{"id":26750,"date":"2022-12-30T00:11:00","date_gmt":"2022-12-30T00:11:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=26750"},"modified":"2023-02-05T11:56:50","modified_gmt":"2023-02-05T11:56:50","slug":"reg-e","status":"publish","type":"post","link":"https:\/\/businessyield.com\/finance-accounting\/reg-e\/","title":{"rendered":"REG E (Regulation E): Electronic Fund Transfer Act Explained!","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n
Although many banking clients are unaware of it, Reg E is a vital source of safety for anyone with a bank account. Most of the time, you won’t even need to be aware of its existence.
Regulation E applies to any electronic fund transfer in which a financial institution permits a debit or credit from a consumer’s account. This reg E establishes the framework and stages for the dispute resolution process. The Consumer Financial Protection Bureau (CFPB) issued reg E in response to the Electronic Fund Transfer Act. Federal regulations protect bank accounts and the people who use them in a variety of ways. Regulation E is one of them, and if you have a checking or savings account, you should understand how it works and avoid violations.<\/p>\n\n\n\n
Regulation E is a Federal Reserve Board regulation that establishes regulations and procedures for electronic funds transfers (EFTs) and gives guidance for electronic debit card issuers.<\/p>\n\n\n\n
The Electronic Fund Transfer Act (EFTA) of 1978<\/a>, 15 U.S.C. 1693 et seq., protects individual customers who use electronic fund transfers (EFTs) and remittance transfers, such as:<\/p>\n\n\n\n Regulation E, which incorporates official interpretations, is used to carry out EFTA. The provisions of Regulation E apply to both state and federal credit unions. In federally insured, state-chartered credit unions, NCUA is not the primary enforcement authority for EFTA (FISCUs). Contact your supervisor if you discover EFTA violations at a FISCU and believe the State Supervisory Authority is not adequately addressing the problem.<\/p>\n\n\n\n The Federal Reserve Board (Board) revised Regulation E in 2009 to prohibit overdraft fees for ATM and one-time debit card transactions unless the consumer opts in or voluntarily consents to overdraft services. The Board also revised Regulation E to limit gift card fees and expiration dates, as well as to require that gift card terms be properly stated.<\/p>\n\n\n\n The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) shifted EFTA regulation authority from the Federal Reserve Board of Governors to the Consumer Financial Protection Bureau (CFPB). The Dodd-Frank Act also revised EFTA and established a new system of consumer safeguards for remittance transfers made by US customers to persons and corporations in other countries.<\/p>\n\n\n\n Regulation E at 12 CFR Part 1005 was reiterated by the CFPB in December 2011. To enforce the Dodd-Frank Act’s remittance protections, the CFPB added subpart B (Requirements for Remittance Transfers) to Regulation E in February 2012.<\/p>\n\n\n\n The Consumer Financial Protection Bureau (CFPB) adopted Regulation E in accordance with the Electronic Fund Transfer Act. This Act “establishes the fundamental rights, obligations, and responsibilities of customers who utilize electronic funds transfer and remittance transfer services, as well as financial institutions and other people who provide these services.”<\/p>\n\n\n\n Federal Regulation E was created to provide a framework for implementing the Electronic Fund Transfer Act’s requirements. In a nutshell, the Act and the ensuing reg E are intended to protect banking customers who transfer money electronically. It also includes instructions for issuers of electronic debit cards.<\/p>\n\n\n\n According to Wortman, compliance with Regulation E is “a federal regulatory framework providing the rights, duties, and responsibilities of participants in Electronic Funds Transfers (EFTs).”<\/p>\n\n\n\n This means that those who use EFTs are legally compelled to observe the rules.<\/p>\n\n\n\n Fines – Failure to comply with Regulation E may result in liability for real consumer damages, statutory damages of $100 – $1000, class action damages of $500,000 or 1% of net worth, as well as appropriate attorney’s fees and costs as decided by the court. See, for example, 15 U.S.C. 1693m(a).<\/p>\n\n\n\n There is also a criminal responsibility component of Regulation E for willfully supplying false or erroneous information or failing to comply with Reg E.<\/p>\n\n\n\n According to Wortman, just as your business should comply with Reg E to avoid heavy fines, “there’s also an economic motivation for consumer attorneys to pursue actions alleging Reg E violations.” Many such rulings for suspected violations have occurred in the last year alone.<\/p>\n\n\n\n Wortman recalls a particular case against CashCall that resulted in a “$1.5 million settlement fund, including a startling $601,336.74 designated for plaintiffs’ attorneys’ fees.”<\/p>\n\n\n\n This should be enough to persuade any accounts receivable department that the short-term hassle of establishing compliance is well worth the long-term peace of mind.<\/p>\n\n\n\n According to the CFPB, electronic fund transfers include the following transactions, which come under Reg E:<\/p>\n\n\n\n Electronic fund transfers do not include all debits and withdrawals. Reg E does not apply to the following transactions:<\/p>\n\n\n\n Introductory or trial offers, in which you pay a small fee to try a product and are then enrolled in a subscription for that product, are frequent. And these are not covered by Regulation E, according to Kelly Pickle, operations officer at Heritage Bank.<\/p>\n\n\n\n “(People) don’t always read the fine print,” Pickle explains. “And they have to cancel within like 30 days or else they’re engaged in this subscription.” These, according to Pickle, should be disputes with the vendor or merchant.<\/p>\n\n\n\n According to the World Cash Report, 43 percent of Americans prefer to make transactions with their debit cards. In the United States, there are 434,000 ATMs and 13.9 million point-of-sale terminals that accept debit cards.<\/p>\n\n\n\n According to the Federal Reserve Payments Study, card-based debit payments have climbed by 10%, while card-based remote payments have increased by 22%. This demonstrates the importance of knowing your rights as a consumer while using ETFs.<\/p>\n\n\n\n The Reg E submission procedure may differ from one bank to the next.<\/p>\n\n\n\n Some banks may ask you to submit your dispute in writing, even if you already discussed it with a representative over the phone.<\/p>\n\n\n\n First Interstate Bank, for example, has an online form. The form, which is used for debit card and ATM card disputes, requests the following information:<\/p>\n\n\n\nRead Also: PORTFOLIO ANALYTICS: Strategies & Top Software Solutions<\/a><\/h5>\n\n\n\n
Regulation E: An Explanation<\/h2>\n\n\n\n
Why Should Your Company Be Concerned About Reg E?<\/h2>\n\n\n\n
What happens at Reg E Violations?<\/h2>\n\n\n\n
What Types of Transactions are Governed by Reg E?<\/h2>\n\n\n\n
EFTs Statistics<\/h2>\n\n\n\n