Regulation E - Electronic Funds Transfer

Sec. 205.1 Authority and purpose.
 

         (a) Authority. The regulation in this part, known as Regulation E, is issued by the Board of Governors of the Federal Reserve System pursuant to the Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.). The information-collection requirements have been approved by the Office of Management and Budget under 44 U.S.C. 3501 et seq. and have been assigned OMB No. 7100-0200.
         (b) Purpose. This part carries out the purposes of the Electronic Fund Transfer Act, which establishes the basic rights, liabilities, and responsibilities of consumers who use electronic fund transfer services and of financial institutions that offer these services. The primary objective of the act and this part is the protection of individual consumers engaging in electronic fund transfers.
 

Sec. 205.2 Definitions.

         For purposes of this part, the following definitions apply:
         (a)(1) Access device means 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.
         (2) An access device becomes an accepted access device when the consumer:
         (i) Requests and receives, or signs, or uses (or authorizes another to use) the access device to transfer money between accounts or to obtain money, property, or services;
         (ii) Requests validation of an access device issued on an unsolicited basis; or
         (iii) Receives an access device in renewal of, or in substitution for, an accepted access device from either the financial institution that initially issued the device or a successor.
         (b)(1) Account means a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes.
         (2) The term does not include an account held by a financial institution under a bona fide trust agreement.
         (c) Act means the Electronic Fund Transfer Act (title IX of the Consumer Credit Protection Act, 15 U.S.C. 1693 et seq.).
         (d) Business day means any day on which the offices of the consumer's financial institution are open to the public for carrying on substantially all business functions.
         (e) Consumer means a natural person.
         (f) Credit means the right granted by a financial institution to a consumer to defer payment of debt, incur debt and defer its payment, or purchase property or services and defer payment therefor.
         (g) Electronic fund transfer is defined in Sec. 205.3.
         (h) Electronic terminal means an electronic device, other than a telephone operated by a consumer, through which a consumer may initiate an electronic fund transfer. The term includes, but is not limited to, point-of-sale terminals, automated teller machines, and cash dispensing machines.
         (i) Financial institution means a bank, savings association, credit union, or any other person that directly or indirectly holds an account belonging to a consumer, or that issues an access device and agrees with a consumer to provide electronic fund transfer services.
         (j) Person means a natural person or an organization, including a corporation, government agency, estate, trust, partnership, proprietorship, cooperative, or association.
         (k) Preauthorized electronic fund transfer means an electronic fund transfer authorized in advance to recur at substantially regular intervals.
         (l) State means any state, territory, or possession of the United States; the District of Columbia; the Commonwealth of Puerto Rico; or any political subdivision of the above in this paragraph (l).
         (m) Unauthorized electronic fund transfer means an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. The term does not include an electronic fund transfer initiated:
         (1) By a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized;
         (2) With fraudulent intent by the consumer or any person acting in concert with the consumer; or
         (3) By the financial institution or its employee.
 

Sec. 205.3 Coverage.

         (a) General. This part applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's account. Generally, this part applies to financial institutions. For purposes of Secs. 205.10 (b), (d), and (e) and 205.13, this part applies to any person.
         (b) Electronic fund transfer. The term electronic fund transfer means any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit an account. The term includes, but is not limited to:
         (1) Point-of-sale transfers;
         (2) Automated teller machine transfers;
         (3) Direct deposits or withdrawals of funds;
         (4) Transfers initiated by telephone; and
         (5) Transfers resulting from debit card transactions, whether or not initiated through an electronic terminal.
         (c) Exclusions from coverage. The term electronic fund transfer does not include:
         (1) Checks. Any transfer of funds originated by check, draft, or similar paper instrument; or any payment made by check, draft, or similar paper instrument at an electronic terminal.
         (2) Check guarantee or authorization. Any transfer of funds that guarantees payment or authorizes acceptance of a check, draft, or similar paper instrument but that does not directly result in a debit or credit to a consumer's account.
         (3) Wire or other similar transfers. Any transfer of funds through Fedwire or through a similar wire transfer system that is used primarily for transfers between financial institutions or between businesses.
         (4) Securities and commodities transfers. Any transfer of funds the primary purpose of which is the purchase or sale of a security or commodity, if the security or commodity is:
         (i) Regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission;
         (ii) Purchased or sold through a broker-dealer regulated by the Securities and Exchange Commission or through a futures commission merchant regulated by the Commodity Futures Trading Commission; or
         (iii) Held in book-entry form by a Federal Reserve Bank or federal agency.
         (5) Automatic transfers by account-holding institution. Any transfer of funds under an agreement between a consumer and a financial institution which provides that the institution will initiate individual transfers without a specific request from the consumer:
         (i) Between a consumer's accounts within the financial institution;
         (ii) From a consumer's account to an account of a member of the consumer's family held in the same financial institution; or
         (iii) Between a consumer's account and an account of the financial institution, except that these transfers remain subject to Sec. 205.10(e) regarding compulsory use and sections 915 and 916 of the act regarding civil and criminal liability.
         (6) Telephone-initiated transfers. Any transfer of funds that:
         (i) Is initiated by a telephone communication between a consumer and a financial institution making the transfer; and
         (ii) Does not take place under a telephone bill-payment or other written plan in which periodic or recurring transfers are contemplated.
         (7) Small institutions. Any preauthorized transfer to or from an account if the assets of the account-holding financial institution were $100 million or less on the preceding December 31. If assets of the account-holding institution subsequently exceed $100 million, the institution's exemption for preauthorized transfers terminates one year from the end of the calendar year in which the assets exceed $100 million. Preauthorized transfers exempt under this paragraph (c)(7) remain subject to Sec. 205.10(e) regarding compulsory use and sections 915 and 916 of the act regarding civil and criminal liability.
 

Sec. 205.4 General disclosure requirements; jointly offered services.

         (a) Form of disclosures. Disclosures required under this part shall be clear and readily understandable, in writing, and in a form the consumer may keep. A financial institution may use commonly accepted or readily understandable abbreviations in complying with the disclosure requirements of this part.
         (b) Additional information; disclosures required by other laws. A financial institution may include additional information and may combine disclosures required by other laws (such as the Truth in Lending Act (15 U.S.C. 1601 et seq.) or the Truth in Savings Act (12 U.S.C. 4301 et seq.)) with the disclosures required by this part.
         (c) [Reserved]
         (d) Multiple accounts and account holders--(1) Multiple accounts. A financial institution may combine the required disclosures into a single statement for a consumer who holds more than one account at the institution.
         (2) Multiple account holders. For joint accounts held by two or more consumers, a financial institution need provide only one set of the required disclosures and may provide them to any of the account holders.
         (e) Services offered jointly. Financial institutions that provide electronic fund transfer services jointly may contract among themselves to comply with the requirements that this part imposes on any or all of them. An institution need make only the disclosures required by Secs. 205.7 and 205.8 that are within its knowledge and within the purview of its relationship with the consumer for whom it holds an account.
 

Sec. 205.5 Issuance of access devices.

         (a) Solicited issuance. Except as provided in paragraph (b) of this section, a financial institution may issue an access device to a consumer only:
         (1) In response to an oral or written request for the device; or
         (2) As a renewal of, or in substitution for, an accepted access
device whether issued by the institution or a successor.
         (b) Unsolicited issuance. A financial institution may distribute an access device to a consumer on an unsolicited basis if the access device is:
         (1) Not validated, meaning that the institution has not yet performed all the procedures that would enable a consumer to initiate an electronic fund transfer using the access device;
         (2) Accompanied by a clear explanation that the access device is not validated and how the consumer may dispose of it if validation is not desired;
         (3) Accompanied by the disclosures required by Sec. 205.7, of the consumer's rights and liabilities that will apply if the access device is validated; and
         (4) Validated only in response to the consumer's oral or written request for validation, after the institution has verified the consumer's identity by a reasonable means.
 

Sec. 205.6 Liability of consumer for unauthorized transfers.

         (a) Conditions for liability. A consumer may be held liable, within the limitations described in paragraph (b) of this section, for an unauthorized electronic fund transfer involving the consumer's account only if the financial institution has provided the disclosures required by Sec. 205.7(b)(1), (2), and (3). If the unauthorized transfer involved an access device, it must be an accepted access device and the financial institution must have provided a means to identify the consumer to whom it was issued.
         (b) Limitations on amount of liability. A consumer's liability for an unauthorized electronic fund transfer or a series of related unauthorized transfers shall be determined as follows:
         (1) Timely notice given. If the consumer notifies the financial institution within two business days after learning of the loss or theft of the access device, the consumer's liability shall not exceed the lesser of $50 or the amount of unauthorized transfers that occur before notice to the financial institution.
         (2) Timely notice not given. If the consumer fails to notify the financial institution within two business days after learning of the loss or theft of the access device, the consumer's liability shall not exceed the lesser of $500 or the sum of:
         (i) $50 or the amount of unauthorized transfers that occur within the two business days, whichever is less; and
         (ii) The amount of unauthorized transfers that occur after the close of two business days and before notice to the institution, provided the institution establishes that these transfers would not have occurred had the consumer notified the institution within that two-day period.
         (3) Periodic statement; timely notice not given. A consumer must report an unauthorized electronic fund transfer that appears on a periodic statement within 60 days of the financial institution's transmittal of the statement to avoid liability for subsequent transfers. If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period. When an access device is involved in the unauthorized transfer, the consumer may be liable for other amounts set forth in paragraphs (b)(1) or (b)(2) of this section, as applicable.
         (4) Extension of time limits. If the consumer's delay in notifying the financial institution was due to extenuating circumstances, the institution shall extend the times specified above to a reasonable period.
         (5) Notice to financial institution. (i) Notice to a financial institution is given when a consumer takes steps reasonably necessary to provide the institution with the pertinent information, whether or not a particular employee or agent of the institution actually receives the information.
         (ii) The consumer may notify the institution in person, by telephone, or in writing.
         (iii) Written notice is considered given at the time the consumer mails the notice or delivers it for transmission to the institution by any other usual means. Notice may be considered constructively given when the institution becomes aware of circumstances leading to the reasonable belief that an unauthorized transfer to or from the consumer's account has been or may be made.
         (6) Liability under state law or agreement. If state law or an agreement between the consumer and the financial institution imposes less liability than is provided by this section, the consumer's liability shall not exceed the amount imposed under the state law or agreement.
 

Sec. 205.7 Initial disclosures.

         (a) Timing of disclosures. A financial institution shall make the disclosures required by this section at the time a consumer contracts for an electronic fund transfer service or before the first electronic fund transfer is made involving the consumer's account.
         (b) Content of disclosures. A financial institution shall provide the following disclosures, as applicable:
         (1) Liability of consumer. A summary of the consumer's liability, under Sec. 205.6 or under state or other applicable law or agreement, for unauthorized electronic fund transfers.
         (2) Telephone number and address. The telephone number and address of the person or office to be notified when the consumer believes that an unauthorized electronic fund transfer has been or may be made.
         (3) Business days. The financial institution's business days.
         (4) Types of transfers; limitations. The type of electronic fund transfers that the consumer may make and any limitations on the frequency and dollar amount of transfers. Details of the limitations need not be disclosed if confidentiality is essential to maintain the security of the electronic fund transfer system.
         (5) Fees. Any fees imposed by the financial institution for electronic fund transfers or for the right to make transfers.
         (6) Documentation. A summary of the consumer's right to receipts and periodic statements, as provided in Sec. 205.9, and notices regarding preauthorized transfers as provided in Secs. 205.10(a), and 205.10(d).
         (7) Stop payment. A summary of the consumer's right to stop payment of a preauthorized electronic fund transfer and the procedure for placing a stop-payment order, as provided in Sec. 205.10(c).
         (8) Liability of institution. A summary of the financial institution's liability to the consumer under section 910 of the act for failure to make or to stop certain transfers.
         (9) Confidentiality. The circumstances under which, in the ordinary course of business, the financial institution may provide information concerning the consumer's account to third parties.
         (10) Error resolution. A notice that is substantially similar to Model Form A-3 as set out in Appendix A of this part concerning error resolution.
 

Sec. 205.8 Change in terms notice; error resolution notice.

         (a) Change in terms notice--(1) Prior notice required. A financial institution shall mail or deliver a written notice to the consumer, at least 21 days before the effective date, of any change in a term or condition required to be disclosed under Sec. 205.7(b) if the change would result in:
         (i) Increased fees for the consumer;
         (ii) Increased liability for the consumer;
         (iii) Fewer types of available electronic fund transfers; or
         (iv) Stricter limitations on the frequency or dollar amount of transfers.
         (2) Prior notice exception. A financial institution need not give prior notice if an immediate change in terms or conditions is necessary to maintain or restore the security of an account or an electronic fund transfer system. If the institution makes such a change permanent and disclosure would not jeopardize the security of the account or system, the institution shall notify the consumer in writing on or with the next regularly scheduled periodic statement or within 30 days of making the change permanent.
         (b) Error resolution notice. For accounts to or from which electronic fund transfers can be made, a financial institution shall mail or deliver to the consumer, at least once each calendar year, an error resolution notice substantially similar to the model form set forth in Appendix A of this part (Model Form A-3). Alternatively, an institution may include an abbreviated notice substantially similar to the model form error resolution notice set forth in Appendix A of this part (Model Form A-3), on or with each periodic statement required by Sec. 205.9(b).
 

Sec. 205.9 Receipts at electronic terminals; periodic statements.

         (a) Receipts at electronic terminals. A financial institution shall make a receipt available to a consumer at the time the consumer initiates an electronic fund transfer at an electronic terminal. The receipt shall set forth the following information, as applicable:
         (1) Amount. The amount of the transfer. A transaction fee may be included in this amount, provided the amount of the fee is disclosed on the receipt and displayed on or at the terminal.
         (2) Date. The date the consumer initiates the transfer.
         (3) Type. The type of transfer and the type of the consumer's account(s) to or from which funds are transferred. The type of account may be omitted if the access device used is able to access only one account at that terminal.
         (4) Identification. A number or code that identifies the consumer's account or accounts, or the access device used to initiate the transfer. The number or code need not exceed four digits or letters to comply with the requirements of this paragraph (a)(4).
         (5) Terminal location. The location of the terminal where the transfer is initiated, or an identification such as a code or terminal number. Except in limited circumstances where all terminals are located in the same city or state, if the location is disclosed, it shall include the city and state or foreign country and one of the following:
         (i) The street address; or
         (ii) A generally accepted name for the specific location; or
         (iii) The name of the owner or operator of the terminal if other than the account-holding institution.
         (6) Third party transfer. The name of any third party to or from whom funds are transferred.
         (b) Periodic statements. For an account to or from which electronic fund transfers can be made, a financial institution shall send a periodic statement for each monthly cycle in which an electronic fund transfer has occurred; and shall send a periodic statement at least quarterly if no transfer has occurred. The statement shall set forth the following information, as applicable:
         (1) Transaction information. For each electronic fund transfer occurring during the cycle:
         (i) The amount of the transfer;
         (ii) The date the transfer was credited or debited to the consumer's account;
         (iii) The type of transfer and type of account to or from which funds were transferred;
         (iv) For a transfer initiated by the consumer at an electronic terminal (except for a deposit of cash or a check, draft, or similar paper instrument), the terminal location described in paragraph (a)(5) of this section; and
         (v) The name of any third party to or from whom funds were transferred.
         (2) Account number. The number of the account.
         (3) Fees. The amount of any fees assessed against the account during the statement period for electronic fund transfers, for the right to make transfers, or for account maintenance.
         (4) Account balances. The balance in the account at the beginning and at the close of the statement period.
         (5) Address and telephone number for inquiries. The address and telephone number to be used for inquiries or notice of errors, preceded by ``Direct inquiries to'' or similar language. The address and telephone number provided on an error resolution notice under Sec. 205.8(b) given on or with the statement satisfies this requirement.
         (6) Telephone number for preauthorized transfers. A telephone number the consumer may call to ascertain whether preauthorized transfers to the consumer's account have occurred, if the financial institution uses the telephone-notice option under Sec. 205.10(a)(1)(iii).
         (c) Exceptions to the periodic statement requirement for certain accounts--(1) Preauthorized transfers to accounts. For accounts that may be accessed only by preauthorized transfers to the account the following rules apply:
         (i) Passbook accounts. For passbook accounts, the financial institution need not provide a periodic statement if the institution updates the passbook upon presentation or enters on a separate document the amount and date of each electronic fund transfer since the passbook was last presented.
         (Ii) Other accounts. For accounts other than passbook accounts, the financial institution must send a periodic statement at least quarterly.
         (2) Intra-institutional transfers. For an electronic fund transfer initiated by the consumer between two accounts of the consumer in the same institution, documenting the transfer on a periodic statement for one of the two accounts satisfies the periodic statement requirement.
         (3) Relationship between paragraphs (c)(1) and (c)(2) of this section. An account that is accessed by preauthorized transfers to the account described in paragraph (c)(1) of this section and by intra- institutional transfers described in paragraph (c)(2) of this section, but by no other type of electronic fund transfers, qualifies for the exceptions provided by paragraph (c)(1) of this section.
         (d) Documentation for foreign-initiated transfers. The failure by a financial institution to provide a terminal receipt for an electronic fund transfer or to document the transfer on a periodic statement does not violate this part if:
         (1) The transfer is not initiated within a state; and
         (2) The financial institution treats an inquiry for clarification or documentation as a notice of error in accordance with Sec. 205.11.
 

Sec. 205.10 Preauthorized transfers.

         (a) Preauthorized transfers to consumer's account--(1) Notice by financial institution. When a person initiates preauthorized electronic fund transfers to a consumer's account at least once every 60 days, the account-holding financial institution shall provide notice to the consumer by:
         (i) Positive notice. Providing oral or written notice of the transfer within two business days after the transfer occurs; or
         (ii) Negative notice. Providing oral or written notice, within two business days after the date on which the transfer was scheduled to occur, that the transfer did not occur; or
         (iii) Readily-available telephone line. Providing a readily available telephone line that the consumer may call to determine whether the transfer occurred and disclosing the telephone number on the initial disclosure of account terms and on each periodic statement.
         (2) Notice by payor. A financial institution need not provide notice of a transfer if the payor gives the consumer positive notice that the transfer has been initiated.
         (3) Crediting. A financial institution that receives a preauthorized transfer of the type described in paragraph (a)(1) of this section shall credit the amount of the transfer as of the date the funds for the transfer are received.
         (b) Written authorization for preauthorized transfers from consumer's account. Preauthorized electronic fund transfers from a consumer's account may be authorized only by a writing signed or similarly authenticated by the consumer. The person that obtains the authorization shall provide a copy to the consumer.
         (c) Consumer's right to stop payment--(1) Notice. A consumer may stop payment of a preauthorized electronic fund transfer from the consumer's account by notifying the financial institution orally or in writing at least three business days before the scheduled date of the transfer.
         (2) Written confirmation. The financial institution may require the consumer to give written confirmation of a stop-payment order within 14 days of an oral notification. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification. An oral stop-payment order ceases to be binding after 14 days if the consumer fails to provide the required written confirmation.
         (d) Notice of transfers varying in amount--(1) Notice. When a preauthorized electronic fund transfer from the consumer's account will vary in amount from the previous transfer under the same authorization or from the preauthorized amount, the designated payee or the financial institution shall send the consumer written notice of the amount and date of the transfer at least 10 days before the scheduled date of transfer.
         (2) Range. The designated payee or the institution shall inform the consumer of the right to receive notice of all varying transfers, but may give the consumer the option of receiving notice only when a transfer falls outside a specified range of amounts or only when a transfer differs from the most recent transfer by more than an agreed- upon amount.
         (e) Compulsory use--(1) Credit. No financial institution or other person may condition an extension of credit to a consumer on the consumer's repayment by preauthorized electronic fund transfers, except for credit extended under an overdraft credit plan or extended to maintain a specified minimum balance in the consumer's account.
         (2) Employment or government benefit. No financial institution or other person may require a consumer to establish an account for receipt of electronic fund transfers with a particular institution as a condition of employment or receipt of a government benefit.
 

Sec. 205.11 Procedures for resolving errors.

         (a) Definition of error--(1) Types of transfers or inquiries covered. The term error means:
         (i) An unauthorized electronic fund transfer;
         (ii) An incorrect electronic fund transfer to or from the consumer's account;
         (iii) The omission of an electronic fund transfer from a periodic statement;
         (iv) A computational or bookkeeping error made by the financial institution relating to an electronic fund transfer;
         (v) The consumer's receipt of an incorrect amount of money from an electronic terminal;
         (vi) An electronic fund transfer not identified in accordance with Secs. 205.9 or 205.10(a); or
         (vii) The consumer's request for documentation required by Secs. 205.9 or 205.10(a) or for additional information or clarification concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under paragraphs (a)(1) (i) through (vi) of this section.
         (2) Types of inquiries not covered. The term error does not include:
         (i) A routine inquiry about the consumer's account balance;
         (ii) A request for information for tax or other recordkeeping purposes; or
         (iii) A request for duplicate copies of documentation.
         (b) Notice of error from consumer--(1) Timing; contents. A financial institution shall comply with the requirements of this section with respect to any oral or written notice of error from the consumer that:
         (i) Is received by the institution no later than 60 days after the institution sends the periodic statement or provides the passbook documentation, required by Sec. 205.9, on which the alleged error is first reflected;
         (ii) Enables the institution to identify the consumer's name and account number; and
         (iii) Indicates why the consumer believes an error exists and includes to the extent possible the type, date, and amount of the error, except for requests described in paragraph (a)(1)(vii) of this section.
         (2) Written confirmation. A financial institution may require the consumer to give written confirmation of an error within 10 business days of an oral notice. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification.
         (3) Request for documentation or clarifications. When a notice of error is based on documentation or clarification that the consumer requested under paragraph (a)(1)(vii) of this section, the consumer's notice of error is timely if received by the financial institution no later than 60 days after the institution sends the information requested.
         (c) Time limits and extent of investigation--(1) Ten-day period. A financial institution shall investigate promptly and, except as otherwise provided in this paragraph (c), shall determine whether an error occurred within 10 business days of receiving a notice of error. The institution shall report the results to the consumer within three business days after completing its investigation. The institution shall correct the error within one business day after determining that an error occurred.
         (2) Forty-five day period. If the financial institution is unable to complete its investigation within 10 business days, the institution may take up to 45 days from receipt of a notice of error to investigate and determine whether an error occurred, provided the institution does the following:
         (i) Provisionally credits the consumer's account in the amount of the alleged error (including interest where applicable) within 10 business days of receiving the error notice. If the financial institution has a reasonable basis for believing that an unauthorized electronic fund transfer has occurred and the institution has satisfied the requirements of Sec. 205.6(a), the institution may withhold a maximum of $50 from the amount credited. An institution need not provisionally credit the consumer's account if:
         (A) The institution requires but does not receive written confirmation within 10 business days of an oral notice of error; or
         (B) The alleged error involves an account that is subject to Regulation T (Securities Credit by Brokers and Dealers, 12 CFR part 220);
         (ii) Informs the consumer, within two business days after the provisional crediting, of the amount and date of the provisional crediting and gives the consumer full use of the funds during the investigation;
         (iii) Corrects the error, if any, within one business day after determining that an error occurred; and
         (iv) Reports the results to the consumer within three business days after completing its investigation (including, if applicable, notice that a provisional credit has been made final).
         (3) Extension of time periods. The time periods in paragraphs (c)(1) and (c)(2) of this section are extended as follows:


         (i) The applicable time is 20 business days in place of 10 business days under paragraphs (c)(1) and (c)(2) of this section if the notice of error involves an electronic fund transfer to or from the account within 30 days after the first deposit to the account was made.
         (Ii) The application time is 90 days in place of 45 days under paragraph (c)(2) of this section, for completing an investigation, if a notice of error involves an electronic fund transfer that:

                (A) Was not initiated within a state;
                (B) Resulted from a point-of-sale debit card transaction; or
                 (C) Occurred within 30 days after the first deposit to the account was made.


         (4) Investigation. With the exception of transfers covered by Sec. 205.14, a financial institution's review of its own records regarding an alleged error satisfies the requirements of this section if:
         (i) The alleged error concerns a transfer to or from a third party; and
         (ii) There is no agreement between the institution and the third party for the type of electronic fund transfer involved.
         (d) Procedures if financial institution determines no error or different error occurred. In addition to following the procedures specified in paragraph (c) of this section, the financial institution shall follow the procedures set forth in this paragraph (d) if it determines that no error occurred or that an error occurred in a manner or amount different from that described by the consumer:
         (1) Written explanation. The institution's report of the results of its investigation shall include a written explanation of the institution's findings and shall note the consumer's right to request the documents that the institution relied on in making its determination. Upon request, the institution shall promptly provide copies of the documents.
         (2) Debiting provisional credit. Upon debiting a provisionally credited amount, the financial institution shall:
         (i) Notify the consumer of the date and amount of the debiting;
         (ii) Notify the consumer that the institution will honor checks, drafts, or similar instruments payable to third parties and preauthorized transfers from the consumer's account (without charge to the consumer as a result of an overdraft) for five business days after the notification. The institution shall honor items as specified in the notice, but need honor only items that it would have paid if the provisionally credited funds had not been debited.
         (e) Reassertion of error. A financial institution that has fully complied with the error resolution requirements has no further responsibilities under this section should the consumer later reassert the same error, except in the case of an error asserted by the consumer following receipt of information provided under paragraph (a)(1)(vii) of this section.
 

Sec. 205.12 Relation to other laws.

         (a) Relation to Truth in Lending. (1) The Electronic Fund Transfer Act and this part govern:
         (i) The addition to an accepted credit card, as defined in Regulation Z (12 CFR 226.12(a)(2), footnote 21), of the capability to initiate electronic fund transfers;
         (ii) The issuance of an access device that permits credit extensions (under a preexisting agreement between a consumer and a financial institution) only when the consumer's account is overdrawn or to maintain a specified minimum balance in the consumer's account; and
         (iii) A consumer's liability for an unauthorized electronic fund transfer and the investigation of errors involving an extension of credit that occurs under an agreement between the consumer and a financial institution to extend credit when the consumer's account is overdrawn or to maintain a specified minimum balance in the consumer's account.
         (2) The Truth in Lending Act and Regulation Z (12 CFR part 226), which prohibit the unsolicited issuance of credit cards, govern:
         (i) The addition of a credit feature to an accepted access device; and
         (ii) Except as provided in paragraph (a)(1)(ii) of this section, the issuance of a credit card that is also an access device.
         (b) Preemption of inconsistent state laws--(1) Inconsistent requirements. The Board shall determine, upon its own motion or upon the request of a state, financial institution, or other interested party, whether the act and this part preempt state law relating to electronic fund transfers. Only state laws that are inconsistent with the act and this part are preempted and then only to the extent of the inconsistency. A state law is not inconsistent with the act and this part if it is more protective of consumers.
         (2) Standards for determination. State law is inconsistent with the requirements of the act and this part if it:
         (i) Requires or permits a practice or act prohibited by the federal law;
         (ii) Provides for consumer liability for unauthorized electronic fund transfers that exceeds the limits imposed by the federal law;
         (iii) Allows longer time periods than the federal law for investigating and correcting alleged errors, or does not require the financial institution to credit the consumer's account during an error investigation in accordance with Sec. 205.11(c)(2)(i); or
         (iv) Requires initial disclosures, periodic statements, or receipts that are different in content from those required by the federal law except to the extent that the disclosures relate to consumer rights granted by the state law and not by the federal law.
         (c) State exemptions--(1) General rule. Any state may apply for an exemption from the requirements of the act or this part for any class of electronic fund transfers within the state. The Board shall grant an exemption if it determines that:
         (i) Under state law the class of electronic fund transfers is subject to requirements substantially similar to those imposed by the federal law; and
         (ii) There is adequate provision for state enforcement.
         (2) Exception. To assure that the federal and state courts continue to have concurrent jurisdiction, and to aid in implementing the act:
         (i) No exemption shall extend to the civil liability provisions of section 915 of the act; and
         (ii) When the Board grants an exemption, the state law requirements shall constitute the requirements of the federal law for purposes of section 915 of the act, except for state law requirements not imposed by the federal law.
 

Sec. 205.13 Administrative enforcement; record retention.

         (a) Enforcement by federal agencies. Compliance with this part is enforced by the agencies listed in Appendix B of this part.
         (b) Record retention. (1) Any person subject to the act and this part shall retain evidence of compliance with the requirements imposed by the act and this part for a period of not less than two years from the date disclosures are required to be made or action is required to be taken.
         (2) Any person subject to the act and this part having actual notice that it is the subject of an investigation or an enforcement proceeding by its enforcement agency, or having been served with notice of an action filed under sections 910, 915, or 916(a) of the act, shall retain the records that pertain to the investigation, action, or proceeding until final disposition of the matter unless an earlier time is allowed by court or agency order.
 

Sec. 205.14 Electronic fund transfer service provider not holding consumer's account.

         (a) Provider of electronic fund transfer service. A person that provides an electronic fund transfer service to a consumer but that does not hold the consumer's account is subject to all requirements of this part if the person:
         (1) Issues a debit card (or other access device) that the consumer can use to access the consumer's account held by a financial institution; and
         (2) Has no agreement with the account-holding institution regarding such access.
         (b) Compliance by service provider. In addition to the requirements generally applicable under this part, the service provider shall comply with the following special rules:
         (1) Disclosures and documentation. The service provider shall give the disclosures and documentation required by Secs. 205.7, 205.8, and 205.9 that are within the purview of its relationship with the consumer. The service provider need not furnish the periodic statement required by Sec. 205.9(b) if the following conditions are met:
         (i) The debit card (or other access device) issued to the consumer bears the service provider's name and an address or telephone number for making inquiries or giving notice of error;
         (ii) The consumer receives a notice concerning use of the debit card that is substantially similar to the notice contained in Appendix A of this part;
         (iii) The consumer receives, on or with the receipts required by Sec. 205.9(a), the address and telephone number to be used for an inquiry, to give notice of an error, or to report the loss or theft of the debit card;
         (iv) The service provider transmits to the account-holding institution the information specified in Sec. 205.9(b)(1), in the format prescribed by the automated clearinghouse system used to clear the fund transfers;
         (v) The service provider extends the time period for notice of loss or theft of a debit card, set forth in Sec. 205.6(b) (1) and (2), from two business days to four business days after the consumer learns of the loss or theft; and extends the time periods for reporting unauthorized transfers or errors, set forth in Secs. 205.6(b)(3) and 205.11(b)(1)(i), from 60 days to 90 days following the transmittal of a periodic statement by the account-holding institution.
         (2) Error resolution. (i) The service provider shall extend by a reasonable time the period in which notice of an error must be received, specified in Sec. 205.11(b)(1)(i), if a delay resulted from an initial attempt by the consumer to notify the account-holding institution.          (Ii) The service provider shall disclose to the consumer the date on which it initiates a transfer to effect a provisional credit in accordance with Sec. 205.11(c)(2)(ii).
         (iii) If the service provider determines an error occurred, it shall transfer funds to or from the consumer's account, in the appropriate amount and within the applicable time period, in accordance with Sec. 205.11(c)(2)(i).
         (iv) If funds were provisionally credited and the service provider determines no error occurred, it may reverse the credit. The service provider shall notify the account-holding institution of the period during which the account-holding institution must honor debits to the account in accordance with Sec. 205.11(d)(2)(ii). If an overdraft results, the service provider shall promptly reimburse the account- holding institution in the amount of the overdraft.
         (c) Compliance by account-holding institution. The account-holding institution need not comply with the requirements of the act and this part with respect to electronic fund transfers initiated through the service provider except as follows:
         (1) Documentation. The account-holding institution shall provide a periodic statement that describes each electronic fund transfer initiated by the consumer with the access device issued by the service provider. The account-holding institution has no liability for the failure to comply with this requirement if the service provider did not provide the necessary information; and
         (2) Error resolution. Upon request, the account-holding institution shall provide information or copies of documents needed by the service provider to investigate errors or to furnish copies of documents to the consumer. The account-holding institution shall also honor debits to the account in accordance with Sec. 205.11(d)(2)(ii).
 

Sec. 205.15 Electronic fund transfer of government benefits.

         (a) Government agency subject to regulation. (1) A government agency is deemed to be a financial institution for purposes of the act and this part if directly or indirectly it issues an access device to a consumer for use in initiating an electronic fund transfer of government benefits from an account, other than needs-tested benefits in a program established under state or local law or administered by a state or local agency.  The agency shall comply with all applicable requirements of the act and this part except as provided in this section.
         (2) For purposes of this section, the term account means an account established by a government agency for distributing government benefits to a consumer electronically, such as through automated teller machines or point-of-sale terminals, but does not include an account for distributing needs-tested benefits in a program established under state or local law or administered by a state or local agency.
         (b) Issuance of access devices. For purposes of this section, a consumer is deemed to request an access device when the consumer applies for government benefits that the agency disburses or will disburse by means of an electronic fund transfer. The agency shall verify the identity of the consumer receiving the device by reasonable means before the device is activated.
         (c) Alternative to periodic statement. A government agency need not furnish the periodic statement required by Sec. 205.9(b) if the agency makes available to the consumer:
         (1) The consumer's account balance, through a readily available telephone line and at a terminal (such as by providing balance information at a balance-inquiry terminal or providing it, routinely or upon request, on a terminal receipt at the time of an electronic fund transfer); and
         (2) A written history of the consumer's account transactions that is provided promptly in response to an oral or written request and that covers at least 60 days preceding the date of a request by the consumer.          (d) Modified requirements. A government agency that does not furnish periodic statements, in accordance with paragraph (c) of this section, shall comply with the following special rules:
         (1) Initial disclosures. The agency shall modify the disclosures under Sec. 205.7(b) by disclosing:
         (i) Account balance. The means by which the consumer may obtain information concerning the account balance, including a telephone number. The agency provides a notice substantially similar to the notice contained in paragraph A-5 in Appendix A of this part.
         (Ii) Written account history. A summary of the consumer's right to receive a written account history upon request, in place of the periodic statement required by Sec. 205.7(b)(6), and the telephone number to call to request an account history. This disclosure may be made by providing a notice substantially similar to the notice contained in paragraph A-5 in Appendix A of this part.
         (Iii) Error resolution. A notice concerning error resolution that is substantially similar to the notice contained in paragraph A-5 in Appendix A of this part, in place of the notice required by Sec. 205.7(b)(10).
         (2) Annual error resolution notice. The agency shall provide an annual notice concerning error resolution that is substantially similar to the notice contained in paragraph A-5 in appendix A, in place of the notice required by Sec. 205.8(b).
         (3) Limitations on liability. For purposes of Sec. 205.6(b)(3), regarding a 60-day period for reporting any unauthorized transfer that appears on a periodic statement, the 60-day period shall begin with transmittal of a written account history or other account information provided to the consumer under paragraph (c) of this section.
         (4) Error resolution. The agency shall comply with the requirements of Sec. 205.11 in response to an oral or written notice of an error from the consumer that is received no later than 60 days after the consumer obtains the written account history or other account information, under paragraph (c) of this section, in which the error is first reflected.

Appendices A - C

Credit And Banking Laws Directory

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