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Federal R eserve Bank OF DALLAS WILLIAM H. WALLACE DALLAS, TEXAS 75222 FIR S T V ICE P R E S ID E N T January 22, 1985 Circular 85-10 TO: The Chief Executive Officer of all member banks and others concerned in the Eleventh Federal Reserve District SUBJECT Regulation E — Electronic Fund Transfers DETAILS The Board of Governors of the Federal Reserve System has issued a revised Regulation E pamphlet as amended effective April 16, 1985. The enclosed pamphlet should be filed in Volume 2 of your Regulations Binders. The pamphlet and the amendments slip sheet dated May 20, 1980, and December 1982, respectively, should be removed. ATTACHMENTS The new Regulation E pamphlet is attached. MORE INFORMATION For more information, please contact Bank's Legal Department at (214) 651-6228. this Sincerely yours, This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). Board of Governors of the Federal Reserve System Regulation E Electronic Fund Transfers 12 CFR 205; as amended effective April 16, 1985 Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the District in which the inquiry arises. December 1984 Contents Page Section 205.1—Authority, purpose, and scope ...................................................... 1 (a) Authority ..................................... 1 (b) Purpose and sc o p e ....................... 1 Section 205.2—Definitions and rules of construction............................ ................ 1 Section 205.3—Exemptions...................... 2 (a) Check guarantee or authorization services.......................................... 2 (b) Wire transfers............................... 2 (c) Certain securities or commodities transfers.......................................... 2 (d) Certain automatic transfers......... 2 (e) Certain telephone-initiated transfers.......................................... 3 (f) Trust accounts ............................. 3 (g) Preauthorized transfers to small financial institutions...................... 3 Section 205.4— Special requirements........ 3 (a) Services offered by two or more financial institutions...................... 3 (b) Multiple accounts and account holders............................................ 3 (c) Additional information; disclosures required by other laws. 3 Section 205.5—Issuance of access devices. 3 (a) General r u l e ................................. 3 (b) Exception ..................................... 3 (c) Relation to truth in lending......... 4 Section 205.6—Liability of consumer for unauthorized transfers.......................... 4 (a) General r u l e ................................. 4 (b) Limitations on amount of liability. 4 (c) Notice to financial institu tio n ---- 5 (d) Relation to truth in lending.......... 5 Section 205.7—Initial disclosure of terms and conditions........................................ 5 (a) Content of disclosures.................. 5 (b) Timing of disclosures for accounts in existence on May 10, 1980........ 6 Section 205.8—Change in terms; errorresolution n o tic e.................................... 6 (a) Change in te rm s ............................ 6 (b) Error-resolution notice.................. 7 Page Section 205.9—Documentation of transfers.................................................. 7 (a) Receipts at electronic terminals. . . 7 (b) Periodic statements .................... 8 (c) Documentation of certain passbook acco un ts....................... 8 (d) Periodic statements for certain nonpassbook accounts................. 9 (e) Use of abbreviations.................... 9 (f) Receipt requirements for certain cash-dispensing term in als........... 9 (g) Delayed effective date for certain periodic-statement requirements .. 9 (h) Periodic statements for certain intra-institutional tra n sfe rs......... 9 (i) Documentation for foreigninitiated transfers......................... 9 Section 205.10—Preauthorized transfers . 9 (a) Preauthorized transfers to a consumer’s a c c o u n t.................... 9 (b) Preauthorized transfers from a consumer’s account; written authorization................................ 10 (c) Consumer’s right to stop payment 10 (d) Notice of transfers varying in amount ........................................ 10 Section 205.11—Procedures for resolving e rro rs ...................................................... 10 (a) Definition of error........................ 10 (b) Notice of error from consumer . . . 10 (c) Investigation of e rro rs ................ 10 (d) Extent of required investigation .. 10 (e) Procedures after financial institution determines that error occurred ...................................... 10 (f) Procedures after financial institution determines that no error occurred.............................. 10 (g) Withdrawal of notice of error . . . . 13 (h) Reassertion of e r r o r .................... 13 (i) Relation to truth in lending........ 13 Section 205.12—Relation to state law --13 (a) Preemption of inconsistent state laws ............................................... 13 (b) Standards for preemption .......... 13 (c) Procedures for preemption ........ 13 Contents Page (d) Exemption for state-regulated transfers.......................................... 13 Section 205.13—Administrative enforcement............................................ 14 (a) Enforcement by federal agencies .. 14 (b) Issuance of staff interpretations . . . 14 (c) Record retention............................ 14 Section 205.14— Services offered by financial institutions not holding consumer’s account................................ 15 Page (a) Compliance by service-providing institution...................................... 15 (b) Compliance by account-holding institution...................................... (c) Definition of agreem ent................ 15 Appendix A—Model disclosure clauses .. 16 Appendix B—Federal enforcement agencies.................................................. 19 Electronic Fund Transfer A c t .................. 21 Regulation E Electronic Fund Transfers 12 CFR 205; effective March 30, 1979; as amended effective April 16,1985 SECTION 205.1—Authority, Purpose, and Scope (a) Authority. This regulation, issued by the Board of Governors of the Federal Reserve System, implements title IX (Electronic Fund Transfer Act) of the Consumer Credit Protection Act, as amended (15 USC 1601 et seq.). Information-collection requirements contained in this regulation have been ap proved by the Office of Management and Bud get under the provisions of 44 USC 3501 et seq. and have been assigned OMB No. 71000200. (b) Purpose and scope. In November 1978, the Congress enacted the Electronic Fund Transfer Act. The Congress found that the use of electronic systems to transfer funds provides the potential for substantial benefits to consumers, but that the unique characteris tics of these systems make the application of existing consumer protection laws unclear, leaving the rights and liabilities of users of electronic fund transfer systems undefined. The act establishes the basic rights, liabilities, and responsibilities of consumers who use electronic money transfer services and of fi nancial institutions that offer these services. This regulation is intended to carry out the purposes of the act, including, primarily, the protection of individual consumers engaging in electronic transfers. Except as otherwise provided, this regulation applies to all persons who are financial institutions as defined in sec tion 205.2 (i). SECTION 205.2—Definitions and Rules of Construction For the purposes of this regulation, the fol lowing definitions and rules of construction apply, unless the context indicates otherwise: (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 for the pur pose of initiating electronic fund transfers; (2) An access device becomes an “accepted access device ” when the consumer to whom the access device was issued; (i) Requests and receives, or signs, or uses, or authorizes another to use, the ac cess device for the purpose of transferring money between accounts or obtaining money, property, labor, or services; (ii) Requests validation of an access de vice issued on an unsolicited basis; or (iii) Receives an access device issued in renewal of, or in substitution for, an ac cepted access device, whether such access device is issued by the initial financial in stitution or a successor. (b) “Account” means a demand deposit (checking), savings, or other consumer asset account (other than an occasional or inciden tal credit balance in a credit plan) held either directly or indirectly by a financial institution and established primarily for personal, family, or household purposes. (c) “A ct” means the Electronic Fund Trans fer Act (title IX of the Consumer Credit Pro tection Act, 15 USC 1601 et seq.). (d) Business day ” means any day on which the offices of the consumer’s financial institu tion are open to the public for carrying on substantially all business functions. (e) “Consumer” means a natural person. (f) “< redit” means the right granted by a fi C nancial institution to a consumer to defer pay ment of debt, incur debt and defer its pay ment, or purchase property or services and defer payment therefor. (g) “Electronic fu n d transfer” means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an elec tronic terminal, telephone, or computer or 1 § 205.2 magnetic tape for the purpose of ordering, in structing, or authorizing a financial institution to debit or credit an account. The term in cludes, but is not limited to, point-of-sale transfers, automated teller machine transfers, direct deposits or withdrawals of funds, and transfers initiated by telephone. It includes all transfers resulting from debit card transac tions, including those that do not involve an electronic terminal at the time of the transac tion. The term does not include payments made by check, draft, or similar paper instru ment at an electronic terminal. (h) “Electronic terminal” means an electron ic 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 state or national bank, a state or federal savings and loan association, a state or federal mutual sav ings bank, a state or federal credit union, or any other person who, directly or indirectly, holds an account belonging to a consumer. The term also includes any person who issues an access device and agrees with a consumer to provide electronic fund transfer services. (j) “Preauthorized electronic fu n d transfer” means an electronic fund transfer authorized in advance to recur at substantially regular intervals. (k) “ 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 any of the above. (/) “Unauthorized electronic fu n d transfer” means an electronic fund transfer from a con sumer’s account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the con sumer receives no benefit. The term does not include any electronic fund transfer (1) initia ted by a person who was furnished with the access device to the consumer’s account by the consumer, unless the consumer has noti fied the financial institution involved that transfers by that person are no longer autho2 Regulation E rized, (2) initiated with fraudulent intent by the consumer or any person acting in concert with the consumer, or (3) that is initiated by the financial institution or its employee. (m) Footnotes have the same legal effect as the text of the regulation. SECTION 205.3—Exemptions The act and this regulation do not apply to the following: (a) Check guarantee or authorization services. Any service that guarantees payment or au thorizes acceptance of a check, draft, or simi lar paper instrument and that does not direct ly result in a debit or credit to a consumer’s account. (b) Wire transfers. Any wire transfer of funds for a consumer through the Federal Re serve Communications System or other simi lar network that is used primarily for transfers between financial institutions or between businesses. (c) Certain securities or commodities trans fers. Any transfer the primary purpose of which is the purchase or sale of securities or commodities regulated by the Securities and Exchange Commission or the Commodity Fu tures Trading Commission. (d) Certain automatic transfers. Any transfer 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: (1) Between a consumer’s accounts within the financial institution, such as a transfer from a checking account to a savings account; (2) Into a consumer’s account by the fi nancial institution, such as the crediting of interest to a savings account;Ia (3) From a consumer’s account to an la The financial institution remains subject to section 913 of the act regarding compulsory use of electronic fund transfers. A financial institution may, however, require the automatic repayment of credit that is extended under an overdraft credit plan or that is extended to maintain a spec ified minimum balance in the consum er’s account. Finan cial institutions also remain subject to sections 915 and 916 regarding civil and criminal liability. Regulation E account of the financial institution, such as a loan payment;1 or 3 (4) From a consumer’s account to an ac count of another consumer, within the fi nancial institution, who is a member of the transferor’s family. (e) Certain telephone-initiated transfers. Any transfer of funds that (1) is initiated by a tele phone conversation between a consumer and an officer or employee of a financial institution and (2) is not under a telephone bill-payment or other prearranged plan or agreement in which periodic or recurring transfers are contemplated. (f) Trust accounts. Any trust account held by a financial institution under a bona fide trust agreement. (g) Preauthorized transfers to small financial institutions. (1) Any preauthorized transfer to or from an account if the assets of the ac count-holding financial institution are $25 million or less on December 31. la (2) If the account-holding financial institu tion’s assets subsequently exceed $25 mil lion, the institution’s exemption for this class of transfers shall terminate one year from the end of the calendar year in which the assets exceed $25 million. SECTION 205.4— Special Requirements (a) Services offered by two or more financial institutions. Two or more financial institutions that jointly provide electronic fund transfer services may contract among themselves to comply with the requirements that this regu lation imposes on any or all of them. When making disclosures under sections 205.7 and 205.8, a financial institution that provides electronic fund transfer services under an agreement with other financial institutions need make only those disclosures which are within its knowledge and the purview of its relationship with the consumer for whom it holds an account. la The financial institution remains subject to section 913 of the act regarding compulsory use of electronic fund transfers. A financial institution may, however, require the autom atic repayment o f credit th at is extended under an overdraft credit plan or that is extended to maintain a spec ified minimum balance in the consumer’s account. Finan cial institutions also remain subject to sections 915 and 916 regarding civil and criminal liability. § 205.5 (b) Multiple accounts and account holders. (1) If a consumer holds two or more ac counts at a financial institution, the institu tion may combine the disclosures required by the regulation into one statement (for example, the financial institution may mail or deliver a single periodic statement or an nual error resolution notice to a consumer for multiple accounts held by that consum er at that institution). (2) If two or more consumers hold a joint account from or to which electronic fund transfers can be made, the financial institu tion need provide only one set of the disclo sures required by the regulation for each account. (c) Additional information; disclosures re quired by other laws. At the financial institu tion’s option, additional information or disclo sures required by other laws (for example, Truth in Lending disclosures) may be com bined with the disclosures required by this regulation. SECTION 205.5— Issuance of Access Devices (a) General rule. A financial institution may issue an access device to a consumer only: (1) In response to an oral or written re quest or application for the device;16 or (2) As a renewal of, or in substitution for, an accepted access device, whether issued by the initial financial institution or a successor. (3) As a renewal of, or in substitution for, an access device issued before February 8, 1979 (other than an accepted access device, which can be renewed or substituted under paragraph (a)(2 ) of this section), provided that the disclosures set forth in sections 205.7(a)(1), (2), and (3) accompany the renewal or substitute device; except that for a renewal or substitution that occurs before July 1, 1979, the disclosures may be sent within a reasonable time after the renewal or substitute device is issued. (b) Exception. Notwithstanding the provi sions of paragraph (a)(1 ) of this section, a lb In the case o f a joint account, a financial institution may issue an access device to each account holder for whom the requesting holder specifically requests an access device. 3 § 205.5 financial institution may distribute an access device to a consumer on an unsolicited basis if: (1) The access device is not validated; (2) The distribution is accompanied by a complete disclosure, in accordance with section 205.7(a), of the consumer’s rights and liabilities that will apply if the access device is validated; (3) The distribution is accompanied by a clear explanation that the access device is not validated and how the consumer may dispose of the access device if validation is not desired; and (4) The access device is validated only in response to the consumer’s oral or written request or application for validation and af ter verification of the consumer’s identity by any reasonable means, such as by photo graph, fingerprint, personal visit, or signa ture comparison. An access device is considered validated when a financial institution has performed all procedures necessary to enable a consumer to use it to initiate an electronic fund transfer. (c) Relation to Truth in Lending. (1) The act and this regulation govern: (i) Issuance of access devices; (ii) Addition to an accepted credit card, as defined in 12 CFR 226.12(a)(2), foot note 21 (Regulation Z), of the capability to initiate electronic fund transfers; and (iii) Issuance of access devices that per mit credit extensions only under a preex isting agreement between a consumer and a financial institution to extend the credit when the consumer’s account is over drawn or to maintain a specified mini mum balance in the consumer’s account. (2) The Truth in Lending Act (15 USC 1601 et seq.) and 12 CFR Part 226 (Regu lation Z), which prohibit the unsolicited is suance of credit cards, govern (i) Issuance of credit cards as defined in 12 CFR 226.2(a) (15); (ii) Addition of a credit feature to an ac cepted access device; and (iii) Issuance of credit cards that are also access devices, except as provided in paragraph (c)(1 ) (iii) of this section. Regulation E SECTION 205.6— Liability of Consumer for Unauthorized Transfers (a) General rule. A consumer is liable, within the limitations described in paragraph (b) of this section, for unauthorized electronic fund transfers involving the consumer’s account only if: (1) The access device used for the unau thorized transfers is an accepted access device; (2) The financial institution has provided a means (such as by signature, photograph, fingerprint, or electronic or mechanical confirmation) to identify the consumer to whom the access device was issued; and (3) The financial institution has provided the following information, in writing, to the consumer: (i) A summary of the consumer’s liabili ty under this section, or under other ap plicable law or agreement, for unautho rized electronic fund transfers and, at the financial institution’s option, notice of the advisability of promptly reporting loss or theft of the access device or unau thorized transfers. (ii) The telephone number and address of the person or office to be notified in the event the consumer believes that an un authorized electronic fund transfer has been or may be made. (iii) The financial institution’s business days, as determined under section 205.2 (d), unless applicable state law or an agreement between the consumer and the financial institution sets a liability limit not greater than $50. (b) Limitations on amount o f liability. The amount of a consumer’s liability for an unau thorized electronic fund transfer or a series of related unauthorized transfers shall not ex ceed $50 or the amount of unauthorized transfers that occur before notice to the finan cial institution under paragraph (c) of this section, whichever is less, unless one or both of the following exceptions apply: (1) If the consumer fails to notify the fi nancial institution within two business days after learning of the loss or theft of the ac cess device, the consumer’s liability shall not exceed the lesser of $500 or the sum of Regulation E (i) $50 or the amount of unauthorized electronic fund transfers that occur be fore the close of the two business days, whichever is less, and (ii) The amount of unauthorized elec tronic fund transfers that the financial in stitution establishes would not have oc curred but for the failure of the consumer to notify the institution within two busi ness days after the consumer learns of the loss or theft of the access device, and that occur after the close of two busi ness days and before notice to the finan cial institution. (2) If the consumer fails to report within 60 days of transmittal of the periodic state ment any unauthorized electronic fund transfer that appears on the statement, the consumer’s liability shall not exceed the sum of (i) The lesser of $50 or the amount of unauthorized electronic fund transfers that appear on the periodic statement or that occur during the 60-day period, and (ii) The amount of unauthorized elec tronic fund transfers that occur after the close of the 60 days and before notice to the financial institution and that the fi nancial institution establishes would not have occurred but for the failure of the consumer to notify the financial institu tion within that time. (3) Paragraphs (b )(1 ) and (2) of this sec tion may both apply in some circumstances. Paragraph (b)(1 ) shall determine the con sumer’s liability for any unauthorized transfers that appear on the periodic state ment and occur before the close of the 60day period, and paragraph (b) (2) (ii) shall determine liability for transfers that occur after the close of the 60-day period. (4) If a delay in notifying the financial in stitution was due to extenuating circum stances, such as extended travel or hospital ization, the time periods specified above shall be extended to a reasonable time. (5) If applicable state law or an agreement between the consumer and financial institu tion imposes lesser liability than that pro vided in paragraph (b) of this section, the consumer’s liability shall not exceed that imposed under that law or agreement. § 205.7 (c) Notice to financial institution. For pur poses of this section, notice to a financial insti tution is given when a consumer takes such steps as are reasonably necessary to provide the financial institution with the pertinent information, whether or not any particular of ficer, employee, or agent of the financial insti tution does in fact receive the information. Notice may be given to the financial institu tion, at the consumer’s option, in person, by telephone, or in writing. Notice in writing is considered given at the time the consumer de posits the notice in the mail or delivers the notice for transmission by any other usual means to the financial institution. Notice is also considered given when the financial insti tution becomes aware of circumstances that lead to the reasonable belief that an unautho rized electronic fund transfer involving the consumer’s account has been or may be made. (d) Relation to Truth in Lending. (1) A con sumer’s liability for an unauthorized elec tronic fund transfer shall be determined solely in accordance with this section if the electronic fund transfer (i) Was initiated by use of an access de vice that is also a credit card as defined in 12 CFR 226.2(a)(15), or (ii) Involves an extension of credit un der an agreement between a consumer and a financial institution to extend the credit when the consumer’s account is overdrawn or to maintain a specified minimum balance in the consumer’s account. (2) A consumer’s liability for unautho rized use of a credit card that is also an access device but that does not involve an electronic fund transfer shall be determined solely in accordance with the Truth in Lending Act and 12 CFR 226 (Regula tion Z). SECTION 205.7—Initial Disclosure of Terms and Conditions (a) Content o f disclosures. At the time a con sumer contracts for an electronic fund trans fer service or before the first electronic fund transfer is made involving a consumer’s ac count, a financial institution shall disclose to 5 § 205.7 the consumer, in a readily understandable written statement that the consumer may re tain, the following terms and conditions of the electronic fund transfer service, as applicable: (1) A summary of the consumer’s liability under section 205.6, or other applicable law or agreement, for unauthorized electronic fund transfers and, at the financial institu tion’s option, the advisability of promptly reporting loss or theft of the access device or unauthorized transfers. (2) 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) The financial institution’s business days, as determined under section 205.2(d). (4) The type of electronic fund transfers that the consumer may make and any limi tations on the frequency and dollar amount of transfers. The details of the limitations need not be disclosed if their confidentiality is essential to maintain the security of the electronic fund transfer system. (5) Any charges for electronic fund trans fers or for the right to make transfers. (6) A summary of the consumer’s right to receive documentation of electronic fund transfers, as provided in sections 205.9, 205.10(a), and 205.10(d). (7) A summary of the consumer’s right to stop payment of a preauthorized electronic fund transfer and the procedure for initiat ing a stop-payment order, as provided in section 205.10(c). (8) A summary of the financial institu tion’s liability to the consumer for its failure to make or to stop certain transfers under section 910 of the act. (9) The circumstances under which the fi nancial institution in the ordinary course of business will disclose information to third parties concerning the consumer’s account. (10) A notice that is substantially similar to the following notice concerning error res olution procedures and the consumer’s rights under them: In Case of Errors or Questions About Your Electronic Transfers Telephone us at [insert telephone number] or Regulation E Write us at [insert address] as soon as you can, if you think your statement or receipt is wrong or if you need more informa tion about a transfer listed on the statement or receipt. We must hear from you no later than 60 days after we sent the FIRST statement on which the problem or error appeared. (1) Tell us your name and account number (if any). (2) Describe the error or the transfer you are unsure about, and explain as clearly as you can why you believe it is an error or why you need more information. (3) Tell us the dollar amount of the suspected error. If you tell us orally, we may require that you send us your complaint or question in writing within 10 business days. We will tell you the results of our investigation within 10 business days after we hear from you and will correct any error promptly. If we need more time, however, we may take up to 45 days to investigate your complaint or question. If we decide to do this, we will recredit your account within 10 business days for the amount you think is in error, so that you will have the use of the money during the time it takes us to complete our investigation. If we ask you to put your com plaint or question in writing and we do not recieve it within 10 business days, we may not re credit your account. If we decide that there was no error, we will send you a written explanation within three busi ness days after we finish our investigation. You may ask for copies of the documents that we used in our investigation. (b) Timing o f disclosures fo r accounts in exis tence on May 10, 1980. A financial institution shall mail or deliver to the consumer the in formation required by paragraph (a) of this section on or before June 9, 1980, or with the first periodic statement required by section 205.9(b) after May 10, 1980, whichever is earlier, for any account that is open on May 10, 1980, and (1) From or to which electronic fund transfers were made prior to May 10, 1980; (2) With respect to which a contract for such transfers was entered into between a consumer and a financial institution; or (3) For which an access device was issued to a consumer. SE C T IO N 205.8— C hange in Terms; Error-R esolution N otice (a) Change in terms. A financial institution Regulation E 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 re quired to be disclosed under section 205.7(a) if the change would result in increased fees or charges, increased liability for the consumer, fewer types of available electronic fund trans fers, or stricter limitations on the frequency or dollar amounts of transfers. Prior notice need not be given where an immediate change in terms or conditions is necessary to maintain or restore the security of an electronic fund transfer system or account. However, if such a change is to be made permanent, the financial institution shall provide written notice of the change to the consumer on or with the next regularly scheduled periodic statement or within 30 days, unless disclosure would jeop ardize the security of the system or account. § 205.9 SECTION 205.9—Documentation of Transfers (a) Receipts at electronic terminals. At the time an electronic fund transfer is initiated at an electronic terminal by a consumer, the fi nancial institution shall make available2 to the consumer a written receipt of the trans fe rs ) that clearly sets forth the following in formation, as applicable: (1) The amount of the transfer. A charge for the transfer may be included in this amount if the terminal is owned or operated by a person other than the financial institu tion holding the consumer’s account, pro vided the amount of the charge is disclosed on the receipt and on a sign posted on or at the terminal. (2) The calendar date the consumer initia ted the transfer. (b) Error-resolution notice. For each account (3) The type of transfer and the type of the from or to which electronic fund transfers can consumer’s account(s)3 to or from which be made, a financial institution shall mail or funds are transferred, such as “withdrawal deliver to the consumer, at least once each from checking,” “transfer from savings to calendar year, the notice set forth in section checking,” or “payment from savings.” 205.7(a) (10). Alternatively, a financial insti These descriptions may be used for trans tution may mail or deliver a notice that is sub fers to or from accounts that are similar in stantially similar to the following notice on or function to checking accounts (such as with each periodic statement required by sec share draft or negotiable order of withdraw tion 205.9(b): al accounts) or to savings accounts (such as share accounts). Codes may be used only In Case of Errors or Questions About Your if they are explained elsewhere on the Electronic Transfers receipt. Telephone us at [insert telephone number] (4) A number or code that uniquely iden or tifies the consumer initiating the transfer, Write us at [insert address] the consumer’s account(s), or the access as soon as you can, if you think your statement or device used to initiate the transfer. receipt is wrong or if you need more information (5) The location (in a form prescribed by about a transfer on the statement or receipt. We paragraph (b )(l)(iv ) of this section) of must hear from you no later than 60 days after we the terminal at which the transfer was ini sent you the FIRST statement on which the error or problem appeared. tiated or an identification (such as a code or (1) Tell us your name and account number (if terminal number). any). (6) The name of any third party to or from (2) Describe the error or the transfer you are whom funds are transferred; a code may be unsure about, and explain as clearly as you can why you believe there is an error or why you need more used only if it is explained elsewhere on the information. (3) Tell us the dollar amount of the suspected error. We will investigate your complaint and will cor rect any error promptly. If we take more than 10 business days to do this, we will recredit your ac count for the amount you think is in error, so that you will have use of the money during the time it takes us to complete our investigation. 2 A financial institution may arrange for a third party, such as a m erchant, to make the receipt available. 3 If more than one account o f the same type may be accessed by a single access device, the accounts m ust be uniquely identified unless the terminal is incapable of such identification and was purchased or ordered by the finan cial institution prior to February 6, 1980. The type of ac count need not be identified if the access device may access only one account at that terminal. 7 § 205.9 receipt. This requirement does not apply if the name is provided by the consumer in a form that the electronic terminal cannot duplicate on the receipt. Regulation E (B) A generally accepted name for a specific location (such as a branch of the financial institution, a shopping center, or an airport), city, and state or foreign country;6 or (C) The name of the entity at whose place of business the terminal is locat ed or which owns or operates the terminal (such as the financialinstitution7 or the seller of goods or services), city, and state or foreign country.8 (v) The name of any third party to or from whom funds were transferred.9 (2) The number(s) of the consumer’s ac count (s) for which the statement is issued. (3) The amount of any fees or charges, other than a finance charge under 12 CFR 226.7(f), assessed against the account dur ing the statement period for electronic fund transfers or the right to make such trans fers, or for account maintenance. (4) The balances in the consumer’s ac count (s) at the beginning and at the close of the statement period. (5) The address and telephone number to be used for inquiry or notice of errors, pre ceded by “Direct Inquiries To:” or similar language. Alternatively, the address and telephone number may be provided on the notice of error-resolution procedures set forth in section 205.8(b). (6) If the financial institution uses the notice procedure set forth in section 205.10(a)(1) (iii), the telephone number the consumer may call to ascertain whether a preauthorized transfer to the consumer’s account has occurred. (b) Periodic statements. For any account to or from which electronic fund transfers can be made, the financial institution shall mail or deliver a statement for each monthly or short er cycle in which an electronic fund transfer has occurred, but at least a quarterly state ment if no transfer has occurred. The state ment shall include the following, as applicable: (1) For each electronic fund transfer oc curring during the cycle,4 (i) The amount of the transfer. If a transfer charge was added at the time of initiation by the owner or operator of an electronic terminal in accordance with paragraph (a)(1 ) of this section, that charge may be included in 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 the type of the consumer’s account(s) to or from which funds were transferred. (iv) For each transfer initiated by the consumer at an electronic terminal,43 the location that appeared on the receipt or, if an identification (such as a code or ter minal number) was used, that identifica tion and one of the following descriptions of the terminal’s location: (A ) The address, including number and street (the number may be omit ted if the street alone uniquely identi fies the terminal location) or intersec (c) Documentation fo r certain passbook ac tion, city, and state or foreign counts. In the case of a consumer’s passbook account which may not be accessed by any country;5 electronic fund transfers other than preau thorized transfers to the account,9a the finan 4 The information required by paragraph (b ) (1 ) o f this section may be provided on accompanying documents. Codes explained on the statem ent o r on accompanying doc uments are acceptable. 4aA financial institution need not identify the terminal location for deposits of cash, checks, drafts, or similar pa per instruments at electronic terminals. 5 The city and state may be omitted if all the terminals owned or operated by the financial institution providing the statement (or by the system in which it participates) are located in the same city. The state may be omitted if all the terminals owned or operated by the financial institution providing the statem ent (or by the system in which it par ticipates) are located in that state. The state may also be omitted for transfers occurring at terminals within 50 miles of the financial institution’s main office. 6 See footnote 5. 7 If the financial institution providing the statem ent owns or operates terminals at more than one location, it shall describe the location of its electronic terminals by use of paragraphs ( b ) ( l ) ( i v ) ( A ) or (B ) of this section. 8 See footnote 5. 9 A financial institution need not identify third parties whose names appear on checks, drafts, or similar paper instrum ents deposited to the consum er’s account at an elec tronic terminal. 9a A ccounts that also are accessible by the intra-institutional transfers described in paragraph (h ) of this section may continue to be documented in accordance with para graph (c) or (d ) of this section. Regulation E cial institution may, in lieu of complying with paragraph (b) of this section, upon presenta tion of the consumer’s passbook, provide the consumer with documentation by entering in the passbook or on a separate document the amount and date of each electronic fund transfer made since the passbook was last presented. (d) Periodic statements fo r certain non-pass book accounts. If a consumer’s account other than a passbook account may not be accessed by any electronic fund transfers other than preauthorized transfers to the account,93 the financial institution need provide the periodic statement required by paragraph (b) of this section only quarterly. (e) Use o f abbreviations. A financial institu tion may use commonly accepted or readily understandable abbreviations in complying with the documentation requirements of this section. ( 0 Receipt requirements fo r certain cash-dis pensing terminals. The failure of a financial institution to comply with the requirement of paragraph (a) of this section that a receipt be made available to the consumer at the time an electronic fund transfer is initiated at an elec tronic terminal shall not constitute a violation of the act or this regulation, provided— (1) The transfer occurs at an electronic terminal that— (i) Does not permit transfers other than cash withdrawals by the consumer, (ii) Cannot make a receipt available to the consumer at the time the transfer is ^ initiated, (iii) Cannot be modified to provide a re ceipt at that time, and (iv) Was purchased or ordered by the fi nancial institution prior to February 6, 1980; and (2) The financial institution mails or deliv ers a written receipt to the consumer that complies with the other requirements of paragraph (a) of this section on the next business day following the transfer. 9a A ccounts th at also are accessible by the intra-institutional transfers described in paragraph (h ) o f this section may continue to be documented in accordance with para graph (c) or (d ) o f this section. §205.10 (g) Delayed effective date fo r certain periodic statement requirements. The failure of a finan cial institution to describe an electronic fund transfer in accordance with the requirements of paragraphs (b)(1 ) (iv) and (v) of this sec tion shall not constitute a violation of the act or this regulation unless the transfer occurs on or after August 10, 1980, if, when a transfer involves a payment to another person, the fi nancial institution, upon the consumer’s re quest and without charge, promptly provides the consumer with proof that such a payment was made. (h) Periodic statements fo r certain intra-institutional transfers. A financial institution need not provide the periodic statement required by paragraph (b) of this section for an account accessed only by electronic fund transfers ini tiated by the consumer to or from another ac count of the consumer for which the financial institution documents transfers in compliance with paragraph (b) of this section. (i) Documentation fo r foreign-initiated trans fers. Failure to provide the terminal receipt and periodic statement required by para graphs (a) and (b) of this section for a partic ular electronic fund transfer shall not be deemed a failure to comply with this regula tion, if— (1) the transfer is not initiated in a state as defined in section 205.2(k); and (2) in accordance with section 205.11, the financial institution treats an inquiry for clarification or documentation as a notice of error and corrects the error. SECTION 205.10—Preauthorized Transfers (a) Preauthorized transfers to a consumer's account. (1) Where a consumer’s account is scheduled to be credited by a preauthorized electronic fund transfer from the same pay or at least once every 60 days, except where the payor provides positive notice to the consumer that the transfer has been initiat ed, the financial institution shall provide notice by one of the following means: (i) The institution shall transmit oral or written notice to the consumer, within §205.10 two business days after the transfer, that the transfer occurred; (ii) The institution shall transmit oral or written notice to the consumer, within two business days after the date on which the transfer was scheduled to occur, that the transfer did not occur; or (iii) The institution shall provide a read ily available telephone line that the con sumer may call to ascertain whether or not the transfer occurred, and shall dis close the telephone number on the initial disclosures required by section 205.7 and on each periodic statement. (2) 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 day the funds for the transfer are received. (b) Preauthorized transfers from a consum er's account; written authorization. Pre authorized electronic fund transfers from a consumer’s account may be authorized by the consumer only in writing, and a copy of the authorization shall be provided to the con sumer by the party that obtains the authoriza tion from the consumer. (c) Consumer’ right to stop payment. A con s sumer may stop payment of a preauthorized electronic fund transfer from the consumer’s account by notifying the financial institution orally or in writing at any time up to three business days before the scheduled date of the transfer. The financial institution may require written confirmation of the stop-payment or der to be made within 14 days of an oral noti fication if, when the oral notification is made, the requirement is disclosed to the consumer together with the address to which confirma tion should be sent. If written confirmation has been required by the financial institution, the oral stop-payment order shall cease to be binding 14 days after it has been made. (d) Notice o f transfers varying in amount. Where a preauthorized electronic fund trans fer from the consumer’s account varies in amount from the previous transfer relating to the same authorization, or the preauthorized amount, the financial institution or the desig nated payee shall mail or deliver, at least 10 days before the scheduled transfer date, a 10 Regulation E written notice of the amount and scheduled date of the transfer. If the financial institution or designated payee informs the consumer of the right to receive notice of all varying trans fers, the consumer may elect to receive notice only when a transfer does not fall within a specified range of amounts or, alternatively, only when a transfer differs from the most re cent transfer by more than an agreed-upon amount. SECTION 205.11—Procedures for Resolving Errors (a) Definition o f error. For purposes of this section, the term “error” means: (1) An unauthorized electronic fund transfer; (2) An incorrect electronic fund transfer to or from the consumer’s account; (3) The omission from a periodic state ment of an electronic fund transfer to or from the consumer’s account that should have been included; (4) A computational or bookkeeping error made by the financial institution relating to an electronic fund transfer; (5) The consumer’s receipt of an incorrect amount of money from an electronic terminal; (6) An electronic fund transfer not identi fied in accordance with the requirements of sections 205.9 or 205.10(a); or (7) A consumer’s request for any docu mentation required by sections 205.9 or 205.10(a), or for additional information or clarification concerning an electronic fund transfer. This includes any request for doc umentation, information, or clarification in order to assert an error within the meaning of paragraphs (a )(1 ) through (6) of this section. It does not include a routine in quiry about the balance in the consumer’s account or a request for duplicate copies of documentation or other information that is made only for tax or other record-keeping purposes. (b) Notice o f error from consumer. (1) A no tice of an error is an oral or written notice from the consumer that— (i) Is received by the financial Regulation E institution10 no later than 60 days after the institution— (A) Transmitted a periodic statement or provided documentation under sec tion 205.9(c) on which the alleged er ror is first reflected; or (B) Transmitted additional informa tion, clarification, or documentation described in paragraph (a )(7 ) of this section that was initially requested in accordance with paragraph (b) (1) (i) (A) of this section; (ii) Enables the financial institution to identify the consumer’s name and ac count number; and (iii) Except for errors described in para graph (a)(7 ) of this section, indicates the consumer’s belief, and the reasons for that belief, that an error exists in the con sumer’s account or is reflected on docu mentation required by sections 205.9 or 205.10(a), and indicates to the extent possible the type, the date, and the amount of the error. (2) A financial institution may require a written confirmation to be received within 10 business days of an oral notice if, when the oral notice is given, the consumer is ad vised of the requirement and of the address to which confirmation must be sent. (c) Investigation o f errors. (1) After receiv ing a notice of an error, the financial institu tion shall promptly investigate the alleged error, determine whether an error occurred, and transmit the results of its investigation and determination to the consumer within 10 business days. (2) As an alternative to the 10-businessday requirement of paragraph (c)(1 ) of this section, the financial institution shall investigate the alleged error and determine whether an error occurred, promptly but in no event later than 45 calendar days after receiving a notice of an error, and shall transmit the results of its investigation and determination to the consumer, provided— 10 A financial institution may require the consumer to give notice only at the telephone number or address dis closed by the institution, provided the institution maintains reasonable procedures to refer the consumer to the speci fied telephone number o r address if the consumer attem pts to give notice to the institution in a different manner. §205.11 (i) The financial institution provisional ly recredits the consumer’s account in the amount of the alleged error (including interest where applicable) within 10 busi ness days after receiving the notice of er ror. If the financial institution has a reasonable basis for believing that an un authorized electonic fund transfer may have occurred and that it has satisfied the requirements of section 205.6(a), it may withhold a maximum of $50 from the amount recredited; (ii) The financial institution, promptly but no later than two business days after the provisional recrediting, orally reports or mails or delivers notice to the consum er of the amount and date of the recredit ing and of the fact that the consumer will have full use of the funds pending the determination of whether an error occurred; (iii) The financial institution gives the consumer full use of the funds provision ally recredited during the investigation; and (iv) If the financial institution deter mines that no error occurred and debits the account, the institution gives notice of the debiting and continues to honor certain items as required by paragraph (f) (2) of this section. (3) A financial institution shall comply with all requirements of this section except that it need not provisionally recredit the consumer’s account if— (i) it requires but does not receive time ly written confirmation of oral notice of an error; or (ii) the notice of an error involves an ac count that is subject to the margin re quirements or other aspects of Regula tion T (12 CFR 220). (4) If a notice of an error involves an elec tronic fund transfer that was not initiated in a state as defined in section 205.2(k), or involves an electronic fund transfer result ing from a point-of-sale debit card transac tion, the applicable time periods for action in subsections (c), (e), and ( 0 shall be 20 business days in place of 10 business days, and 90 calendar days in place of 45 calen dar days. 11 §205.11 (d) Extent o f required investigation. (1) A fi nancial institution complies with its duty to investigate, correct, and report its determi nation regarding an error described in para graph (a)(7 ) of this section by transmitting the requested information, clarification, or documentation within the time limits set forth in paragraph (c) of this section. If the institution has provisionally recredited the consumer’s account in accordance with par agraph (c)(2) of this section, it may debit the amount upon transmitting the requested information, clarification, or documentation. (2) Except in the case of services covered by section 205.14, a financial institution’s review of its own records regarding an al leged error will satisfy its investigation re sponsibilities under paragraph (c) of this section if the alleged error concerns a trans fer to or from a third party and there is no agreement between the financial institution and the third party11 regarding the type of electronic fund transfer alleged in the error. (3) A financial institution may make, without investigation, a final correction to a consumer’s account in the amount or man ner alleged by the consumer to be in error, but must comply with all other applicable requirements of this section. (e) Procedure after financial institution deter mines that error occurred. If the financial insti tution determines that an error occurred, it shall— (1) Promptly, but no later than one busi ness day after its determination, correct the error (subject to the liability provisions of sections 205.6(a) and (b )), including, where applicable, the crediting of interest and the refunding of any fees or charges imposed, and (2) Promptly, but in any event within the 10-business-day or 45-day time limits, oral- Regulation E ly report or mail or deliver to the consumer notice of the correction and, if applicable, notice that a provisional credit has been made final.12 (f) Procedures after financial institution de termines that no error occurred. If the financial institution determines that no error occurred or that an error occurred in a different man ner or amount from that described by the consumer— (1) The financial institution shall mail or deliver to the consumer a written explana tion of its findings within 3 business days after concluding its investigation, but in no event later than 10 business days after re ceiving notice of the error if the institution is proceeding under paragraph (c)(1 ) of this section. The explanation shall include notice of the consumer’s right to request the documents upon which the institution re lied in making its determination. (2) Upon debiting a provisionally recredit ed amount, the financial institution— (i) Shall orally report or mail or deliver notice to the consumer of the date and amount of the debiting and the fact that the financial institution will honor checks, drafts, or similar paper instru ments payable to third parties and preau thorized transfers from the consumer’s account (using the provisionally recredit ed funds) for five business days after transmittal of the notice. (ii) Shall honor checks, drafts, or simi lar paper instruments payable to third parties and preauthorized transfer from the consumer’s account (without charge to the consumer as a result of an over draft) for five business days after trans mittal of the notice. The institution need only honor items that it would have paid if the provisionally recredited funds had not been debited. (3) Upon the consumer’s request, the fi nancial institution shall promptly mail or deliver to the consumer copies of the docu ments on which it relied in making its de termination. 11 Institutions do not have an agreement for purposes of paragraph (d ) (2 ) of this section solely because they partic ipate in transactions under the federal recurring payments program, or th at cleared through an autom ated or other clearing house or similar arrangem ent for the clearing and settlement of fund transfers generally, or because they 12 This notice requirement may be satisfied by a notice on agree to be bound by the rules o f such arrangements. An a periodic statement that is mailed or delivered within the agreement that a third party will honor an access device is 10-business-day or 45-day time limits and that clearly iden an agreement for purposes of this paragraph. tifies the correction to the consumer’s account. 12 Regulation E (g) Withdrawal o f notice o f error. The finan cial institution has no further error-resolution responsibilities as to a consumer’s assertion of an error if the consumer concludes that no error did in fact occur and voluntarily with draws the notice. (h) Reassertion o f error. A financial institu tion that has fully complied with the require ments of this section with respect to an error has no further responsibilities under this sec tion if the consumer subsequently reasserts the same error, regardless of the manner in which it is reasserted. This paragraph does not preclude the assertion of an error defined in paragraphs (a)(1) through (6) of this sec tion following the assertion of an error de scribed in paragraph (a) (7) of this section re garding the same electronic fund transfer. (i) Relation to Truth in Lending. Where an electronic fund transfer also involves an ex tension of credit under an agreement between a consumer and a financial institution to ex tend credit when the consumer’s account is overdrawn or to maintain a specified mini mum balance in the consumer’s account, the financial institution shall comply with the re quirements of this section rather than those of 12 CFR 226.13(a), (b), (c), (e), (0 , and (h). SECTION 205.12 Relation to State Law (a) Preemption o f inconsistent state laws. The Board shall determine, upon the request of any state, financial institution, or other inter ested party, whether the act and this regula tion preempt state laws relating to electronic fund transfers. Only those state laws that are inconsistent with the act and this regulation shall be preempted and then only to the extent of the inconsistency. A state law is not incon sistent with the act and this regulation if it is more protective of a consumer. (b) Standards fo r preemption. The following are examples of the standards the Board will apply in determining whether a state law, or a provision of that law, is inconsistent with the act and this regulation. Inconsistency may ex ist when state law— §205.12 (1) Requires or permits a practice or act prohibited by the act or this regulation; (2) Provides for consumer liability for un authorized electronic fund transfers which exceeds that imposed by the act and this regulation; (3) Provides for longer time periods than the act and this regulation for investigation and correction of errors alleged by a con sumer, or fails to provide for the recrediting of the consumer’s account during the insti tution’s investigation of errors as set forth in section 205.11(c); or (4) Provides for initial disclosures, period ic statements, or receipts that are different in content from that required by the act and this regulation except to the extent that the disclosures relate to rights granted to con sumers by the state law and not by the act or this regulation. (c) Procedures fo r preemption. Any request for a determination shall include the following: (1) A copy of the full text of the state law in question, including any regulatory imple mentation or judicial interpretation of that law; (2) A comparison of the provisions of state law with the corresponding provisions in the act and this regulation, together with a discussion of reasons why specific provi sions of state law are either consistent or inconsistent with corresponding sections of the act and this regulation; and (3) A comparison of the civil and criminal liability for violation of state law with the provisions of sections 915 and 916(a) of the act. (d) Exemption fo r state-regulated transfers. (1) Any state may apply to the Board for an exemption from the requirements of the act and the corresponding provisions of this regulation for any class of electronic fund transfers within the state. The Board will grant such an exemption if the Board deter mines that— (i) Under the law of the state that class of electronic fund transfers is subject to requirements substantially similar to those imposed by the act and the corre1 3 §205.12 sponding provisions of this regulation, and (ii) There is adequate provision for state enforcement. (2) To assure that the federal and state courts will continue to have concurrent ju risdiction, 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) After an exemption has been grant ed, for the purposes of section 915 of the act, the requirements of the applicable state law shall constitute the require ments of the act and this regulation, ex cept to the extent the state law imposes requirements not imposed by the act or this regulation. SECTION 205.13—Administrative Enforcement (a) Enforcement by federal agencies. (1) Ad ministrative enforcement of the act and this regulation for certain financial institutions is assigned to the Comptroller of the Cur rency, Board of Governors of the Federal Reserve System, Board of Directors of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board (acting directly or through the Federal Savings and Loan Insurance Corporation), National Credit Union Administration Board, Civil Aeronautics Board, and Securities and Ex change Commission. (2) Except to the extent that administra tive enforcement is specifically committed to other authorities, compliance with the requirements imposed under the act and this regulation is enforced by the Federal Trade Commission. (b) Issuance o f sta ff interpretations. (1) Un official staff interpretations are issued at the staff's discretion where the protection of section 915(d) of the act is neither request ed nor required, or where a rapid response is necessary. (2 )(i) Official staff interpretations are is sued at the discretion of designated offi cials. No interpretations will be issued 14 Regulation E approving financial institutions’ forms or statements. Any request for an official staff interpretation of this regulation shall be made in writing and addressed to the Director of the Division of Consumer and Community Affairs, Board of Gover nors of the Federal Reserve System, Washington, D.C. 20551. The request shall contain a complete statement of all relevant facts concerning the transfer or service, and shall include copies of all pertinent documents. (ii) Within five business days of receipt of a request, an acknowledgment will be sent to the person making the request. If the designated officials deem issuance of an official staff interpretation to be appro priate, the interpretation will be pub lished in the Federal Register to become effective 30 days after the publication date. If a request for public comment is received, the effective date will be sus pended. The interpretation will then be republished in the Federal Register and the public given an opportunity to com ment. Any official staff interpretation issued after opportunity for public com ment shall become effective upon publi cation in the Federal Register. (3) Any request for public comment on an official staff interpretation of this regulation shall be made in writing and addressed to the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. It must be postmarked or received by the Secretary’s office within 30 days of the interpretation’s publication in the Fed eral Register. The request shall contain a statement setting forth the reasons why the person making the request believes that public comment would be appropriate. (4) Pursuant to section 915(d) of the act, the Board has designated the director and other officials of the Division of Consumer and Community Affairs as officials “duly authorized” to issue, at their discretion, of ficial staff interpretations of this regulation. (c) Record retention. (1) Evidence of com pliance with the requirements imposed by the act and this regulation shall be pre served by any person subject to the act and Regulation E this regulation for a period of not less than two years. Records may be stored by use of microfiche, microfilm, magnetic tape, or other methods capable of accurately retain ing and reproducing information. (2) Any person subject to the act and this regulation that has actual notice that it is being investigated or is subject to an en forcement proceeeding by an agency charged with monitoring that person’s com pliance with the act and this regulation, or that has been served with notice of an ac tion filed under sections 910, 915, or 916(a) of the act, shall retain the information re quired in paragraph (c)(1) of this section that pertains to the action or proceeding until final disposition of the matter, unless an earlier time is allowed by order of the agency or court. SECTION 205.14— Services Offered by Financial Institutions not Holding Consumer’s Account (a) Compliance by service-providing institu tion. Except as provided in this section, where a financial institution issues an access device to a consumer to be used for initiating elec tronic fund transfers to or from the consum er’s account held by another financial institu tion, and the service-providing institution does not have an agreement with the accountholding institution regarding the service, the service-providing institution shall comply with all requirements of the act and this regu lation that relate to the service or the electron ic fund transfers made by the consumer under the service. For this purpose, the following special rules shall apply: (1) Section 205.6 shall require the serviceproviding institution to reimburse the con sumer for unauthorized electronic fund transfers in excess of the limits set by that section. (2) Sections 205.7, 205.8, and 205.9 shall require the service-providing institution to provide those disclosures and documenta tion that are within its knowledge and the purview of its relationship with the consumer. (3) Section 205.11 (b )(l)(i) shall require the service-providing institution to extend §205.14 by a reasonable time the time periods with in which notice of an error must be received if a delay in notifying the service-providing institution was due to the fact that the con sumer initially notified or attempted to noti fy the account-holding institution. (4) Sections 205.11(c) (2) (i) and (e)(1) shall require the service-providing institu tion to transfer funds, in the appropriate amount and within the applicable time peri od, to the consumer’s account at the account-holding institution. (5) Section 205.11(c) (2) (ii) shall require the service-providing institution to disclose the date on which it initiates a transfer to effect the provisional recredit. (6) Section 205.11(f)(2) shall require the service-providing institution to notify the account-holding institution of the date until which the account-holding institution must honor any debit to the account as required by section 205.11(f)(2). If an overdraft re sults, the service-providing institution shall promptly reimburse the account-holding in stitution in the amount of the overdraft. (b) Compliance by account-holding institu tion. An account-holding institution described in paragraph (a) of this section need not com ply with the requirements of the act and this regulation with respect to electronic fund transfers to or from the consumer’s account made by the service-providing institution, ex cept that the account-holding institution shall comply with section 205.11 by— (1) Promptly providing, upon the request of the service-providing institution, infor mation or copies of documents required for the purpose of investigating alleged errors or furnishing copies of documents to the consumer; and (2) Honoring debits to the account in ac cordance with section 205.11(f)(2). (c) Definition o f agreement. For purposes of this section, an agreement between the serv ice-providing and the account-holding institu tions regarding the electronic fund transfer service refers to a specifc agreement(s) among institutions (or among institutions and another person that participates in the opera tion of the service) which sets forth the rights and obligations of the institutions with respect 15 §205.14 to a service involving the issuance of an access device to the consumer. Institutions do not have such an agreement solely because they participate in transactions that are cleared through an automated or other clearinghouse or similar arrangement for the clearing and settlement of fund transfers generally, or be cause they agree to be bound by the rules of such an arrangement. APPENDIX A—Model Disclosure Clauses This appendix contains model disclosure clauses for optional use by financial institu tions to facilitate compliance with the disclo sure requirements of sections 205.5(a)(3), (b )(2 ), and (b )(3 ), 205.6(a)(3), and 205.7. Section 915(d) (2) of the act provides that use of these clauses in conjunction with other re quirements of the regulation will protect fi nancial institutions from liability under sec tions 915 and 916 of the act to the extent that the clauses accurately reflect the institutions’ electronic fund transfer services. Financial institutions need not use any of the clauses, but may use clauses of their own design in conjunction with the model clauses. The inapplicable words or portions of phrases in parentheses should be deleted. The under scored catchlines are not part of the clauses and should not be used as such. Financial in stitutions may make alterations, substitutions, or additions in the clauses in order to reflect the services offered, such as technical changes (e.g., substitution of a trade name for the word “card,” deletion of inapplicable services, or substitution of lesser liability limits in sec tion A (2)). Sections A (3), A (8) and A (9) include references to a telephone number and address. Where two or more of these clauses are used in a disclosure, the telephone number and address need not be repeated if referenced. SECTION A ( 1)—Disclosure That Access Device is Not Validated and How to Dispose of Device if Validation is Not Desired (§ 205.5(b )(3)) (a) Account using cards. YOU CANNOT USE THE ENCLOSED CARD TO TRANS Regulation E FER MONEY INTO OR OUT OF YOUR ACCOUNT UNTIL WE HAVE VALIDAT ED IT. IF YOU DO NOT WANT TO USE THE CARD, PLEASE (destroy it at once by cutting it in half). [Financial institution may add validation in structions here.] (b) Accounts using codes. YOU CANNOT USE THE ENCLOSED CODE TO TRANS FER MONEY INTO OR OUT OF YOUR ACCOUNT UNTIL WE HAVE VALIDAT ED IT. IF YOU DO NOT WANT TO USE THE CODE, PLEASE (destroy this notice at once) [Financial institution may add validation instructions here.] SECTION A (2 )—Disclosure of Consumers Liability for Unauthorized Transfers and Optional Disclosure of Advisability of Prompt Reporting (§ 2 0 5.7(a )(1)) (a) Liability disclosure. (Tell us AT ONCE if you believe your (card) (code) has been lost or stolen. Telephoning is the best way of keep ing your possible losses down. You could lose all the money in your account (plus your maximum overdraft line of credit). If you tell us within two business days, you can lose no more than $50 if someone used your (card)(code) without your permission.) (If you believe your (card) (code) has been lost or stolen, and you tell us within two business days after you learn of the loss or theft, you can lose no more than $50 if someone used your (card) (code) without your permission.) If you do NOT tell us within two business days after you learn of the loss or theft of your (card) (code), and we can prove we could have stopped someone from using your (card) (code) without your permission if you had told us, you could lose as much as $500. Also, if your statement shows transfers that you did not make, tell us at once. If you do not tell us within 60 days after the statement was mailed to you, you may not get back any money you lost after the 60 days if we can prove that we could have stopped someone from taking the money if you had told us in time. Regulation E If a good reason (such as a long trip or a hospital stay) kept you from telling us, we will extend the time periods. SECTION A (3 )—Disclosure of Telephone Number and Address to Be Notified in Event of Unauthorized Transfer (§ 205.7(a)(2)) (a) Address and telephone number. If you be lieve your (card) (code) has been lost or sto len or that someone has transferred or may transfer money from your account without your permission, call: [Telephone number] or write: [Name of person or office to be notified] [Address] SECTION A (4 )—Disclosure of What Constitutes Business Day of Institution (§ 205.7(a)(3)) (a) Business day disclosure. Our business days are (Monday through Friday) (Monday through Saturday) (any day including Satur days and Sundays). Holidays are (not) included. • SECTION A (5 )—Disclosure of Types of Available Transfers and Limits on Transfers (§ 205.7(a)(4)) (a) Account access. You may use your (card) (code) to (1) Withdraw cash from your (check ing) (or) (savings) account. (2) Make deposits to your (check ing) (or) (savings) account. (3) Transfer funds between your checking and savings accounts whenever you request. (4) Pay for purchases at places that have agreed to accept the (card) (code). (5) Pay bills directly (by telephone) from your (checking) (or) (savings) account in the amounts and on the days you request. Some of these services may not be available at all terminals. (b) Limitations on frequency o f transfers. (1) You may make only [insert number, § A(6) e.g., three] cash withdrawals from our ter minals each [insert time period, e.g., week]. (2) You can use your telephone bill-payment service to pay [insert number] bills each [insert time period] (telephone call). (3) You can use our point-of-sale transfer service for [insert number] transactions each [insert time period]. (4) For security reasons, there are (other) limits on the number of transfers you can make using our (terminals) (telephone billpayment service) (point-of-sale transfer service). (c) Limitations on dollar amounts o f trans fers. (1) You may withdraw up to ([insert dollar amount] from our terminals each [insert time period]) (time you use the (card) (code)). (2) You may buy up to [insert dollar amount] worth of goods or services each ([insert time period])(tim e you use the (card) (code)) in our point-of-sale transfer service. SECTION A (6 )—Disclosure of Charges for Transfers or Right to Make Transfers (§ 2 05.7(a)(5)) (a) Per transfer charge. We will charge you [insert dollar amount] for each transfer you make using our (automated teller machines) (telephone bill-payment service) (point-ofsale transfer service). (b) Fixed charge. We will charge you [insert dollar amount] each [insert time period] for our (automated teller machine service) (tele phone bill-payment service) (point-of-sale transfer service). (c) Average or minimum balance charge. We will only charge you for using our (automated teller machines) (telephone bill-payment service) (point-of-sale transfer service) if the (average) (minimum) balance in your (checking account) (savings account) (ac counts) falls below [insert dollar amount]. If it does, we will charge you [insert dollar amount] each (transfer) ([insert time period]). 17 § A(7) SECTION A (7 )—Disclosure of Account Information to Third Parties (§ 205.7 (a)(9)) (a) Account information disclosure. We will disclose information to third parties about your account or the transfers you make: (1) where it is necessary for completing transfers. or (2) in order to verify the existence and condition of your account for a third party, such as a credit bureau or merchant. or (3) in order to comply with government agency or court orders. or (4) If you give us your written permission. SECTION A (8 )—Disclosure of Right to Receive Documentation of Transfers (§ 2 05.7(a)(6)) (a) Terminal transfers. You can get a receipt at the time you make any transfer to or from you account using one of our (automated tell er machines) (or) (point-of-sale terminals). (b) Preauthorized credits. If you have ar ranged to have direct deposits made to your account at least once every 60 days from the same person or company, (we will let you know if the deposit is (not) made.) (the person or company making the deposit will tell you every time they send us the money.) (you can call us at [insert telephone num ber] to find out whether or not the deposit has been made.) (c) Periodic statements. You will get a (monthly) (quarterly) account statement (unless there are no transfers in a particular month. In any case you will get the statement at least quarterly). (d) Passbook account where the only possible electronic fu n d transfers are preauthorized credits. If you bring your passbook to us, we will record any electronic deposits that were made to your account since the last time you brought in your passbook. 18 Regulation E SECTION A (9 )—Disclosure of Right to Stop Payment of Preauthorized Transfers, Procedure for Doing So, Right to Receive Notice of Varying Amounts, and Financial Institution’s Liability for Failure to Stop Payment (§ 205.7(a) (6), (7), and (8 )) (a) Right to stop payment and procedure fo r doing so. If you have told us in advance to make regular payments out of your account, you can stop any of these payments. Here’s how: Call us at [insert telephone number], or write us at [insert address], in time for us to receive your request three business days or more before the payment is scheduled to be made. If you call, we may also require you to put your request in writing and get it to us within 14 days after you call. (We will charge you [insert amount] for each stop-payment order you give.) (b) Notice o f varying amounts. If these regu lar payments may vary in amount, (we) (the person you are going to pay) will tell you, 10 days before each payment, when it will be made and how much it will be. (You may choose instead to get this notice only when the payment would differ by more than a certain amount from the previous payment, or when the amount would fall outside certain limits that you set.) (c) Liability fo r failure to stop payment o f preauthorized transfer. If you order us to stop one of these payments three business days or more before the transfer is scheduled, and we do not do so, we will be liable for your losses or damages. SECTION A ( 10)—Disclosure of Financial Institution’s Liability for Failure to Make Transfers (§ 2 0 5.7(a )(8)) (a) Liability fo r failure to make transfers. If we do not complete a transfer to or from your account on time or in the correct amount ac cording to our agreement with you, we will be liable for your losses or damages. However, there are some exceptions. We will NOT be liable, for instance— Regulation E Appendix B • If, through no fault of ours, you do not have enough money in your account to make the transfer. State Member Banks Federal Reserve Bank serving the District in which the state member bank is located. • If the transfer would go over the credit limit on your overdraft line. Nonmember Insured Banks Federal Deposit Insurance Corporation re gional director for the region in which the nonmember insured bank is located. • If the automated teller machine where you - are making the transfer does not have enough cash. • If the (terminal) (system) was not work ing properly and you knew about the breakdown when you started the transfer. • If circumstances beyond our control (such as fire or flood) prevent the transfer, de spite reasonable precautions that we have taken. There may be other exceptions stated in our agreement with you. APPENDIX B—Federal Enforcement Agencies The following list indicates which federal agency enforces Regulation E for particular classes of institutions. Any questions concern ing compliance by a particular institution should be directed to the appropriate enforc ing agency. National Banks Comptroller of the Currency Office of Customer and Community Programs Washington, D.C. 20219 Savings Institutions Insured by the FSLIC and Members o f the FHLB System (except fo r Sav ings Banks insured by FDIC) The Federal Home Loan Bank Board supervi sory agent in the District in which the institu tion is located. Federal Credit Unions Division of Consumer Affairs National Credit Union Administration 2025 M Street, N.W. Washington, D.C. 20456 Creditors Subject to Civil Aeronautics Board Director Bureau of Consumer Protection Civil Aeronautics Board Washington, D.C. 20428 Brokers and Dealers Division of Market Regulations Securities and Exchange Commission Washington, D.C. 20549 R etail Department Stores, Consumer Finance Companies, Certain Other Financial Institu tions, and A ll Nonbank Debit Card Issuers Federal Trade Commission Electronic Fund Transfers Washington, D.C. 20580 Electronic Fund Transfer Act 15 USC 1693 et seq.; 92 Stat. 3728; Pub. L. 95-630, Financial Institutions Regulatory and Interest Rate Control Act, Title XX (November 10, 1978) FIRA, TITLE XX—Electronic Fund Transfers SECTION 2001 The Consumer Credit Protection Act (15 U.S.C. 1601 et seqj is amended by adding at the end thereof the following new title: TITLE IX—ELECTRONIC FUND TRANSFERS SECTION 901—Short Title This title may be cited as the “Electronic Fund Transfer Act”. SECTION 902—Findings and Purpose (a) The Congress finds that the use of elec tronic systems to transfer funds provides the potential for substantial benefits to consumers. However, due to the unique characteristics of such systems, the application of existing con sumer protection legislation is unclear, leaving the rights and liabilities of consumers, finan cial institutions, and intermediaries in elec tronic fund transfers undefined. (b) It is the purpose of this title to provide a basic framework establishing the rights, liabil ities, and responsibilities of participants in electronic fund transfer systems. The primary objective of this title, however, is the provision of individual consumer rights. SECTION 903—Definitions As used in this title— (1) the term “accepted card or other means of access” means a card, code, or other means of access to a consumer’s ac count for the purpose of initiating electron ic fund transfers when the person to whom such card or other means of access was is sued has requested and received or has signed or has used, or authorized another to use, such card or other means of access for the purpose of transferring money between accounts or obtaining money, property, la bor, or services; (2) the term “account” means a demand deposit, savings deposit, or other asset ac count (other than an occasional or inciden tal credit balance in an open end credit plan as defined in section 103(i) of this Act), as described in regulations of the Board, estab lished primarily for personal, family, or household purposes, but such term does not include an account held by a financial insti tution pursuant to a bona fide trust agreement; (3) the term “Board” means the Board of Governors of the Federal Reserve System: (4) the term “business day” means any day on which the offices of the consumer’s financial institution involved in an electron ic fund transfer are open to the public for carrying on substantially all of its business functions; (5) the term “consumer” means a natural person; (6) the term “electronic fund transfer” means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, instruct, or authorize a finan cial institution to debit or credit an account. Such term includes, but is not limited to, point-of-sale transfers, automated teller ma chine transactions, direct deposits or with drawals of funds, and transfers initiated by telephone. Such term does not include— (A ) any check guarantee or authoriza tion service which does not directly result in a debit or credit to a consumer’s account; (B) any transfer of funds, other than those processed by automated clearing house, made by a financial institution on behalf of a consumer by means of a serv ice that transfers funds held at either 21 §903 Federal Reserve banks or other deposito ry institutions and which is not designed primarily to transfer funds on behalf of a consumer; (C) any transaction the primary pur pose of which is the purchase or sale of securities or commodities through a broker-dealer registered with or regu lated by the Securities and Exchange Commission; (D ) any automatic transfer from a sav ings account to a demand deposit ac count pursuant to an agreement between a consumer and a financial institution for the purpose of covering an overdraft or maintaining an agreed upon minimum balance in the consumer’s demand depos it account; or (E) any transfer of funds which is initia ted by a telephone conversation between a consumer and an officer or employee of a financial institution which is not pursu ant to a prearranged plan and under which periodic or recurring transfers are not contemplated; as determined under regulations of the Board; (7) the term “electronic terminal” means an electronic device, other than a telephone operated by a consumer, through which a consumer may initiate an electronic fund transfer. Such term includes but is not lim ited to, point-of-sale terminals, automated teller machines, and cash dispensing machines; (8) the term “financial institution” means a State or National bank, a State or Federal savings and loan association, a mutual sav ings bank, a State or Federal credit union, or any other person who, directly or indi rectly, holds an account belonging to a consumer; (9) the term “preauthorized electronic fund transfer” means an electronic fund transfer authorized in advance to recur at substantially regular intervals; (10) the term “State” means any State, territory, or possession of the United States, the District of Columbia, the Common wealth of Puerto Rico, or any political sub division of any of the foregoing; and (11) the term “unauthorized electronic fund transfer” means an electronic fund Electronic Fund Transfer Act transfer from a consumer’s account initiat ed by a person other than the consumer without actual authority to initiate such transfer and from which the consumer re ceives no benefit, but the term does not in clude any electronic fund transfer (A) ini tiated by a person other than the consumer who was furnished with the card, code, or other means of access to such consumer’s account by such consumer, unless the con sumer has notified the financial institution involved that transfers by such other person are no longer authorized, (B) initiated with fraudulent intent by the consumer or any person acting in concert with the consumer, or (C) which constitutes an error commit ted by a financial institution. SECTION 904— Regulations (a) The Board shall prescribe regulations to carry out the purposes of this title. In pre scribing such regulations, the Board shall: (1) consult with the other agencies re ferred to in section 917 and take into ac count, and allow for, the continuing evolu tion of electronic banking services and the technology utilized in such services, (2) prepare an analysis of economic im pact which considers the cost and benefits to financial institutions, consumers, and other users of electronic fund transfers, in cluding the extent to which additional doc umentation, reports, records, or other paper work would be required, and the effects upon competition in the provision of elec tronic banking services among large and small financial institutions and the avail ability of such services to different classes of consumers, particularly low income consumers, (3) to the extent practicable, the Board shall demonstrate that the consumer pro tections of the proposed regulations out weigh the compliance costs imposed upon consumers and financial institutions, and (4) any proposed regulations and accom panying analyses shall be sent promptly to Congress by the Board. (b) The Board shall issue model clauses for optional use by financial institutions to facili Electronic Fund Transfer Act tate compliance with the disclosure require ments of section 905 and to aid consumers in understanding the rights and responsibilities of participants in electronic fund transfers by utilizing readily understandable language. Such model clauses shall be adopted after no tice duly given in the Federal Register and opportunity for public comment in accord ance with section 553 of title 5, United States Code. With respect to the disclosures required by section 905(a) (3) and (4), the Board shall take account of variations in the services and charges under different electronic fund trans fer systems and, as appropriate, shall issue al ternative model clauses for disclosure of these differing account terms. (c) Regulations prescribed hereunder may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of electronic fund transfers, as in the judgment of the Board are necessary or proper to effec tuate the purposes of this title, to prevent cir cumvention or evasion thereof, or to facilitate compliance therewith. The Board shall by reg ulation modify the requirements imposed by this title on small financial institutions if the Board determines that such modifications are necessary to alleviate any undue compliance burden on small financial institutions and such modifications are consistent with the purpose and objective of this title. (d) In the event that electronic fund transfer services are made available to consumers by a person other than a financial institution hold ing a consumer’s account, the Board shall by regulation assure that the disclosures, protec tions, responsibilities, and remedies created by this title are made applicable to such persons and services. SECTION 905—Terms and Conditions of Transfers (a) The terms and conditions of electronic fund transfers involving a consumer’s account shall be disclosed at the time the consumer contracts for an electronic fund transfer serv ice, in accordance with regulations of the Board. Such disclosures shall be in readily un §905 derstandable language and shall include, to the extent applicable— (1) the consumer’s liability for unautho rized electronic fund transfers and, at the financial institution’s option, notice of the advisability of prompt reporting of any loss, theft, or unauthorized use of a card, code, or other means of access; (2) the telephone number and address of the person or office to be notified in the event the consumer believes that an unau thorized electronic fund transfer has been or may be effected; (3) the type and nature of electronic fund transfers which the consumer may initiate, including any limitations on the frequency or dollar amount of such transfers, except that the details of such limitations need not be disclosed if their confidentiality is neces sary to maintain the security of an electron ic fund transfer system, as determined by the Board; (4) any charges for electronic fund trans fers or for the right to make such transfers; (5) the consumer’s right to stop payment of a preauthorized electronic fund transfer and the procedure to initiate such a stop payment order; (6) the consumer’s right to receive docu mentation of electronic fund transfers un der section 906; (7) a summary, in a form prescribed by regulations of the Board, of the error reso lution provisions of section 908 and the consumer’s rights thereunder. The financial institution shall thereafter transmit such summary at least once per calendar year; (8) the financial institution’s liability to the consumer under section 910; and (9) under what circumstances the financial institution will in the ordinary course of business disclose information concerning the consumer’s account to third persons. (b) A financial institution shall notify a con sumer in writing at least twenty-one days pri or to the effective date of any change in any term or condition of the consumer’s account required to be disclosed under subsection (a) if such change would result in greater cost or liability for such consumer or decreased ac cess to the consumer’s account. A financial 23 §905 institution may, however, implement a change in the terms or conditions of an account with out prior notice when such change is immedi ately necessary to maintain or restore the se curity of an electronic fund transfer system or a consumer’s account. Subject to subsection (a)(3 ), the Board shall require subsequent notification if such a change is made permanent. (c) For any account of a consumer made ac cessible to electronic fund transfers prior to the effective date of this title, the information required to be disclosed to the consumer un der subsection (a) shall be disclosed not later than the earlier of— (1) the first periodic statement required by section 906(c) after the effective date of this title; or (2) thirty days after the effective date of this title. SECTION 906— Documentation of Transfers; Periodic Statements (a) For each electronic fund transfer initiat ed by a consumer from an electronic terminal, the financial institution holding such consum er’s account shall, directly or indirectly, at the time the transfer is initiated, make available to the consumer written documentation of such transfer. The documentation shall clearly set forth to the extent applicable— (1) the amount involved and date the transfer is initiated; (2) the type of transfer; (3) the identity of the consumer’s account with the financial institution from which or to which funds are transferred; (4) the identity of any third party to whom or from whom funds are transferred; and (5) the location or identification of the electronic terminal involved. (b) For a consumer’s account which is scheduled to be credited by a preauthorized electronic fund transfer from the same payor at least once in each successive sixty-day peri od, except where the payor provides positive notice of the transfer to the consumer, the fi nancial institution shall elect to provide 24 Electronic Fund Transfer Act promptly either positive notice to the consum er when the credit is made as scheduled, or negative notice to the consumer when the credit is not made as scheduled, in accordance with regulations of the Board. The means of notice elected shall be disclosed to the con sumer in accordance with section 905. (c) A financial institution shall provide each consumer with a periodic statement for each account of such consumer that may be ac cessed by means of an electronic fund trans fer. Except as provided in subsections (d) and (e), such statement shall be provided at least monthly for each monthly or shorter cycle in which an electronic fund transfer affecting the account has occurred, or every three months, whichever is more frequent. The statement, which may include information regarding transactions other than electronic fund trans fers, shall clearly set forth— (1) with regard to each electronic fund transfer during the period, the information described in subsection (a), which may be provided on an accompanying document; (2) the amount of any fee or charge as sessed by the financial institution during the period for electronic fund transfers or for account maintenance; (3) the balances in the consumer’s account at the beginning of the period and at the close of the period; and (4) the address and telephone number to be used by the financial institution for the purpose of receiving any statement inquiry or notice of account error from the consum er. Such address and telephone number shall be preceded by the caption “Direct In quiries To:” or other similar language indi cating that the address and number are to be used for such inquiries or notices. (d) In the case of a consumer’s passbook ac count which may not be accessed by electron ic fund transfers other than preauthorized electronic fund transfers crediting the ac count, a financial institution may, in lieu of complying with the requirements of subsec tion (c), upon presentation of the passbook provide the consumer in writing with the amount and date of each such transfer involv ing the account since the passbook was last presented. Electronic Fund Transfer Act (e) In the case of a consumer’s account other than a passbook account, which may not be accessed by electronic fund transfers other than preauthorized electronic fund transfers crediting the account, the financial institution may provide a periodic statement on a quar terly basis which otherwise complies with the requirements of subsection (c). (f) In any action involving a consumer, any documentation required by this section to be given to the consumer which indicates that an electronic fund transfer was made to another person shall be admissible as evidence of such transfer and shall constitute prima facie proof that such transfer was made. SECTION 907—Preauthorized Transfers (a) A preauthorized electronic fund transfer from a consumer’s account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made. A consumer may stop payment of a preauthorized electronic fund transfer by notifying the financial institution orally or in writing at any time up to three business days preceding the scheduled date of such transfer. The financial institution may require written confirmation to be provided to it within fourteen days of an oral notification if, when the oral notification is made, the con sumer is advised of such requirement and the address to which such confirmation should be sent. (b) In the case of preauthorized transfers from a consumer’s account to the same person which may vary in amount, the financial insti tution or designated payee shall, prior to each transfer, provide reasonable advance notice to the consumer, in accordance with regulations of the Board, of the amount to be transferred and the scheduled date of the transfer. SECTION 908—Error Resolution (a) If a financial institution, within sixty days after having transmitted to a consumer docu mentation pursuant to section 906 (a), (c), or (d) or notification pursuant to section §908 906(b), receives oral or written notice in which the consumer— (1) sets forth or otherwise enables the fi nancial institution to identify the name and account number of the consumer; (2) indicates the consumer’s belief that the documentation, or, in the case of notifica tion pursuant to section 906(b), the con sumer’s account, contains an error and the amount of such error; and (3) sets forth the reasons for the consum er’s belief (where applicable) that an error has occurred, the financial institution shall investigate the alleged error, determine whether an error has occurred, and report or mail the results of such investigation and determination to the consumer within ten business days. The financial institution may require written confirmation to be provided to it within ten business days of an oral no tification of error if, when the oral notifica tion is made, the consumer is advised of such requirement and the address to which such confirmation should be sent. A finan cial institution which requires written con firmation in accordance with the previous sentence need not provisionally recredit a consumer’s account in accordance with subsection (c), nor shall the financial insti tution be liable under subsection (e) if the written confirmation is not received within the ten-day period referred to in the previ ous sentence. (b) If the financial institution determines that an error did occur, it shall promptly, but in no event more than one business day after such determination, correct the error, subject to section 909, including the crediting of inter est where applicable. (c) If a financial institution receives notice of an error in the manner and within the time period specified in subsection (a), it may, in lieu of the requirements of subsections (a) and (b), within ten business days after receiv ing such notice provisionally recredit the con sumer’s account for the amount alleged to be in error, subject to section 909, including in terest where applicable, pending the conclu sion of its investigation and its determination of whether an error has occurred. Such inves tigation shall be concluded not later than for25 §908 ty-five days after receipt of notice of the error. During the pendency of the investigation, the consumer shall have full use of the funds pro visionally recredited. (d) If the financial institution determines af ter its investigation pursuant to subsection (a) or (c) that an error did not occur, it shall deliver or mail to the consumer an explana tion of its findings within 3 business days after the conclusion of its investigation, and upon request of the consumer promptly deliver or mail to the consumer reproductions of all doc uments which the financial institution relied on to conclude that such error did not occur. The financial institution shall include notice of the right to request reproductions with the explanation of its findings. (e) If in any action under section 915, the court finds that— (1) the financial institution did not provi sionally recredit a consumer’s account within the ten-day period specified in sub section (c), and the financial institution (A ) did not make a good faith investigation of the alleged error, or (B) did not have a reasonable basis for believing that the con sumer’s account was not in error; or (2) the financial institution knowingly and willfully concluded that the consumer’s ac count was not in error when such conclu sion could not reasonably have been drawn from the evidence available to the financial institution at the time of its investigation, then the consumer shall be entitled to treble damages determined under section 915(a)(1). (f) For the purpose of this section, an error consists of— (1) an unauthorized electronic fund transfer; (2) an incorrect electronic fund transfer from or to the consumer’s account; (3) the omission from a periodic statement of an electronic fund transfer affecting the consumer’s account which should have been included; (4) a computational error by the financial institution; (5) the consumer’s receipt of an incorrect 26 Electronic Fund Transfer Act amount of money from an electronic terminal; (6) a consumer’s request for additional in formation or clarification concerning an electronic fund transfer or any documenta tion required by this title; or (7) any other error described in regula tions of the Board. SECTION 909—Consumer Liability for Unauthorized Transfers (a) A consumer shall be liable for any unau thorized electronic fund transfer involving the account of such consumer only if the card or other means of access utilized for such trans fer was an accepted card or other means of access and if the issuer of such card, code, or other means of access has provided a means whereby the user of such card, code, or other means of access can be identified as the person authorized to use it, such as by signature, pho tograph, or fingerprint or by electronic or me chanical confirmation. In no event, however, shall a consumer’s liability for an unautho rized transfer exceed the lesser of— (1) $50; or (2) the amount of money or value of prop erty or services obtained in such unautho rized electronic fund transfer prior to the time the financial institution is notified of, or otherwise becomes aware of, circum stances which lead to the reasonable belief that an unauthorized electronic fund trans fer involving the consumer’s account has been or may be effected. Notice under this paragraph is sufficient when such steps have been taken as may be reasonably required in the ordinary course of business to pro vide the financial institution with the perti nent information, whether or not any par ticular officer, employee, or agent of the financial institution does in fact receive such information. Notwithstanding the foregoing, reimburse ment need not be made to the consumer for losses the financial institution establishes would not have occurred but for the failure of the consumer to report within sixty days of transmittal of the statement (or in extenuat ing circumstances such as extended travel or Electronic Fund Transfer Act hospitalization, within a reasonable time un der the circumstances) any unauthorized elec tronic fund transfer or account error which appears on the periodic statement provided to the consumer under section 906. In addition, reimbursement need not be made to the con sumer for losses which the financial institution establishes would not have occurred but for the failure of the consumer to report any loss or theft of a card or other means of access within two business days after the consumer learns of the loss or theft (or in extenuating circumstances such as extended travel or hos pitalization, within a longer period which is reasonable under the circumstances), but the consumer’s liability under this subsection in any such case may not exceed a total of $500, or the amount of unauthorized electronic fund transfers which occur following the close of two business days (or such longer period) af ter the consumer learns of the loss or theft but prior to notice to the financial institution un der this subsection, whichever is less. (b) In any action which involves a consum er’s liability for an unauthorized electronic fund transfer, the burden of proof is upon the financial institution to show that the electron ic fund transfer was authorized or, if the elec tronic fund transfer was unauthorized, then the burden of proof is upon the financial insti tution to establish that the conditions of liabil ity set forth in subsection (a) have been met, and, if the transfer was initiated after the ef fective date of section 905, that the disclosures required to be made to the consumer under section 905(a) (1) and (2) were in fact made in accordance with such section. (c) In the event of a transaction which in volves both an unauthorized electronic fund transfer and an extension of credit as defined in section 103(e) of this Act pursuant to an agreement between the consumer and the fi nancial institution to extend such credit to the consumer in the event the consumer’s account is overdrawn, the limitation on the consum er’s liability for such transaction shall be determined solely in accordance with this section. (d) Nothing in this section imposes liability upon a consumer for an unauthorized elec §910 tronic fund transfer in excess of his liability for such a transfer under other applicable law or under any agreement with the consumer’s financial institution. (e) Except as provided in this section, a con sumer incurs no liability from an unautho rized electronic fund transfer. SECTION 910—Liability of Financial Institutions (a) Subject to subsections (b) and (c), a fi nancial institution shall be liable to a consum er for all damages proximately caused by— (1) the financial institution’s failure to make an electronic fund transfer, in accord ance with the terms and conditions of an account, in the correct amount or in a time ly manner when properly instructed to do so by the consumer, except where— (A ) the consumer’s account has insuffi cient funds; (B) the funds are subject to legal process or other encumbrance restricting such transfer; (C) such transfer would exceed an es tablished credit limit; (D ) an electronic terminal has insuffi cient cash to complete the transaction; or (E) as otherwise provided in regulations of the Board; (2) the financial institution’s failure to make an electronic fund transfer due to in sufficient funds when the financial institu tion failed to credit, in accordance with the terms and conditions of an account, a de posit of funds to the consumer’s account which would have provided sufficient funds to make the transfer, and (3) the financial institution’s failure to stop payment of a preauthorized transfer from a consumer’s account when instructed to do so in accordance with the terms and condi tions of the account. (b) A financial institution shall not be liable under subsection (a) (1) or (2) if the financial institution shows by a preponderance of the evidence that its action or failure to act result ed from— (1) an act of God or other circumstance 27 §910 beyond its control, that it exercised reason able care to prevent such an occurrence, and that it exercised such diligence as the circumstances required; or (2.) a technical malfunction which was known to the consumer at the time he at tempted to initiate an electronic fund trans fer or, in the case of a preauthorized trans fer, at the time such transfer should have occurred. (c) In the case of a failure described in sub section (a) which was not intentional and which resulted from a bona fide error, not withstanding the maintenance of procedures reasonably adapted to avoid any such error, the financial institution shall be liable for ac tual damages proved. SECTION 911—Issuance of Cards or Other Means of Access (a) No person may issue to a consumer any card, code, or other means of access to such consumer’s account for the purpose of initiat ing an electronic fund transfer other than— (1) in response to a request or application therefor; or (2) as a renewal of, or in substitution for, an accepted card, code, or other means of access, whether issued by the initial issuer or a successor. (b) Notwithstanding the provisions of sub section (a), a person may distribute to a con sumer on an unsolicited basis a card, code, or other means of access for use in initiating an electronic fund transfer from such consumer’s account, if— (1) such card, code, or other means of ac cess is not validated; (2) such distribution is accompanied by a complete disclosure, in accordance with section 905, of the consumer’s rights and liabilities which will apply if such card, code, or other means of access is validated; (3) such distribution is accompanied by a clear explanation, in accordance with regu lations of the Board, that such card, code, or other means of access is not validated and how the consumer may dispose of such 28 Electronic Fund Transfer Act code, card, or other means of access if vali dation is not desired; and (4) such card, code, or other means of access is validated only in response to a request or application from the consumer, upon verification of the consumer’s identity. (c) For the purpose of subsection (b), a card, code, or other means of access is validat ed when it may be used to initiate an electron ic fund transfer. SECTION 912—Suspension of Obligations If a system malfunction prevents the effectua tion of an electronic fund transfer initiated by a consumer to another person, and such other person has agreed to accept payment by such means, the consumer’s obligation to the other person shall be suspended until the malfunc tion is corrected and the electronic fund trans fer may be completed, unless such other per son has subsequently, by written request, demanded payment by means other than an electronic fund transfer. SECTION 913—Compulsory Use of Electronic Fund Transfers No person may— (1) condition the extension of credit to a consumer on such consumer’s repayment by means of preauthorized electronic fund transfers; or (2) require a consumer to establish an ac count for receipt of electronic fund trans fers with a particular financial institution as a condition of employment or receipt of a government benefit. SECTION 914— Waiver of Rights No writing or other agreement between a con sumer and any other person may contain any provision which constitutes a waiver of any right conferred or cause of action created by this title. Nothing in this section prohibits, however, any writing or other agreement which grants to a consumer a more extensive Electronic Fund Transfer Act right or remedy or greater protection than contained in this title or a waiver given in set tlement of a dispute or action. SECTION 915—Civil Liability (a) Except as otherwise provided by this sec tion and section 910, any person who fails to comply with any provision of this title with respect to any consumer, except for an error resolved in accordance with section 908, is lia ble to such consumer in an amount equal to the sum of— (1) any actual damage sustained by such consumer as a result of such failure; (2) (A ) in the case of an individual action, an amount not less than $100 nor greater than $1,000; or (B) in the case of a class action, such amount as the court may allow, except that (i) as to each member of the class no minimum recovery shall be applicable, and (ii) the total recovery under this subparagraph in any class action or series of class actions arising out of the same failure to comply by the same person shall not be more than the lesser of $500,000 or 1 per centum of the net worth of the defendant; and (3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attor ney’s fee as determined by the court, (b) In determining the amount of liability in any action under subsection (a), the court shall consider, among other relevant factors— (1) in any individual action under subsec tion (a )(2 )(A ), the frequency and persis tence of noncompliance, the nature of such noncompliance, and the extent to which the noncompliance was intentional; or (2) in any class action under subsection (a )(2 )(B ), the frequency and persistence of noncompliance, the nature of such com pliance, the resources of the defendant, the number of persons adversely affected, and the extent to which the noncompliance was intentional. (c) Except as provided in section 910, a per son may not be held liable in any action §915 brought under this section for a violation of this title if the person shows by a preponder ance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of proce dures reasonably adapted to avoid any such error. (d) No provision of this section or section 916 imposing any liability shall apply to— (1) any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Board or in conformity with any interpretation or ap proval by an official or employee of the Federal Reserve System duly authorized by the Board to issue such interpretations or approvals under such procedures as the Board may prescribe therefor; or (2) any failure to make disclosure in prop er form if a financial institution utilized an appropriate model clause issued by the Board, notwithstanding that after such act, omission, or failure has occurred, such rule, regulation, approval, or model clause is amended, re scinded, or determined by judicial or other au thority to be invalid for any reason. (e) A person has no liability under this sec tion for any failure to comply with any re quirement under this title if, prior to the insti tution of an action under this section, the person notifies the consumer concerned of the failure, complies with the requirements of this title, and makes an appropriate adjustment to the consumer’s account and pays actual dam ages or, where applicable, damages in accord ance with section 910. (f) On a finding by the court that an unsuc cessful action under this section was brought in bad faith or for purposes of harassment, the court shall award to the defendant attorney’s fees reasonable in relation to the work expend ed and costs. (g) Without regard to the amount in contro versy, any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occur rence of the violation. 29 §916 SECTION 916—Criminal Liability (a) Whoever knowingly and willfully— (1) gives false or inaccurate information or fails to provide information which he is re quired to disclose by this title or any regula tion issued thereunder; or (2) otherwise fails to comply with any pro vision of this title; shall be fined not more than $5,000 or imprisoned not more than one year, or both. (b) Whoever— (1) knowingly, in a transaction affecting interstate or foreign commerce, uses or at tempts or conspires to use any counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained debit instrument to obtain money, goods, services, or anything else of value which within any one-year pe riod has a value aggregating $1,000 or more; or (2) with unlawful or fraudulent intent, transports or attempts or conspires to trans port in interstate or foreign commerce a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained debit in strument knowing the same to be counter feit, fictitious, altered, forged, lost, stolen, or fraudulently obtained; or (3) with unlawful or fraudulent intent, uses any instrumentality of interstate or foreign commerce to sell or transport a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained debit in strument knowing the same to be counter feit, fictitious, altered, forged, lost, stolen, or fraudulently obtained; or (4) knowingly receives, conceals, uses, or transports money, goods, services, or any thing else of value (except tickets for inter state or foreign transportation) which (A) within any one-year period has a value ag gregating $1,000 or more, (B) has moved in or is part of, of which constitutes inter state or foreign commerce and (C) has been obtained with a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained debit instrument; or (5) knowingly receives, conceals, uses, sells, or transports in interstate or foreign commerce one or more tickets for interstate or foreign transportation, which (A) with Electronic Fund Transfer Act in any one-year period have a value aggre gating $500 or more, and (B) have been purchased or obtained with one or more counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained debit in strument; or (6) in a transaction affecting interstate or foreign commerce, furnishes money, prop erty, services, or anything else of value, which within any one-year period has a val ue aggregating $1,000 or more, through the use of any counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained debit instrument knowing the same to be counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained— shall be fined not more than $10,000 or im prisoned not more than ten years, or both. (c) As used in this section, the term “debit instrument” means a card, code, or other de vice, other than a check, draft, or similar pa per instrument, by the use of which a person may initiate an electronic fund transfer. SECTION 917—Administrative Enforcement (a) Compliance with the requirements im posed under this title shall be enforced under— (1) section 8 of the Federal Deposit Insur ance Act, in the case of— (A ) national banks, by the Comptroller of the Currency; (B) member banks of the Federal Re serve System (other than national banks), by the Board; (C) banks insured by the Federal De posit Insurance Corporation (other than members of the Federal Reserve Sys tem), by the Board of Directors of the Federal Deposit Insurance Corporation; (2) section 5(d) of the Home Owners’ Loan Act of 1933, section 407 of the Na tional Housing Act, and sections 6(i) and 17 of the Federal Home Loan Bank Act, by the Federal Home Loan Bank Board (act ing directly or through the' Federal Savings and Loan Insurance Corporation), in the case of any institution subject to any of those provisions; Electronic Fund Transfer Act (3) the Federal Credit Union Act, by the Administrator of the National Credit Un ion Administration with respect to any Federal credit union. (4) the Federal Aviation Act of 1958, by the Civil Aeronautics Board, with respect to any air carrier or foreign air carrier sub ject to that Act; and (5) the Securities Exchange Act of 1934, by the Securities and Exchange Commis sion, with respect to any broker or dealer subject to that Act. (b) For the purpose of the exercise by any agency referred to in subsection (a) of its powers under any Act referred to in that sub section, a violation of any requirement im posed under this title shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any pro vision of law specifically referred to in subsec tion (a), each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this title, any other authority conferred on it by law. (c) Except to the extent that enforcement of the requirements imposed under this title is specifically committed to some other Govern ment agency under subsection (a), the Feder al Trade Commission shall enforce such re quirements. For the purpose of the exercise by the Federal Trade Commission of its func tions and powers under the Federal Trade Commission Act, a violation of any require ment imposed under this title shall be deemed a violation of a requirement imposed under that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Commission to enforce compliance by any person subject to the jurisdiction of the Commission with the requirements imposed under this title, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests in the Federal Trade Commission Act. SECTION 918—Reports to Congress (a) Not later than twelve months after the §919 effective date of this title and at one-year in tervals thereafter, the Board shall make re ports to the Congress concerning the adminis tration of its functions under this title, includ ing such recommendations as the Board deems necessary or appropriate. In addition, each report of the Board shall include its as sessment of the extent to which compliance with this title is being achieved, and a summa ry of the enforcement actions taken under sec tion 917 of this title. In such report, the Board shall particularly address the effects of this ti tle on the costs and benefits to financial insti tutions and consumers, on competition, on the introduction of new technology, on the opera tions of financial institutions, and on the ade quacy of consumer protection. (b) In the exercise of its functions under this title, the Board may obtain upon request the views of any other Federal agency which, in the judgment of the Board, exercises regulato ry or supervisory functions with respect to any class of persons subject to this title. SECTION 919—Relation to State Laws This title does not annul, alter, or affect the laws of any State relating to electronic fund transfers, except to the extent that those laws are inconsistent with the provisions of this ti tle, and then only to the extent of the incon sistency. A State law is not inconsistent with this title if the protection such law affords any consumer is greater than the protection af forded by this title. The Board shall, upon its own motion or upon the request of any finan cial institution, State, or other interested par ty, submitted in accordance with procedures prescribed in regulations of the Board, deter mine whether a State requirement is inconsist ent or affords greater protection. If the Board determines that a State requirement is incon sistent, financial institutions shall incur no lia bility under the law of that State for a good faith failure to comply with that law, notwith standing that such determination is subse quently amended, rescinded, or determined by judicial or other authority to be invalid for any reason. This title does not extend the ap plicability of any such law to any class of per31 §919 sons or transactions to which it would not otherwise apply. Electronic Fund Transfer Act subject to requirements substantially similar to those imposed by this title, and that there is adequate provision for enforcement. SECTION 920—Exemption for State Regulation SECTION 921—Effective Date The Board shall by regulation exempt from the requirements of this title any class of elec tronic fund transfers within any State if the Board determines that under the law of that State that class of electronic fund transfers is This title takes eifect upon the expiration of eighteen months from the date of its enact ment, except that sections 909 and 911 take effect upon the expiration of ninety days after the date of enactment. 32
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