same time, the financial institution may document them on a single
or on separate receipts.
Paragraph 9(a)(1)--Amount
1. Disclosure of transaction fee. The required display of a fee
amount on or at the terminal may be accomplished by displaying the fee
on a sign at the terminal or on the terminal screen for a reasonable
duration. Displaying the fee on a screen provides adequate notice, as
long as a consumer is given the option to cancel the transaction after
receiving notice of a fee. (See Sec. 205.16 for the notice requirements
applicable to ATM operators that impose a fee for providing EFT
services.)
2. Relationship between Sec. 205.9(a)(1) and Sec. 205.16. The
requirements of Sec. Sec. 205.9(a)(1) and 205.16 are similar but not
identical.
i. Section 205.9(a)(1) requires that if the amount of the transfer
as shown on the receipt will include the fee, then the fee must be
disclosed either on a sign on or at the terminal, or on the terminal
screen. Section 205.16 requires disclosure both on a sign on or at the
terminal (in a prominent and conspicuous location) and on the terminal
screen. Section 205.16 permits disclosure on a paper notice as an
alternative to the on-screen disclosure.
ii. The disclosure of the fee on the receipt under Sec. 205.9(a)(1)
cannot be used to comply with the alternative paper disclosure procedure
under Sec. 205.16, if the receipt is provided at the completion of the
transaction because, pursuant to the statute, the paper notice must be
provided before the consumer is committed to paying the fee.
iii. Section 205.9(a)(1) applies to any type of electronic terminal
as defined in Regulation E (for example, to POS terminals as well as to
ATMs), while Sec. 205.16 applies only to ATMs.
Paragraph 9(a)(2)--Date
1. Calendar date. The receipt must disclose the calendar date on
which the consumer uses the electronic terminal. An accounting or
business date may be disclosed in addition if the dates are clearly
distinguished.
Paragraph 9(a)(3)--Type
1. Identifying transfer and account. Examples identifying the type
of transfer and the type of the consumer's account include ``withdrawal
from checking,'' ``transfer from savings to checking,'' or ``payment
from savings.''
2. Exception. Identification of an account is not required when the
consumer can access only one asset account at a particular time or
terminal, even if the access device can normally be used to access more
than one account. For example, the consumer may be able to access only
one particular account at terminals not operated by the account-holding
institution, or may be able to access only one particular account when
the terminal is off-line. The exception is available even if, in
addition to accessing one asset account, the consumer also can access a
credit line.
3. Access to multiple accounts. If the consumer can use an access
device to make transfers to or from different accounts of the same type,
the terminal receipt must specify which account was accessed, such as
``withdrawal from checking I'' or ``withdrawal from checking II.'' If
only one account besides the primary checking account can be
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debited, the receipt can identify the account as ``withdrawal from other
account.''
4. Generic descriptions. Generic descriptions may be used for
accounts that are similar in function, such as share draft or NOW
accounts and checking accounts. In a shared system, for example, when a
credit union member initiates transfers to or from a share draft account
at a terminal owned or operated by a bank, the receipt may identify a
withdrawal from the account as a ``withdrawal from checking.''
5. Point-of-sale transactions. There is no prescribed terminology
for identifying a transfer at a merchant's POS terminal. A transfer may
be identified, for example, as a purchase, a sale of goods or services,
or a payment to a third party. When a consumer obtains cash from a POS
terminal in addition to purchasing goods, or obtains cash only, the
documentation need not differentiate the transaction from one involving
the purchase of goods.
Paragraph 9(a)(5)--Terminal Location
1. Options for identifying terminal. The institution may provide
either:
i. The city, state or foreign country, and the information in
Sec. Sec. 205.9(a)(5) (i), (ii), or (iii), or
ii. A number or a code identifying the terminal. If the institution
chooses the second option, the code or terminal number identifying the
terminal where the transfer is initiated may be given as part of a
transaction code.
2. Omission of city name. The city may be omitted if the generally
accepted name (such as a branch name) contains the city name.
3. Omission of a state. A state may be omitted from the location
information on the receipt if:
i. All the terminals owned or operated by the financial institution
providing the statement (or by the system in which it participates) are
located in that state, or
ii. All transfers occur at terminals located within 50 miles of the
financial institutions's main office.
4. Omission of a city and state. A city and state may be omitted if
all the terminals owned or operated by the financial institution
providing the statement (or by the system in which it participates) are
located in the same city.
Paragraph 9(a)(5)(i)
1. Street address. The address should include number and street (or
intersection); the number (or intersecting street) may be omitted if the
street alone uniquely identifies the terminal location.
Paragraph 9(a)(5)(ii)
1. Generally accepted name. Examples of a generally accepted name
for a specific location include a branch of the financial institution, a
shopping center, or an airport.
Paragraph 9(a)(5)(iii)
1. Name of owner or operator of terminal. Examples of an owner or
operator of a terminal are a financial institution or a retail merchant.
Paragraph 9(a)(6)--Third Party Transfer
1. Omission of third-party name. The receipt need not disclose the
third-party name if the name is provided by the consumer in a form that
is not machine readable (for example, if the consumer indicates the
payee by depositing a payment stub into the ATM). If, on the other hand,
the consumer keys in the identity of the payee, the receipt must
identify the payee by name or by using a code that is explained
elsewhere on the receipt.
2. Receipt as proof of payment. Documentation required under the
regulation constitutes prima facie proof of a payment to another person,
except in the case of a terminal receipt documenting a deposit.
9(b) Periodic Statements
1. Periodic cycles. Periodic statements may be sent on a cycle that
is shorter than monthly. The statements must correspond to periodic
cycles that are reasonably equal, that is, do not vary by more than four
days from the regular cycle. The requirement of reasonably equal cycles
does not apply when an institution changes cycles for operational or
other reasons, such as to establish a new statement day or date.
2. Interim statements. Generally, a financial institution must
provide periodic statements for each monthly cycle in which an EFT
occurs, and at least quarterly if a transfer has not occurred. Where
EFTs occur between regularly-scheduled cycles, interim statements must
be provided. For example, if an institution issues quarterly statements
at the end of March, June, September and December, and the consumer
initiates an EFT in February, an interim statement for February must be
provided. If an interim statement contains interest or rate information,
the institution must comply with Regulation DD, 12 CFR 230.6.
3. Inactive accounts. A financial institution need not send
statements to consumers whose accounts are inactive as defined by the
institution.
4. Statement pickup. A financial institution may permit, but may not
require, consumers to pick up their periodic statements at the financial
institution.
5. Periodic statements limited to EFT activity. A financial
institution that uses a passbook as the primary means for displaying
account activity, but also allows the account to be debited
electronically, may provide a periodic statement requirement that
reflects
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only the EFTs and other required disclosures (such as charges, account
balances, and address and telephone number for inquiries). (See Sec.
205.9(c)(1)(i) for the exception applicable to preauthorized transfers
for passbook accounts.)
6. Codes and accompanying documents. To meet the documentation
requirements for periodic statements, a financial institution may:
i. Include copies of terminal receipts to reflect transfers
initiated by the consumer at electronic terminals;
ii. Enclose posting memos, deposit slips, and other documents that,
together with the statement, disclose all the required information;
iii. Use codes for names of third parties or terminal locations and
explain the information to which the codes relate on an accompanying
document.
Paragraph 9(b)(1)--Transaction Information
1. Information obtained from others. While financial institutions
must maintain reasonable procedures to ensure the integrity of data
obtained from another institution, a merchant, or other third parties,
verification of each transfer that appears on the periodic statement is
not required.
Paragraph 9(b)(1)(i)
1. Incorrect deposit amount. If a financial institution determines
that the amount actually deposited at an ATM is different from the
amount entered by the consumer, the institution need not immediately
notify the consumer of the discrepancy. The periodic statement
reflecting the deposit may show either the correct amount of the deposit
or the amount entered by the consumer along with the institution's
adjustment.
Paragraph 9(b)(1)(iii)
1. Type of transfer. There is no prescribed terminology for
describing a type of transfer. Placement of the amount of the transfer
in the debit or the credit column is sufficient if other information on
the statement, such as a terminal location or third-party name, enables
the consumer to identify the type of transfer.
Paragraph 9(b)(1)(iv)
1. Nonproprietary terminal in network. An institution need not
reflect on the periodic statement the street addresses, identification
codes, or terminal numbers for transfers initiated in a shared or
interchange system at a terminal operated by an institution other than
the account-holding institution. The statement must, however, specify
the entity that owns or operates the terminal, plus the city and state.
Paragraph 9(b)(1)(v)
1. Recurring payments by government agency. The third-party name for
recurring payments from federal, state, or local governments need not
list the particular agency. For example, ``U.S. gov't'' or ``N.Y. sal''
will suffice.
2. Consumer as third-party payee. If a consumer makes an electronic
fund transfer to another consumer, the financial institution must
identify the recipient by name (not just by an account number, for
example).
3. Terminal location/third party. A single entry may be used to
identify both the terminal location and the name of the third party to
or from whom funds are transferred. For example, if a consumer purchases
goods from a merchant, the name of the party to whom funds are
transferred (the merchant) and the location of the terminal where the
transfer is initiated will be satisfied by a disclosure such as ``XYZ
Store, Anytown, Ohio.''
4. Account-holding institution as third party. Transfers to the
account-holding institution (by ATM, for example) must show the
institution as the recipient, unless other information on the statement
(such as, ``loan payment from checking'') clearly indicates that the
payment was to the account-holding institution.
5. Consistency in third-party identity. The periodic statement must
disclose a third-party name as it appeared on the receipt, whether it
was, for example, the ``dba'' (doing business as) name of the third
party or the parent corporation's name.
6. Third-party identity on deposits at electronic terminal. A
financial institution need not identify third parties whose names appear
on checks, drafts, or similar paper instruments deposited to the
consumer's account at an electronic terminal.
Paragraph 9(b)(3)--Fees
1. Disclosure of fees. The fees disclosed may include fees for EFTs
and for other nonelectronic services, and both fixed fees and per-item
fees; they may be given as a total or may be itemized in part or in
full.
2. Fees in interchange system. An account-holding institution must
disclose any fees it imposes on the consumer for EFTs, including fees
for ATM transactions in an interchange or shared ATM system. Fees for
use of an ATM imposed on the consumer by an institution other than the
account-holding institution and included in the amount of the transfer
by the terminal-operating institution need not be separately disclosed
on the periodic statement.
3. Finance charges. The requirement to disclose any fees assessed
against the account does not include a finance charge imposed on the
account during the statement period.
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Paragraph 9(b)(4)--Account Balances
1. Opening and closing balances. The opening and closing balances
must reflect both EFTs and other account activity.
Paragraph 9(b)(5)--Address and Telephone Number for Inquiries
1. Telephone number. A single telephone number, preceded by the
``direct inquiries to'' language, will satisfy the requirements of Sec.
205.9(b)(5) and (6).
Paragraph 9(b)(6)--Telephone Number for Preauthorized Transfers
1. Telephone number. See comment 9(b)(5)-1.
9(c) Exceptions to the Periodic Statement Requirements for Certain
Accounts
1. Transfers between accounts. The regulation provides an exception
from the periodic statement requirement for certain intra-institutional
transfers between a consumer's accounts. The financial institution must
still comply with the applicable periodic statement requirements for any
other EFTs to or from the account. For example, a Regulation E statement
must be provided quarterly for an account that also receives payroll
deposits electronically, or for any month in which an account is also
accessed by a withdrawal at an ATM.
Paragraph 9(c)(1)--Preauthorized Transfers to Accounts
1. Accounts that may be accessed only by preauthorized transfers to
the account. The exception for ``accounts that may be accessed only by
preauthorized transfers to the account'' includes accounts that can be
accessed by means other than EFTs, such as checks. If, however, an
account may be accessed by any EFT other than preauthorized credits to
the account, such as preauthorized debits or ATM transactions, the
account does not qualify for the exception.
2. Reversal of direct deposits. For direct-deposit-only accounts, a
financial institution must send a periodic statement at least quarterly.
A reversal of a direct deposit to correct an error does not trigger the
monthly statement requirement when the error represented a credit to the
wrong consumer's account, a duplicate credit, or a credit in the wrong
amount. (See also comment 2(m)-5.)
9(d) Documentation for Foreign-Initiated Transfers
1. Foreign-initiated transfers. An institution must make a good
faith effort to provide all required information for foreign-initiated
transfers. For example, even if the institution is not able to provide a
specific terminal location, it should identify the country and city in
which the transfer was initiated.
Section 205.10--Preauthorized Transfers
10(a) Preauthorized Transfers to Consumer's Account
Paragraph 10(a)(1)--Notice by Financial Institution
1. Content. No specific language is required for notice regarding
receipt of a preauthorized transfer. Identifying the deposit is
sufficient; however, simply providing the current account balance is
not.
2. Notice of credit. A financial institution may use different
methods of notice for various types or series of preauthorized
transfers, and the institution need not offer consumers a choice of
notice methods.
3. Positive notice. A periodic statement sent within two business
days of the scheduled transfer, showing the transfer, can serve as
notice of receipt.
4. Negative notice. The absence of a deposit entry (on a periodic
statement sent within two business days of the scheduled transfer date)
will serve as negative notice.
5. Telephone notice. If a financial institution uses the telephone
notice option, it should be able in most instances to verify during a
consumer's initial call whether a transfer was received. The institution
must respond within two business days to any inquiry not answered
immediately.
6. Phone number for passbook accounts. The financial institution may
use any reasonable means necessary to provide the telephone number to
consumers with passbook accounts that can only be accessed by
preauthorized credits and that do not receive periodic statements. For
example, it may print the telephone number in the passbook, or include
the number with the annual error resolution notice.
7. Telephone line availability. To satisfy the readily-available
standard, the financial institution must provide enough telephone lines
so that consumers get a reasonably prompt response. The institution need
only provide telephone service during normal business hours. Within its
primary service area, an institution must provide a local or toll-free
telephone number. It need not provide a toll-free number or accept
collect long-distance calls from outside the area where it normally
conducts business.
10(b) Written Authorization for Preauthorized Transfers From Consumer's
Account
1. Preexisting authorizations. The financial institution need not
require a new authorization before changing from paper-based to
electronic debiting when the existing authorization does not specify
that debiting is to occur electronically or specifies that the debiting
will occur by paper means. A new authorization also is not required when
a successor institution begins collecting payments.
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2. Authorization obtained by third party. The account-holding
financial institution does not violate the regulation when a third-party
payee fails to obtain the authorization in writing or fails to give a
copy to the consumer; rather, it is the third-party payee that is in
violation of the regulation.
3. Written authorization for preauthorized transfers. The
requirement that preauthorized EFTs be authorized by the consumer ``only
by a writing'' cannot be met by a payee's signing a written
authorization on the consumer's behalf with only an oral authorization
from the consumer. A tape recording of a telephone conversation with a
consumer who agrees to preauthorized debits also does not constitute
written authorization for purposes of this provision.
4. Use of a confirmation form. A financial institution or designated
payee may comply with the requirements of this section in various ways.
For example, a payee may provide the consumer with two copies of a
preauthorization form, and ask the consumer to sign and return one and
to retain the second copy.
5. Similarly authenticated. The similarly authenticated standard
permits signed, written authorizations to be provided electronically.
The writing and signature requirements of this section are satisfied by
complying with the Electronic Signatures in Global and National Commerce
Act, 15 U.S.C. 7001 et seq., which defines electronic records and
electronic signatures. Examples of electronic signatures include, but
are not limited to, digital signatures and security codes. A security
code need not originate with the account-holding institution. The
authorization process should evidence the consumer's identity and assent
to the authorization. The person that obtains the authorization must
provide a copy of the terms of the authorization to the consumer either
electronically or in paper form. Only the consumer may authorize the
transfer and not, for example, a third-party merchant on behalf of the
consumer.
6. Requirements of an authorization. An authorization is valid if it
is readily identifiable as such and the terms of the preauthorized
transfer are clear and readily understandable.
7. Bona fide error. Consumers sometimes authorize third-party
payees, by telephone or on-line, to submit recurring charges against a
credit card account. If the consumer indicates use of a credit card
account when in fact a debit card is being used, the payee does not
violate the requirement to obtain a written authorization if the failure
to obtain written authorization was not intentional and resulted from a
bona fide error, and if the payee maintains procedures reasonably
adapted to avoid any such error. If the payee is unable to determine, at
the time of the authorization, whether a credit or debit card number is
involved, and later finds that the card used is a debit card, the payee
must obtain a written and signed or (where appropriate) a similarly
authenticated authorization as soon as reasonably possible, or cease
debiting the consumer's account.
10(c) Consumer's Right To Stop Payment
1. Stop-payment order. The financial institution must honor an oral
stop-payment order made at least three business days before a scheduled
debit. If the debit item is resubmitted, the institution must continue
to honor the stop-payment order (for example, by suspending all
subsequent payments to the payee-originator until the consumer notifies
the institution that payments should resume).
2. Revocation of authorization. Once a financial institution has
been notified that the consumer's authorization is no longer valid, it
must block all future payments for the particular debit transmitted by
the designated payee-originator. The institution may not wait for the
payee-originator to terminate the automatic debits. The institution may
confirm that the consumer has informed the payee-originator of the
revocation (for example, by requiring a copy of the consumer's
revocation as written confirmation to be provided within fourteen days
of an oral notification). If the institution does not receive the
required written confirmation within the fourteen-day period, it may
honor subsequent debits to the account.
10(d) Notice of Transfers Varying in Amount
Paragraph 10(d)(1)--Notice
1. Preexisting authorizations. A financial institution holding the
consumer's account does not violate the regulation if the designated
payee fails to provide notice of varying amounts.
Paragraph 10(d)(2)--Range
1. Range. A financial institution or designated payee that elects to
offer the consumer a specified range of amounts for debiting (in lieu of
providing the notice of transfers varying in amount) must provide an
acceptable range that could be anticipated by the consumer. For example,
if the transfer is for payment of a gas bill, an appropriate range might
be based on the highest bill in winter and the lowest bill in summer.
10(e) Compulsory Use
Paragraph 10(e)(1)--Credit
1. Loan payments. Creditors may not require repayment of loans by
electronic means on a preauthorized, recurring basis. A creditor may
offer a program with a reduced annual percentage rate or other cost-
related
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incentive for an automatic repayment feature, provided the program with
the automatic payment feature is not the only loan program offered by
the creditor for the type of credit involved. Examples include:
i. Mortgages with graduated payments in which a pledged savings
account is automatically debited during an initial period to supplement
the monthly payments made by the borrower.
ii. Mortgage plans calling for preauthorized biweekly payments that
are debited electronically to the consumer's account and produce a lower
total finance charge.
2. Overdraft. A financial institution may require the automatic
repayment of an overdraft credit plan even if the overdraft extension is
charged to an open-end account that may be accessed by the consumer in
ways other than by overdrafts.
Paragraph 10(e)(2)--Employment or Government Benefit
1. Payroll. An employer (including a financial institution) may not
require its employees to receive their salary by direct deposit to any
particular institution. An employer may require direct deposit of salary
by electronic means if employees are allowed to choose the institution
that will receive the direct deposit. Alternatively, an employer may
give employees the choice of having their salary deposited at a
particular institution (designated by the employer) or receiving their
salary by another means, such as by check or cash.
Section 205.11--Procedures for Resolving Errors
11(a) Definition of Error
1. Terminal location. With regard to deposits at an ATM, a
consumer's request for the terminal location or other information
triggers the error resolution procedures, but the financial institution
need only provide the ATM location if it has captured that information.
2. Verifying an account debit or credit. If the consumer contacts
the financial institution to ascertain whether a payment (for example,
in a home-banking or bill-payment program) or any other type of EFT was
debited to the account, or whether a deposit made via ATM, preauthorized
transfer, or any other type of EFT was credited to the account, without
asserting an error, the error resolution procedures do not apply.
3. Loss or theft of access device. A financial institution is
required to comply with the error resolution procedures when a consumer
reports the loss or theft of an access device if the consumer also
alleges possible unauthorized use as a consequence of the loss or theft.
4. Error asserted after account closed. The financial institution
must comply with the error resolution procedures when a consumer
properly asserts an error, even if the account has been closed.
5. Request for documentation or information. A request for
documentation or other information must be treated as an error unless it
is clear that the consumer is requesting a duplicate copy for tax or
other record-keeping purposes.
11(b) Notice of Error From Consumer
Paragraph 11(b)(1)--Timing; Contents
1. Content of error notice. The notice of error is effective even if
it does not contain the consumer's account number, so long as the
financial institution is able to identify the account in question. For
example, the consumer could provide a Social Security number or other
unique means of identification.
2. Investigation pending receipt of information. While a financial
institution may request a written, signed statement from the consumer
relating to a notice of error, it may not delay initiating or completing
an investigation pending receipt of the statement.
3. Statement held for consumer. When a consumer has arranged for
periodic statements to be held until picked up, the statement for a
particular cycle is deemed to have been transmitted on the date the
financial institution first makes the statement available to the
consumer.
4. Failure to provide statement. When a financial institution fails
to provide the consumer with a periodic statement, a request for a copy
is governed by this section if the consumer gives notice within 60 days
from the date on which the statement should have been transmitted.
5. Discovery of error by institution. The error resolution
procedures of this section apply when a notice of error is received from
the consumer, and not when the financial institution itself discovers
and corrects an error.
6. Notice at particular phone number or address. A financial
institution may require the consumer to give notice only at the
telephone number or address disclosed by the institution, provided the
institution maintains reasonable procedures to refer the consumer to the
specified telephone number or address if the consumer attempts to give
notice to the institution in a different manner.
Paragraph 11(b)(2)--Written Confirmation
1. Written confirmation-of-error notice. If the consumer sends a
written confirmation of error to the wrong address, the financial
institution must process the confirmation through normal procedures. But
the institution need not provisionally credit the consumer's account if
the written confirmation
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is delayed beyond 10 business days in getting to the right place because
it was sent to the wrong address.
11(c) Time Limits and Extent of Investigation
1. Notice to consumer. Unless otherwise indicated in this section,
the financial institution may provide the required notices to the
consumer either orally or in writing.
2. Written confirmation of oral notice. A financial institution must
begin its investigation promptly upon receipt of an oral notice. It may
not delay until it has received a written confirmation.
3. Charges for error resolution. If a billing error occurred,
whether as alleged or in a different amount or manner, the financial
institution may not impose a charge related to any aspect of the error-
resolution process (including charges for documentation or
investigation). Since the act grants the consumer error-resolution
rights, the institution should avoid any chilling effect on the good-
faith assertion of errors that might result if charges are assessed when
no billing error has occurred.
4. Correction without investigation. A financial institution may
make, without investigation, a final correction to a consumer's account
in the amount or manner alleged by the consumer to be in error, but must
comply with all other applicable requirements of Sec. 205.11.
5. Correction notice. A financial institution may include the notice
of correction on a periodic statement that is mailed or delivered within
the 10-business-day or 45-calendar-day time limits and that clearly
identifies the correction to the consumer's account. The institution
must determine whether such a mailing will be prompt enough to satisfy
the requirements of this section, taking into account the specific facts
involved.
6. Correction of an error. If the financial institution determines
an error occurred, within either the 10-day or 45-day period, it must
correct the error (subject to the liability provisions of Sec. Sec.
205.6 (a) and (b)) including, where applicable, the crediting of
interest and the refunding of any fees imposed by the institution. In a
combined credit/EFT transaction, for example, the institution must
refund any finance charges incurred as a result of the error. The
institution need not refund fees that would have been imposed whether or
not the error occurred.
7. Extent of required investigation. A financial institution
complies with its duty to investigate, correct, and report its
determination regarding an error described in Sec. 205.11(a)(1)(vii) by
transmitting the requested information, clarification, or documentation
within the time limits set forth in Sec. 205.11(c). If the institution
has provisionally credited the consumer's account in accordance with
Sec. 205.11(c)(2), it may debit the amount upon transmitting the
requested information, clarification, or documentation.
Paragraph 11(c)(2)(i)
1. Compliance with all requirements. Financial institutions exempted
from provisionally crediting a consumer's account under Sec.
205.11(c)(2)(i) (A) and (B) must still comply with all other
requirements of Sec. 205.11.
Paragraph 11(c)(3)--Extension of Time Periods
1. POS debit card transactions. The extended deadlines for
investigating errors resulting from POS debit card transactions apply to
all debit card transactions, including those for cash only, at
merchants' POS terminals, and also including mail and telephone orders.
The deadlines do not apply to transactions at an ATM, however, even
though the ATM may be in a merchant location.
Paragraph 11(c)(4)--Investigation
1. Third parties. When information or documentation requested by the
consumer is in the possession of a third party with whom the financial
institution does not have an agreement, the institution satisfies the
error resolution requirement by so advising the consumer within the
specified time period.
2. Scope of investigation. When an alleged error involves a payment
to a third party under the financial institution's telephone bill-
payment plan, a review of the institution's own records is sufficient,
assuming no agreement exists between the institution and the third party
concerning the bill-payment service.
3. POS transfers. When a consumer alleges an error involving a
transfer to a merchant via a POS terminal, the institution must verify
the information previously transmitted when executing the transfer. For
example, the financial institution may request a copy of the sales
receipt to verify that the amount of the transfer correctly corresponds
to the amount of the consumer's purchase.
4. Agreement. An agreement that a third party will honor an access
device is an agreement for purposes of this paragraph. A financial
institution does not have an agreement for purposes of Sec.
205.11(c)(4)(ii) solely because it participates in transactions that
occur under the federal recurring payments programs, or that are cleared
through an ACH or similar arrangement for the clearing and settlement of
fund transfers generally, or because it agrees to be bound by the rules
of such an arrangement.
11(d) Procedures if Financial Institution Determines No Error or
Different Error Occurred
1. Error different from that alleged. When a financial institution
determines that an error occurred in a manner or amount different from
that described by the consumer,
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it must comply with the requirements of both Sec. 205.11 (c) and (d),
as relevant. The institution may give the notice of correction and the
explanation separately or in a combined form.
Paragraph 11(d)(1)--Written Explanation
1. Request for documentation. When a consumer requests copies of
documents, the financial institution must provide the copies in an
understandable form. If an institution relied on magnetic tape it must
convert the applicable data into readable form, for example, by printing
it and explaining any codes.
Paragraph 11(d)(2)--Debiting Provisional Credit
1. Alternative procedure for debiting of credited funds. The
financial institution may comply with the requirements of this section
by notifying the consumer that the consumer's account will be debited
five business days from the transmittal of the notification, specifying
the calendar date on which the debiting will occur.
2. Fees for overdrafts. The financial institution may not impose
fees for items it is required to honor under Sec. 205.11. It may,
however, impose any normal transaction or item fee that is unrelated to
an overdraft resulting from the debiting. If the account is still
overdrawn after five business days, the institution may impose the fees
or finance charges to which it is entitled, if any, under an overdraft
credit plan.
11(e) Reassertion of Error
1. Withdrawal of error; right to reassert. The financial institution
has no further error resolution responsibilities if the consumer
voluntarily withdraws the notice alleging an error. A consumer who has
withdrawn an allegation of error has the right to reassert the
allegation unless the financial institution had already complied with
all of the error resolution requirements before the allegation was
withdrawn. The consumer must do so, however, within the original 60-day
period.
Section 205.12--Relation to Other Laws
12(a) Relation to Truth in Lending
1. Determining applicable regulation. i. For transactions involving
access devices that also function as credit cards, whether Regulation E
or Regulation Z (12 CFR part 226) applies depends on the nature of the
transaction. For example, if the transaction solely involves an
extension of credit, and does not include a debit to a checking account
(or other consumer asset account), the liability limitations and error
resolution requirements of Regulation Z apply. If the transaction debits
a checking account only (with no credit extended), the provisions of
Regulation E apply. If the transaction debits a checking account but
also draws on an overdraft line of credit attached to the account,
Regulation E's liability limitations apply, in addition to Sec. Sec.
226.13 (d) and (g) of Regulation Z (which apply because of the extension
of credit associated with the overdraft feature on the checking
account). If a consumer's access device is also a credit card and the
device is used to make unauthorized withdrawals from a checking account,
but also is used to obtain unauthorized cash advances directly from a
line of credit that is separate from the checking account, both
Regulation E and Regulation Z apply.
ii. The following examples illustrate these principles:
A. A consumer has a card that can be used either as a credit card or
a debit card. When used as a debit card, the card draws on the
consumer's checking account. When used as a credit card, the card draws
only on a separate line of credit. If the card is stolen and used as a
credit card to make purchases or to get cash advances at an ATM from the
line of credit, the liability limits and error resolution provisions of
Regulation Z apply; Regulation E does not apply.
B. In the same situation, if the card is stolen and is used as a
debit card to make purchases or to get cash withdrawals at an ATM from
the checking account, the liability limits and error resolution
provisions of Regulation E apply; Regulation Z does not apply.
C. In the same situation, assume the card is stolen and used both as
a debit card and as a credit card; for example, the thief makes some
purchases using the card as a debit card, and other purchases using the
card as a credit card. Here, the liability limits and error resolution
provisions of Regulation E apply to the unauthorized transactions in
which the card was used as a debit card, and the corresponding
provisions of Regulation Z apply to the unauthorized transactions in
which the card was used as a credit card.
D. Assume a somewhat different type of card, one that draws on the
consumer's checking account and can also draw on an overdraft line of
credit attached to the checking account. There is no separate line of
credit, only the overdraft line, associated with the card. In this
situation, if the card is stolen and used, the liability limits and the
error resolution provisions of Regulation E apply. In addition, if the
use of the card has resulted in accessing the overdraft line of credit,
the error resolution provisions of Sec. 226.13(d) and (g) of Regulation
Z also apply, but not the other error resolution provisions of
Regulation Z.
2. Issuance rules. For access devices that also constitute credit
cards, the issuance rules of Regulation E apply if the only credit
feature is a preexisting credit line attached to the asset account to
cover overdrafts (or to maintain a specified minimum balance).
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Regulation Z (12 CFR part 226) rules apply if there is another type of
credit feature, for example, one permitting direct extensions of credit
that do not involve the asset account.
12(b) Preemption of Inconsistent State Laws
1. Specific determinations. The regulation prescribes standards for
determining whether state laws that govern EFTs are preempted by the act
and the regulation. A state law that is inconsistent may be preempted
even if the Board has not issued a determination. However, nothing in
Sec. 205.12(b) provides a financial institution with immunity for
violations of state law if the institution chooses not to make state
disclosures and the Board later determines that the state law is not
preempted.
2. Preemption determination. The Board determined that certain
provisions in the state law of Michigan are preempted by the federal
law, effective March 30, 1981:
i. Definition of unauthorized use. Section 5(4) is preempted to the
extent that it relates to the section of state law governing consumer
liability for unauthorized use of an access device.
ii. Consumer liability for unauthorized use of an account. Section
14 is inconsistent with Sec. 205.6 and is less protective of the
consumer than the federal law. The state law places liability on the
consumer for the unauthorized use of an account in cases involving the
consumer's negligence. Under the federal law, a consumer's liability for
unauthorized use is not related to the consumer's negligence and depends
instead on the consumer's promptness in reporting the loss or theft of
the access device.
iii. Error resolution. Section 15 is preempted because it is
inconsistent with Sec. 205.11 and is less protective of the consumer
than the federal law. The state law allows financial institutions up to
70 days to resolve errors, whereas the federal law generally requires
errors to be resolved within 45 days.
iv. Receipts and periodic statements. Sections 17 and 18 are
preempted because they are inconsistent with Sec. 205.9. The state
provisions require a different disclosure of information than does the
federal law. The receipt provision is also preempted because it allows
the consumer to be charged for receiving a receipt if a machine cannot
furnish one at the time of a transfer.
Section 205.13--Administrative Enforcement; Record Retention
13(b) Record Retention
1. Requirements. A financial institution need not retain records
that it has given disclosures and documentation to each consumer; it
need only retain evidence demonstrating that its procedures reasonably
ensure the consumers' receipt of required disclosures and documentation.
Section 205.14--Electronic Fund Transfer Service Provider Not Holding
Consumer's Account
14(a) Electronic Fund Transfer Service Providers Subject to Regulation
1. Applicability. This section applies only when a service provider
issues an access device to a consumer for initiating transfers to or
from the consumer's account at a financial institution and the two
entities have no agreement regarding this EFT service. If the service
provider does not issue an access device to the consumer for accessing
an account held by another institution, it does not qualify for the
treatment accorded by Sec. 205.14. For example, this section does not
apply to an institution that initiates preauthorized payroll deposits to
consumer accounts on behalf of an employer. By contrast, Sec. 205.14
can apply to an institution that issues a code for initiating telephone
transfers to be carried out through the ACH from a consumer's account at
another institution. This is the case even if the consumer has accounts
at both institutions.
2. ACH agreements. The ACH rules generally do not constitute an
agreement for purposes of this section. However, an ACH agreement under
which members specifically agree to honor each other's debit cards is an
``agreement,'' and thus this section does not apply.
14(b) Compliance by Electronic Fund Transfer Service Provider
1. Liability. The service provider is liable for unauthorized EFTs
that exceed limits on the consumer's liability under Sec. 205.6.
Paragraph 14(b)(1)--Disclosures and Documentation
1. Periodic statements from electronic fund transfer service
provider. A service provider that meets the conditions set forth in this
paragraph does not have to issue periodic statements. A service provider
that does not meet the conditions need only include on periodic
statements information about transfers initiated with the access device
it has issued.
Paragraph 14(b)(2)--Error Resolution
1. Error resolution. When a consumer notifies the service provider
of an error, the EFT service provider must investigate and resolve the
error in compliance with Sec. 205.11 as modified by Sec. 205.14(b)(2).
If an error occurred, any fees or charges imposed as a result of the
error, either by the service provider or by the account-holding
institution (for example, overdraft or dishonor fees) must be reimbursed
to the consumer by the service provider.
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14(c) Compliance by Account-Holding Institution
Paragraph 14(c)(1)
1. Periodic statements from account-holding institution. The
periodic statement provided by the account-holding institution need only
contain the information required by Sec. 205.9(b)(1).
Section 205.16--Disclosures at Automated Teller Machines
16(b) General
Paragraph 16(b)(1)
1. Specific notices. An ATM operator that imposes a fee for a
specific type of transaction such as a cash withdrawal, but not a
balance inquiry, may provide a general statement that a fee will be
imposed for providing EFT services or may specify the type of EFT for
which a fee is imposed.
Section 205.17--Requirements for Electronic Communication
17(b) General Rule
1. Relationship to the E-Sign Act. The E-Sign Act authorizes the use
of electronic disclosures. It does not affect any requirement imposed
under this part other than a provision that requires disclosures to be
in paper form, and it does not affect the content or timing of
disclosures. Electronic disclosures are subject to the regulation's
format, timing, and retainability rules and the clear and readily
understandable standard. For example, to satisfy the clear and readily
understandable standard for disclosures, electronic disclosures must use
visual text.
2. Clear and readily understandable standard. A financial
institution must provide electronic disclosures using a clear and
readily understandable format. Also, in accordance with the E-Sign Act:
i. The institution must disclose the requirements for accessing and
retaining disclosures in that format;
ii. The consumer must demonstrate the ability to access the
information electronically and affirmatively consent to electronic
delivery; and
iii. The institution must provide the disclosures in accordance with
the specified requirements.
3. Timing and effective delivery when a consumer signs up for an EFT
service on-line. When a consumer contracts for an EFT service on the
Internet and will be able immediately to initiate a fund transfer, a
financial institution satisfies the timing requirements under this part
if, at the time the consumer contracts for the service or before the
first transfer is made, the disclosures automatically appear on the
screen, even if multiple screens are required to view the entire
disclosure. Or a financial institution may provide a link to electronic
disclosures, as long as consumers cannot bypass the link and they are
required to access the disclosures before initiating the first transfer.
The institution is not required to confirm that the consumer has read
the disclosures.
4. Timing and effective delivery for disclosures provided
periodically. Disclosures provided by e-mail are timely based on when
the disclosures are sent. Disclosures posted at an Internet web site,
such as periodic statements or change-in-terms and other notices, are
timely when the financial institution has both made the disclosures
available and sent a notice alerting the consumer that the disclosures
have been posted. For example, under Sec. 205.8(a), institution
offering accounts with EFT services must provide a change-in-terms
notice to consumers at least 21 days in advance of certain changes. For
a change-in-terms notice posted on the Internet, an institution must
both post the notice and notify consumers of its availability at least
21 days in advance of the change.
5. Retainability of disclosures. Financial institutions satisfy the
requirement that disclosures be in a form that the consumer may keep if
electronic disclosures are delivered in a format that is capable of
being retained (such as by printing or storing electronically). The
format must also be consistent with the information required to be
provided under section 101(c)(1)(C)(i) of the E-Sign Act (15 U.S.C.
7001(c)(1)(C)(i)) about the hardware and software requirements for
accessing and retaining electronic disclosures.
6. Disclosures provided on financial institution's equipment. A
financial institution that controls the equipment providing electronic
disclosures to consumers (for example, an ATM or computer terminal in a
financial institution's lobby) must ensure that the equipment satisfies
the regulation's requirements to provide timely disclosures in a clear
and readily understandable format and in a form that the consumer may
keep. For example, if disclosures are required at the time of an on-line
transaction, the disclosures must be sent to the consumer's e-mail
address or must be made available at another location such as the
financial institution's Internet web site, unless the financial
institution provides a printer that automatically prints the
disclosures.
17(c) Address or Location To Receive Electronic Communication
Paragraph 17(c)(1)
1. Electronic address. A consumer's electronic address is an e-mail
address that is not limited to receiving communications transmitted
solely by the financial institution.
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Paragraph 17(c)(2)
1. Identifying account involved. A financial institution may
identify a specific account in a variety of ways and is not required to
identify an account by reference to the account number. For example,
where the consumer has only one checking account, and no confusion would
result, the institution may refer to ``your checking account.'' If the
consumer has two checking accounts, the institution may, for example,
differentiate accounts based on names for different checking account
programs or by using a truncated account number.
2. 90-day rule. The actual disclosures provided to the consumer must
be available for at least 90 days, but the financial institution has
discretion to determine whether they should be available at the same
location for the entire period.
17(d) Redelivery
1. E-mail returned as undeliverable. If an e-mail to the consumer
(containing an alert notice or other disclosure) is returned as
undeliverable, the redelivery requirement is satisfied if, for example,
the institution sends the disclosure to a different e-mail address or
postal address that the institution has on file for the consumer.
Sending the disclosure a second time to the same electronic address is
not sufficient if the institution has a different address for the
consumer on file.
17(e) Persons Other Than Financial Institutions
1. Electronic disclosures. Entities other than financial
institutions, such as merchants, are subject to certain provisions of
Regulation E, including Sec. Sec. 205.10(b) and (d). These entities too
may use electronic communication to provide disclosures required to be
in writing.
Appendix A--Model Disclosure Clauses and Forms
1. Review of forms. The Board will not review or approve disclosure
forms or statements for financial institutions. However, the Board has
issued model clauses for institutions to use in designing their
disclosures. If an institution uses these clauses accurately to reflect
its service, the institution is protected from liability for failure to
make disclosures in proper form.
2. Use of the forms. The appendix contains model disclosure clauses
for optional use by financial institutions to facilitate compliance with
the disclosure requirements of Sec. Sec. 205.5(b)(2) and (b)(3),
205.6(a), 205.7, 205.8(b), 205.14(b)(1)(ii) and 205.15(d)(7) and (d)(2).
The use of appropriate clauses in making disclosures will protect a
financial institution from liability under sections 915 and 916 of the
act provided the clauses accurately reflect the institution's EFT
services.
3. Altering the clauses. Financial institutions may use clauses of
their own design in conjunction with the Board's model clauses. The
inapplicable words or portions of phrases in parentheses should be
deleted. The catchlines are not part of the clauses and need not be
used. Financial institutions may make alterations, substitutions, or
additions in the clauses to reflect the services offered, such as
technical changes (including the substitution of a trade name for the
word ``card,'' deletion of inapplicable services, or substitution of
lesser liability limits). Several of the model clauses include
references to a telephone number and address. Where two or more of these
clauses are used in a disclosure, the telephone number and address may
be referenced and need not be repeated.
[Reg. E, 61 FR 19686, May 2, 1996, as amended at 66 FR 13412, Mar. 6,
2001; 66 FR 15192, Mar. 16, 2001; 66 FR 17794, Apr. 4, 2001]