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F e d e r a lR e s e r v e Ba n k O F DALLAS T O N Y J . SA LV A G G IO f i r s t v ic e p re s id e n t „ July 23, 1993 DALLAS, TEXAS 7 5 2 2 2 Notice 93-79 TO: The Chief Operating Officer of each financial institution in the Eleventh Federal Reserve District SUBJECT Availability of Revised Pamphlet Direct Deposit: A Consumer’s Guide DETAILS The newly revised pamphlet, Direct Deposit: A Consumer’s Guide, produced by the Federal Reserve Bank of Dallas, is now available. The pamphlet explains in simple terms how direct deposit works, which payments are best suited for the service, and how to begin using direct deposit. In addition, the pamphlet addresses some of the common concerns consumers have about direct deposit and outlines the benefits of the service. ENCLOSURE A copy of Direct Deposit: A Consumer’s Guide is enclosed for your reference. MORE INFORMATION The pamphlet is available, on request, for you to distribute to your customers. To obtain copies, please call the Public Affairs Department at the Federal Reserve Bank of Dallas at (214) 922-5254, or (800) 333-4460, ext. 5254. For additional copies of this Bank’s notice, please contact the Public Affairs Department at (214) 922-5254. Sincerely, For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Benefits of Direct Deposit Security W ith Direct Deposit, you do not have to worry about lost or stolen payment checks. Your payment is automatically deposited safely into your account. Convenience You do not have to take the time to go to your financial institution to deposit your check. If you are out of town, your payment w ill be deposited into your account in your absence, allowing that money to immediately begin drawing whatever interest may apply. Many payments are sent through the mail, losing up to 10 days of interest. Direct Deposit eliminates the m ailing period, so your payments begin drawing interest on the day of deposit. Simplicity Direct Deposit is easy to begin, and you may change your financial institution, change the account receiving the Direct Deposit or stop service by sim ply completing a form. Flexibility You may have your funds deposited into one of a variety of accounts, ^uch as a money market account, a savings account or a checking account, depending on your needs. Reliability You can be assured your funds are deposited into your designated account on time, correctly and confidentially. Regulation E ensures proper handling of your account. produced by Federal Reserve Bank of Dallas Public Affairs Department P.O. Box 655906 Dallas, Texas 7 5265-5906 03084736 X / / 1 ^ ✓ I / t ' A CONSUMER S GUIDE I I I How does Direct Deposit work? Direct Deposit A Consumer’s Guide The process is simple. The organization paying you notifies your financial institution electronically that a specified amount of Let Direct Deposit work for you What happens if my deposit is not made for some reason? Direct Deposit is extremely reliable. Of more than money should be made available to you in an account you designate. 1 billion deposits made in 1992 by Direct Deposit, Federal Reserve Banks and financial institutions process these elec 99.9 percent were processed without a hitch. Of those Trust— nowhere is it more im portant than in a banking relationship. tronic transactions through a national automated clearinghouse deposits that did experience a problem, almost all Trust is its mainstay, and electronic banking is no exception. (ACH) system. were rectified within one day. You w ill receive a payment stub from the organization paying However, because every deposit is important to you when your deposit is made. This stub is sim ilar to a deposit slip you, rules are in place to protect your funds and credit in joined with others to create a system that allows individuals to take in that it indicates the date and amount of money deposited into your case of an error. Your funds are safeguarded under the advantage of technology that has been used by businesses for account and may be used as proof of availability of funds. However, Federal Reserve Electronic Funds Transfer Act (Regulation years— the electronic deposit and transfer of funds, com m only you w ill not receive a payment stub with federal recurring payments. E), as well as National Automated Clearing House Association W ith this in mind, your neighborhood financial institution has With Direct Deposit, your funds are available for use the m orn known as Direct Deposit. ing of the payment date. If you go to your bank and deposit your (NACHA) guidelines. Under these regulations and guidelines, your financial institu check in person, you m ight not have access to your funds until the tion agrees to rectify any problem and make your funds available that is reliable, simple and convenient. With this system, you del next day or longer. In addition, the confidentiality of your payment is w ithin one day once it has been established an error has occurred. egate the task of depositing certain payments into a designated maintained when Direct Deposit is used because fewer people are Many financial institutions w ill also help customers resolve prob account at your local financial institution. Your money is then elec involved in the process of depositing your money. Finally, there is lems that result from a bank error, such as bounced checks, by noti tronically deposited into that account on the day of payment and is no charge for Direct Deposit. fying the business where the transaction occurred. Direct Deposit offers consumers a money-management tool Your financial institution must investigate the error and quickly available for your use that day. What payments are best suited to Direct Deposit? What makes the system work is consistent, tim ely execution. Any ongoing, regularly scheduled payment is a good candidate Your financial institution takes great care in handling your account, and consumer safeguards exist to ensure accuracy. More than 30 m illion people trust their funds to Direct Deposit. To begin your Direct Deposit service, contact your financial institution. , (for Direct Deposit. Many government payments qualify, and many employers offer it as an option for payroll checks. Listed below are ' just a few of the payments available through Direct Deposit: report the results to you. Once the investigation confirm s an error did occur, your financial institution w ill rectify the situation immediately. If the investigation indicates an error did not occur, the finan cial institution must deliver to you a written explanation of its findings within three days after concluding its investigation. You may also request copies of the documentation or information used in the investigation. Company Payroll If the financial institution is unable to determine whether an Dividend or Interest error occurred, or if there is a dispute concerning the error, addi Federal Salary tional procedures exist to resolve the problem. For more information Social Security concerning these procedures, contact the Consumer Affairs Division Civil Service Retirement at your Federal Reserve Bank. Veterans Affairs Compensation Railroad Retirement How do I begin Direct Deposit? Inquire at your financial institution for information on begin Can I use Direct Deposit to have money withdrawn from my account? In addition to receiving payments into your account through Direct Deposit, you can electronically withdraw money from your ning Direct Deposit. A member of the staff w ill be able to answer any account to pay your bills. By authorizing a withdrawal for a specific questions you may have about Direct Deposit and w ill help you be amount at a predetermined date each month, you can pay your bills gin your service. In the case of company payroll payments, ask your without having to write and mail checks. The automated bill payment personnel or payroll department for information. method saves you time, saves you money on postage costs and ensures prompt payment of bills.
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