Topic: Electronic Fund Transfer Act (EFTA)
-
We have heard that Visa is changing its Zero Liability policy to reflect a different standard of care for zero liability protection for unauthorized transactions. Previously, a cardholder had zero liability for unauthorized transactions unless they were “grossly negligent.” Under the new policy, the cardholder will have zero liability for unauthorized transactions unless they were “negligent.” Does this change trigger a change in terms notice under Regulation E?
—
by
Yes, we believe that this change to Visa’s Zero Liability policy triggers a change in terms notice under Regulation E. A Regulation E change in terms notice is required at least 21 days before the effective date of any change that will result in increased liability for the customer. In this case, Visa has changed…
-
A consumer customer notified us of an unauthorized Visa debit card charge within 60 days of receiving her periodic statement. We notified Visa, but Visa denied the customer’s claim because the merchant used “Verified by Visa” to confirm the identity of purchaser. We are not familiar with the “Verified by Visa” program. Do we still have to reimburse the customer for the charge?
—
by
In our view, you are required to reimburse the customer for debit transactions that you determine are unauthorized, regardless of whether the transaction was verified through the Verified by Visa program. Our understanding of the Verified by Visa program is that it is a free service for cardholders intended to verify customer identity during online…
-
We currently offer ad hoc overdraft protection, but we want to establish a formal overdraft protection program for checking accounts, ACH transactions, and debit transactions. We have not yet established the exact parameters of our program, but we are planning to charge a fee for the service. What notice do we have to provide before rolling out the program? Can the notice be included in a periodic statement? Can we establish criteria that customers must meet in order to qualify for the program, such as that the customer does not have any delinquent loans? Or do we have to offer the program to all customers?
—
by
Yes, your bank should provide advance notice and an opportunity to opt in to a new overdraft program. Regulation E requires financial institutions to complete a four-step process before charging a fee for paying an overdraft on an ATM or on a one-time debit card transaction. This process includes providing written notice of the overdraft…
-
We are switching to a new core processor, which will result in several changes to our debit card program. The daily ATM withdrawal limit will be raised, and the current limits for PIN- and signature-based point of sale transactions will be combined, without lowering the current limits. Do we have to provide advance notice for these changes? If not, do we have to provide any kind of notice?
—
by
No, we do not believe that these changes would require a change in terms notice. Regulation E requires change in terms notices when a change would result in “stricter limitations on the frequency or dollar amounts of transfers.” The changes you described would either increase or maintain your bank’s current limitations on the dollar amounts…
-
Are we required to notify our debit card customers about their ability to opt out of the Visa Account Updater (VAU) program that Visa requires us to implement in October 2017? This program requires us to notify Visa when a cardholder’s account information changes, so that merchants who have an existing relationship with the cardholder can continue to process recurring payments without an interruption in service. We are required to participate in the program, but customers may opt-out. There are no customer fees or other changes associated with this new program. Also, because this is an information sharing issue, we want to make sure we will not violate any privacy laws if we do not notify our existing cardholders about new service and opt-out option.
—
by
We are not aware of any federal or Illinois law that would require you to provide notice about the VAU program and opt-out option to your debit card customers, although we believe it may be prudent to do so. Regulation E requires debit card issuers to notify customers about changes to certain terms and conditions,…
-
Now that the nonbank ATM registration requirements have been repealed, should we change our BSA risk or monitoring procedures for customers that own nonbank ATMs?
—
by
No, we do not recommend changing your current BSA and monitoring practices for customers that own nonbank ATMs. These customers are no longer required to file statements of ownership with the Illinois Department of Financial Regulation (IDFPR), but this should not affect your bank’s risk assessment of these customers. If your bank has determined that…
-
One of our customers’ checks was stolen. Later, someone forged the customer’s signature on a check at a store. The store converted the paper check into an electronic check and was processed as an ACH debit transaction. Do we have to follow the Electronic Fund Transfer Act (EFTA) guidelines? Do we need the customer to complete a forgery affidavit? Do you have sample language for the affidavit?
—
by
Yes, the EFTA would apply to an electronic check that is processed as an ACH transaction. The EFTA, as implemented by Regulation E, applies to “electronic fund transfers,” which are defined to include ACH transfers and, specifically, electronic check conversions (where a paper check is used “as a source of information to initiate a one-time…
-
Is there any requirement that we must provide a receipt to customers for deposits — whether made in-person, through the night drop, or through the mail? I am not aware of any federal requirement. Is there a state law that addresses this subject?
—
by
No, we are not aware of an Illinois law that requires financial institutions to issue receipts for deposits. However, Regulation E does require financial institutions to make receipts available for certain electronic deposits. If a consumer initiates a deposit of over $15 by an electronic fund transfer initiated at an electronic terminal, Regulation E would…
-
Can we email teller receipts to our customers? What information should we include in the receipts?
—
by
Yes, we believe that your bank may provide electronic receipts for teller transactions, without needing to meet the disclosure and consent requirements in the federal E-Sign Act. We are not aware of any federal or Illinois law that requires financial institutions to issue receipts for basic teller transactions, such as deposits and withdrawals (in fact,…
-
Our FDIC examiners looked at our fee schedule, which includes a charge for overdrafts that are not resolved (“continuous overdrafts”). The examiners told us to add a disclosure to the fee schedule stating that we may assess a fee for a “continuous overdraft” caused by a bank fee. We were thinking about adding a line stating that continuous overdrafts would “include OD as a result from bank charges.” Does the FDIC have any guidance on how to phrase this disclosure?
—
by
We are not aware of any rule or guidance that specifies how to disclose the fact that bank fees may cause continuous overdrafts which will incur separate overdraft fees. If your disclosure is clear and not misleading, we believe it should be sufficient as it relates to the wording of the disclosure. In our view,…