Topic: Electronic Fund Transfer Act (EFTA)
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We are putting together account disclosures for business and consumer debit cards, specifically regarding error resolution under Regulation E. While Regulation E does not apply to business accounts, is there an Illinois law that might apply to business debit cards?
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No, we are not aware of any Illinois laws that would impose error resolution requirements on a business debit card. Moreover, as you note, Regulation E applies only to consumer-purpose accounts. However, we do recommend consulting with your bank counsel when drafting the account disclosures for your business debit card customers. In addition, as you…
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Our auditors told us that a “Doing Business As” (“d/b/a”) checking account was subject to Regulation E because it is held under the sole proprietor’s social security number, not a business tax ID. Is that true? Also, if we offer our consumer Internet banking product to business customers, would that make those business accounts subject to Regulation E?
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No, Regulation E does not apply to a business customer. Regulation E applies only to accounts “established primarily for personal, family, or household purposes.” It would not apply to an account established for a business, regardless of the tax identification number used for the account. Also, a business operating under a fictitious d/b/a name is…
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For a joint deposit account, should we be accepting a form reporting an unauthorized ACH debit from just one of the joint owners? For example, it doesn’t seem logical to return an ACH as unauthorized unless all owners are willing to attest that the charge was unauthorized.
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Yes, you may accept a “written statement of unauthorized debit” (WSUD) from a joint account holder without the other joint account holder’s signature. Under the NACHA rules, the “Receiver” must sign the WSUD. Because the term “Receiver” is defined to include “all Persons whose signatures are required to withdraw funds from an account,” and either…
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What is your recommended record retention period for stop payment orders on checks? My opinion is that we need to retain them for six months after they expire, but we have been holding them for six years.
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We believe that the standard industry practice is to retain stop payment orders on checks for six months after the order has terminated. This corresponds with the IBA Guide to Record Retention, which recommends retaining stop payment orders for six months after termination (unless the stop payment relates to a preauthorized electronic fund transfer, in…
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We are discontinuing the service of permitting deposits at our ATMs. Do we need to update our Regulation E disclosures and resend, or can we simply notify customers of the change in a statement message?
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Yes, Regulation E requires you to deliver a change in terms notice to customers because you are removing one of the types of electronic fund transfer services that previously was available to your customers. For resources related to our guidance, please see: Regulation E, 12 CFR 1005.8(a)(1)(iii) (“A financial institution shall mail or deliver a written notice…
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If a noncustomer experiences an error at our ATM (the individual was charged but did not receive any cash), are we subject to Regulation E’s error resolution procedures?
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No, you are not subject to Regulation E’s error resolution procedures in this case. Regulation E applies only to accounts that are subject to an agreement for EFT services between your institution and the consumer. Because you do not have an agreement for EFT services with the noncustomer, Regulation E’s error resolution procedures do not…
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Can we deny a consumer’s Regulation E claim if the consumer still has the merchandise? What if the consumer has returned the merchandise?
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In most cases, you can deny a Regulation E error resolution claim if the customer is in possession of the purchased merchandise or has returned the merchandise. In both circumstances, it is unlikely that the transaction was “unauthorized.” However, it is possible that your customer received the merchandise as a result of an unauthorized transaction…
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Can we deny a customer’s Regulation E claim if the customer does not first attempt to resolve the claim with the merchant? Can we require the customer to sign an affidavit or provide a copy of the return receipt, proof of purchase, email, cancellation number, etc.?
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No, you may not deny a Regulation E error resolution claim based on the fact that your customer did not first attempt to resolve the claim with the merchant. Also, you may not require the customer to sign an affidavit or provide a proof of purchase, receipt, email or cancellation number. You may request confirmation…
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If an ATM does not dispense the correct amount of cash, do the investigation time frames and consumer liability caps from Regulation E apply?
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Regulation E’s error resolution time frames do apply to incorrect ATM withdrawals. The 10-day and 45-day time limits on investigations apply to all “errors,” including a “consumer’s receipt of an incorrect amount of money” from an ATM. However, Regulation E’s consumer liability caps do not apply to incorrect ATM withdrawals. The consumer liability caps apply…
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Do Regulation E’s consumer liability rules differentiate between ATM withdrawals and other types of electronic fund transfers?
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No, Regulation E’s consumer liability rules do not differentiate between ATM withdrawals and other types of electronic fund transfers. However, the fact that the withdrawals were made by ATM may mean that they were authorized electronic funds transfers. Importantly, Regulation E’s consumer liability rules only apply to unauthorized electronic fund transfers involving the consumer’s account.…