Topic: Electronic Fund Transfer Act (EFTA)
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Is there any Illinois law that addresses stop payment requests received orally?
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Yes, the Illinois Uniform Commercial Code (Illinois UCC) addresses stop payment requests received orally. The Illinois UCC generally provides that a stop payment order for any item drawn on a customer’s account is effective for six months. However, an oral stop payment order lapses after fourteen calendar days if it is not confirmed in writing…
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A customer is claiming that his brother initiated unauthorized electronic fund transfers (EFTs) from his account. We learned through our investigation that our customer executed a power of attorney (POA) for property naming his brother as agent a few years ago for purposes of selling a home they co-owned. We do not have a copy of the POA, but we have a written statement from the customer stating that he gave his brother a POA for property. He does not know whether the POA had a termination date. Can we conclude no error occurred based on the customer’s written statement? Or do we need to have the POA on file? If the transactions are considered unauthorized, can we take legal action against the brother?
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Completing Your Regulation E Error Investigation Based on the information you have so far, we do not believe you have satisfied your institution’s burden of proof to conclude that no error occurred. You may be able to complete your investigation and make a conclusion regarding whether an error occurred without obtaining a copy of the…
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We recently updated our deposit account terms and conditions. We are trying to avoid having to send our customers the entire document or a separate change in terms notice. Can we post the updated terms and conditions on our website with changes highlighted and include a message in our customer’s statements saying they can visit our website for the updated terms and conditions? The message also would say that customers can request a printed copy.
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It is unlikely that you will be able to fulfill your notice requirements by posting updated terms and conditions on your website if your updated deposit account terms affect any of the notice requirements under Regulation CC, Regulation E, Regulation DD, or Regulation P. These regulations do allow electronic disclosure if certain requirements are met,…
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We have a customer that is disputing several debits and credits to their account made through a mobile payment service going back three years. The customer claims they have never used the mobile payment service before. However, the customer’s account history shows that the mobile payment service has credited more money to their account than it has debited, and we have evidence that the customer benefitted from the credits and debits. If our investigation determines an error occurred, should we debit the customer’s account since they have gained more money than they lost from the mobile payment service? Can we deny the customer’s error claim based on previous credits and debits from the same mobile payment service?
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Reimbursing a Customer’s Account for Erroneous EFT Credits and Debits The CFPB’s FAQs on Electronic Fund Transfers (EFTs) confirm that Regulation E applies to any mobile payment transactions that meet the definition of EFT. Regulation E requires a bank to reimburse a customer for unauthorized EFTs that occurred during the first sixty days after it…
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If our customer attaches a debit card issued by our bank to a non-bank person-to-person (P2P) payment mobile application, and our customer temporarily loans their phone to a friend, who uses the P2P app to send themself money without permission, would the P2P app be considered the access device? Would the non-bank P2P provider be considered the “financial institution” for error resolution purposes, meaning we can refer the customer to the non-bank P2P provider if the customer notifies us of the fraudulent transaction? Would the answer to this change if the P2P app instead accessed our customer’s account directly rather than through a debit card? Would this even be considered an unauthorized electronic fund transfer (EFT) since the customer voluntarily loaned their phone to their friend? How would this answer change if the fraud was instead committed by an unknown third-party scammer who obtained our customer’s P2P app username and password?
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Yes, we believe the non-bank P2P payment mobile application would be the relevant “access device” in this scenario, as Regulation E defines “access device” as a “card, code, or other means of access to a consumer’s account, or any combination thereof, that may be used by the consumer to initiate electronic fund transfers.” Also, a…
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If our customer attaches a debit card issued by our bank to a non-bank person-to-person (P2P) payment mobile application, how would this affect what is considered an “accepted access device” under Regulation E? Would the P2P provider be considered the “financial institution” for the purposes of Regulation E’s dispute resolution provisions?
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We believe that an “accepted access device” under Regulation E could include a P2P payment app that your customer has attached to their bank-issued debit card. Under Regulation E, an access device is a “card, code, or other means of access to a consumer’s account, or any combination thereof, that may be used by the…
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The answer to this question indicates that if a customer waits two years before reporting recurring fraudulent charges on their account, their bank likely would be required to credit the customer for any unauthorized transactions that occurred during the first sixty days following the periodic statement reflecting the initial fraudulent transaction. Are we correct that such a customer also would be eligible for a refund of all fees and interest we charged for that sixty-day period, but not for any fees and interest we charged after the sixty-day period?
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No, we believe that such a customer would be entitled to a refund of all fees and interest imposed in relation to the fraudulent transactions — occurring during and after the initial sixty-day period. Regulation E requires a bank to credit a customer for the unauthorized transactions that occurred during the first sixty days after…
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What should we include in our bank disclosures and policies regarding Mastercard debit card limits? Can we lower a debit card’s limits or cancel a debit card if a customer has had repeated overdrafts? If we lower a customer’s debit card limits or cancel their debit card, do we need to send written notice to the customer? Also, are there any parameters for canceling a customer’s debit card if they have been repeatedly scammed and submitted numerous disputes?
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We believe that the Regulation E requirement to disclose limitations on the frequency and dollar amount of debit card transactions would require you to include any limits imposed by Mastercard in your disclosures. However, we do not believe that you are required to disclose when you cancel a debit card. We do recommend caution before…
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Our customer claims that an individual forced them to make an ATM transaction and debit card purchases at three stores. Our customer said the individual claimed they had just been released from prison and lifted their shirt to reveal gunshot wounds. However, our customer did not mention that the individual had a weapon. Was our customer actually “forced” to make these transactions, and would they be considered unauthorized under Regulation E? Our customer said they were going to file a police report, but we have not seen it.
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In our view, the debit card transactions that occurred at the stores would not be considered “unauthorized transactions” under Regulation E, regardless of whether your customer was forced to make them. Conversely, an ATM transaction “induced by force” would be considered unauthorized under Regulation E. Whether your customer’s ATM transaction was “induced by force” is…
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If a customer willingly purchases a service from a merchant on their debit card, then decides they are dissatisfied with the service, do we need to provide a provisional credit to the customer if they cannot resolve their dispute with the merchant? Based on our investigation, we concluded that no fraudulent activity occurred.
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No, you are not required to provide a provisional credit to a customer if you have determined that an “error” (such as an unauthorized or incorrect electronic fund transfer) has not occurred on their account — and we do not believe a dispute over the quality of a merchant’s service constitutes an “error.” Under Regulation…