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FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 10698 ~l
March 18, 1994
ELEC TR O N IC FU N D T R A N SF E R S
— Proposed Revision of Regulation E
— Proposed Revision of the Official Staff Commentary to Regulation E
Comments Invited by May 31, 1994
— Amendments to Regulation E Regarding Electronic Benefit Transfer (EBT) Programs
To All Depository Institutions in the Second Federal
Reserve District, and Others Concerned:
Proposed Revisions
T h e fo llo w in g is f r o m th e te x t o f a s ta te m e n t i s s u e d b y th e B o a r d o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y s te m
in v itin g c o m m e n ts o n p r o p o s a ls to r e v is e its R e g u la tio n E , “ E le c tr o n ic F u n d T r a n s f e r s ,” a n d t h e S t a f f C o m m e n t a r y
to th a t r e g u la tio n :
The Federal Reserve Board has published for public comment a proposal to simplify and update its Regulation E,
which implements the Electronic Fund Transfer Act. Comment is requested by May 31, 1994.
In keeping with the Board’s Regulatory Planning and Review Program, the proposed revisions focus on ways of easing
the burdens imposed on financial institutions without diminishing consumer protections established by the act.
The proposal contains some substantive revisions, including changes to the existing exemptions for securities or
commodities transfers and for preauthorized transfers to or from accounts at small institutions. For the most part, however,
the revisions to Regulation E involve technical changes intended to make the regulation more consistent with the
requirements of other regulations governing deposit accounts, simplify the language and format of the regulation, and
delete obsolete provisions.
Major changes in the regulation would require that the act be amended, and the Board therefore also solicits comment
on legislative revisions that could be achieved without significant adverse impact on consumer protections.
The Board also proposed changes to the staff commentary.
P r i n t e d o n th e fo llo w in g p a g e s is th e te x t o f th e p r o p o s a ls , w h ic h h a v e b e e n r e p r i n t e d f r o m th e
Federal Register
o f M a r c h 7 . C o m m e n ts o n e i t h e r o f th e p r o p o s a ls s h o u ld b e s u b m itte d b y M a y 3 1 , 1 9 9 4 , a n d m a y b e s e n t to th e
B o a r d o f G o v e r n o r s , a s s p e c if ie d in th e o f f ic ia l n o tic e s , o r to o u r C o m p lia n c e E x a m in a tio n s D e p a r t m e n t .
Amendments to Regulation E
In a m e n d in g its R e g u la tio n E , th e B o a r d o f G o v e r n o r s is s u e d th e f o llo w in g s ta te m e n t:
The Federal Reserve Board has issued final amendments to its electronic fund transfer regulation, Regulation E, to
cover electronic benefit transfer (EBT) programs. Adoption of the Board’s rule means that benefit recipients will be
accorded much the same protections that are available to other users of electronic payment mechanisms.
EBT programs involve the issuance of plastic access cards and personal identification numbers to recipients of
government benefits such as food stamps, Aid to Families with Dependent Children, and Supplemental Security Income.
Benefits can be accessed through automated teller machines (ATMs) and point-of-sale terminals. The EBT amendments
to Regulation E call for general application of the rules on liability for unauthorized transfers, error resolution, and most
other provisions, except for periodic statement requirements. This rulemaking directly affects government agencies that
administer EBT programs and indirectly affects depository institutions and other private-sector entities.
/0 < o ? z
M andatory com p lian ce w as set for March 1, 1997, as requested by a Federal E B T Task Force that represents all the
m ajor federal agen cies w ith benefit programs. The task force is w orking to establish a nationw ide system for electronic
d elivery o f governm ent ben efits, and asked for the three-year delay so that agen cies could im plem ent these E B T program s
in com p lian ce w ith R egulation E.
E n c l o s e d — f o r d e p o s i t o r y i n s titu tio n s in th e S e c o n d F e d e r a l R e s e r v e D i s t r i c t a n d o th e r s w h o m a i n t a i n s e ts
o f r e g u la tio n s o f th e B o a r d o f G o v e r n o r s — is th e te x t o f th e a m e n d m e n ts to R e g u la tio n E , w h ic h h a s a ls o b e e n
r e p r i n t e d f r o m th e
Federal Register o f
M a r c h 7 ; a d d i tio n a l, s in g le c o p ie s m a y b e o b ta in e d a t t h is B a n k (3 3 L i b e r t y
S tr e e t) f r o m t h e I s s u e s D iv is io n o n th e f ir s t flo o r, o r b y c o n ta c tin g th e C i r c u la r s D iv is io n (T e l. N o . 2 1 2 - 7 2 0 - 5 2 1 5
o r 5 2 1 6 ) . Q u e s tio n s r e g a r d in g t h is r e g u la tio n m a y b e d i r e c te d to E l i z a b e t h I r w in - M c C a u g h e y , M a n a g e r , C o m p lia n c e
E x a m in a tio n s D e p a r t m e n t (T e l. N o. 2 1 2 - 7 2 0 - 6 8 2 0 ) .
W illiam J . M cD onough ,
President.
10684
Federal Register / V ol. 59, N o. 44 / M o n d a y , M a rc h 7, 1994 / P r o p o s e d R u le s
FEDERAL RESERVE SYSTEM
12 CFR Part 205
[Regulation E; Docket No. R-0830]
Electronic Fund Transfers
AGENCY: Board o f Governors o f the
F ederal Reserve System .
ACTION: P roposed rule.
SUMMARY: T he Board is p u b lish in g for
com m en t a proposal to revise
R egulation E, w h ich im p lem en ts the
E lectronic Fund Transfer A ct. The
p roposal stem s from the Board’s review
o f R egulation E pursuant to its p o lic y o f
p erio d ica lly rev iew in g a ll o f its
regulations. The Board’s rev iew
con sid ered w ays th e regulation co u ld be
sim p lified to ease th e b urdens im p o sed
on finan cial in stitu tio n s, co n siste n t w ith
the Board’s resp o n sib ility for
im p lem en tin g the act, and con sid ered
a lso w h eth er th e regulation co u ld m ore
effectiv ely carry out the p u rposes o f the
act. T he proposal con tain s several
su bstan tive rev isio n s, in clu d in g changes
to th e ex istin g ex em p tio n s for secu rities
or co m m o d ities transfers and for
p reauthorized transfers to or from
a ccou n ts at sm all in stitu tio n s. In
ad d ition , th e proposal in c lu d e s ch anges
in ten d ed to m ake R egulation E m ore
co n sisten t w ith th e requirem ents o f
other regulations governing d ep o sit
accoun ts. T he p roposal also sim p lifies
the language and format o f the
regulation, d eletin g ob solete p ro v isio n s
and elim in atin g all o f th e footnotes. In
con ju n ction w ith the p rop osed revision s
to the regulation, the Board also has
p rop osed rev isio n s to the staff
com m entary p u b lish ed elsew h er e in
to d a y ’s F ed eral Register.
DATES: C om m ents m ust be receiv ed on
or before M ay 3 1 ,1 9 9 4 .
ADDRESSES: C om m ents sh o u ld refer to
D ocket N o. R -0 8 3 0 and be m a iled to
W illiam W. W iles, Secretary, Board o f
G overnors o f the Federal Reserve
System , W ashington, DC 20551. T hey
m ay also be d elivered to th e guard
station in the E ccles B u ild in g Courtyard
on 20th Street, NW. (betw een
C onstitution A v en u e and C Street)
b etw een 8:45 a.m. and 5:15 p.m.
w eek d ays. E xcept as p rovid ed in the
Board’s ru les regarding the availab ility
o f inform ation (12 CFR 261.8),
com m en ts w ill be available for
in sp e ctio n and cop yin g by m em bers o f
the p u b lic in the Freedom o f
Inform ation O ffice, room M P -5 0 0 o f the
Martin B u ild in g b etw een 9:00 a.m . and
5:00 p.m . w eekd ays.
FOR FURTHER INFORMATION CONTACT: Jane
Jensen G ell, Mary Jane Seebach, Staff
A ttorneys, or John W ood, S enior
A ttorney, D iv isio n o f C onsum er and
C om m u nity Affairs, at (202) 4 5 2 -2 4 1 2
or (202) 4 5 2 -3 6 6 7 . For the hearing
im paired o n ly , T elecom m u n ication s
D ev ice for th e D eaf (TDD), Dorothea
T h o m p so n , at (202) 4 5 2 -3 5 4 4 .
SUPPLEMENTARY INFORMATION:
(1) Background
T he E lectronic F und Transfer A ct
(EFTA) (15 U.S.C. 1693), en acted in
1978, p ro v id es a b asic fram ework
esta b lish in g th e rights, lia b ilities, and
r e sp o n sib ilities o f participants in
electro n ic fu n d transfer (EFT) system s.
T he Federal Reserve Board w a s given
ru lew ritin g authority to issu e
im p lem en tin g regulations. T yp es o f
transfers covered by the act and
regulation in clu d e transfers in itiated
through an autom ated teller m ach in e
(ATM), p oin t-of-sale term inal,
autom ated clearin gh ou se, telep h o n e
b ill-p a y m en t system , or h om e banking
program. T h e act and R egulation E (12
CFR part 205) provid e ru les that govern
th ese and other EFTs. T he rules
prescribe restrictions on the u n so licited
issu a n ce o f ATM cards and other access
d ev ices; d isclo su re o f term s and
co n d itio n s o f an EFT service;
d o cu m en ta tio n o f EFTs by m ean s o f
term inal receip ts and p eriod ic account
statem ents; lim itation s on con su m er
lia b ility for u nau th orized transfers;
procedu res for error resolution; and
certain rights related to preauthorized
EFTs.
T h e Board’s p o licy under its
Regulatory P lan nin g and R eview (RPR)
program c a lls for p eriod ic review o f
each Board regulation. T he RPR
program h as four goals: to clarify and
sim p lify th e regulatory language; to
am en d the regulation to reflect
tec h n o lo g ic a l and other developm en ts;
to red u ce u n d u e regulatory burden on
the industry; and to d elete ob solete
p ro v isio n s. In keep in g w ith that p o licy ,
th e Board h as m ade a d etailed review o f
R egulation E to determ in e w h eth er it
can b e sim p lified to ease com p lia n ce
b u rd en s for finan cial in stitu tion s, w h ile
m eetin g th e Board’s resp o n sib ility for
im p lem en tin g the con su m er p rotections
o f th e EFTA.
B ased on its review , the Board n ow
p ro p o ses rev isio n s to R egulation E.
W h ile certain substantive rev isio n s have
b een m ad e to the regulation (see the
sectio n -b y -sectio n d iscu ssio n below ),
th e p rop osal leaves m ost o f the
regulatory p ro v isio n s substan tively
u nch an ged . The regulation clo sely
fo llo w s th e language o f the statute,
w h ic h co n ta in s d etailed requirem ents in
m ost areas, and major ch an ges to the
regulation are n o t p o ssib le u n less the
act its e lf is am en ded. Therefore, the
Board is so lic itin g com m ent on w hether
sp e c ific le g isla tiv e re v isio n s to the
EFTA are n ecessary and achievable
w ith o u t im p o sin g a sign ificant adverse
im pact o n co n su m er p rotections.
T h e p rop osal sim p lifies the language
an d form at o f each section o f the
regulation to state the requirem ents
m ore clearly. A ll o f the footnotes have
b een eith er integrated in to the text o f
the regulation or m oved to the proposed
staff com m en tary, m aking the regulation
itse lf le ss cu m bersom e to use. The
p rop osed regulation is shorter than
current R egu lation E by about fifteen
percen t, a red u ction largely attributable
to th e d e le tio n o f ob solete provisions
and to th e transfer o f explanatory
m aterial to th e com m entary. In addition
to co m m en tin g on the p roposed
ch an ges, th e Board requests sp ecific
su g g estio n s, as w e ll as rationale, for
a d d itio n a l ch an ges to the regulation that
w o u ld facilitate com p lian ce.
(2) P ro p o sed R egulatory R evision s
T h e fo llo w in g d isc u ssio n covers the
p rop osed re v isio n s to R egulation E
se ctio n -b y -sectio n . In m any cases, the
p rop osed ch a n g es w o u ld sim p lify or
clarify th e current text, w ith no
su b stan tive chan ge in the regulatory
requirem ents; w h ere th ese ch an ges are
se lf-e v id e n t from reading the proposed
text itself, th ey are not d iscu ssed .
Section 205.1—A u th ority and Purpose
T h e p rop osal sim p lifies the current
sectio n . D isc u ssio n o f the C ongressional
fin d in g s h as b een d eleted. Coverage
issu e s cu rren tly addressed in § 205.1(b)
h ave b een m o v ed to § 205.3.
Section 205.2—Definitions
Paragraph (b)(2)
T h e p rop osal incorporates the
ex e m p tio n for trust accounts (currently
§ 205.3(f)) in to th e d efin ition o f account.
T he d efin itio n m ore c lo sely tracks the
statutory language con tained in section
903(2) o f th e EFTA.
Paragraph (d)— B u sin ess Day
T h e act and regulation d efine
b u sin e ss d ay as any day on w h ich the
o ffices o f th e co n su m er’s financial
in stitu tio n are o p en to the p ub lic for
carrying on su b stan tially all b u sin ess
fu n ctio n s. T h is currently requires that
each fin a n cia l in stitu tion determ ine
w h e n its o ffices are "carrying on
su b sta n tia lly a ll b u sin ess functions.
U sin g its ex c ep tio n authority under
se ctio n 904(c) o f the EFTA, the Board
p ro p o ses to ch an ge the d efinition so that
it w ill mirror that u sed in R egulations
CC (12 CFR part 229) and DD (12 CFR
/0 b 9 ?
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
p a rt 230). T h o se re g u la tio n s d e fin e a
b u s in e s s d a y as a c a le n d a r d a y o th e r
th a n a S a tu rd a y , S u n d a y , o r a n y le g al
p u b lic h o lid a y sp e c ifie d in 5 U .S.C .
6103(a). T h e B o a rd b e lie v e s c o m p lia n c e
w ith th e m u ltip le re g u la tio n s th a t
g o v ern d e p o s it a c c o u n ts w o u ld b e
s im p lifie d if sim ila r d e fin itio n s w e re
u s e d a n d so lic its c o m m e n t o n w h e th e r
s u c h a c h a n g e w ill re d u c e b u r d e n
w ith o u t a d v e rse ly affectin g c o n s u m e r
p ro te c tio n s.
P a ra g ra p h (g)— F in a n c ia l I n s titu tio n
T h e B o ard p ro p o se s to sim p lify th e
d e fin itio n o f fin a n c ia l in s titu tio n
(cu rre n tly § 205.2(i)) b y e lim in a tin g
re feren c es to b o th sta te a n d fe d e ra l
in s titu tio n s . In ste a d , th e d e fin itio n
w o u ld in c lu d e “ a b a n k , sa v in g s
a sso c ia tio n , c re d it u n io n , o r a n y o th e r
p e rs o n th a t d ire c tly o r in d ire c tly h o ld s
a n a c c o u n t b elo n g in g to a c o n s u m e r .”
T h is is n o t in te n d e d as a s u b s ta n tiv e
ch a n g e in coverage.
P a rag rap h (h)— P erso n
T h e p ro p o s a l a d d s a d e fin itio n o f
“ p e rs o n ,” in c o rp o ra tin g la n g u a g e fro m
R e g u la tio n s B (12 CFR 2 0 2 .2(x)) a n d Z
(12 CFR 226.2(a)(22)). T h e te rm is u s e d
in se v eral p la c e s in th e re g u la tio n , m o st
n o ta b ly in § 205.3(a), d e fin in g th e
re g u la tio n ’s cov erag e, a n d in § 205! 10(e)
o n c o m p u lso ry u se.
S e c tio n 2 0 5 .3 — C o v e ra g e
T h e p ro p o s a l in c lu d e s a n e w se q tio n
d e fin in g th e re g u la tio n ’s co v e rag e. T h e
B oard so lic its c o m m e n t o n w h e th e r
h a v in g a se lf-c o n ta in e d se c tio n o n
coverage w o u ld fa c ilita te u se o f th e
reg u la tio n .
P arag rap h (a)— G en eral
T h e p ro p o s a l c la rifie s th a t th e
re g u la tio n a p p lie s to an y E FT th a t
a u th o riz e s a fin a n c ia l in s titu tio n to
d e b it o r c re d it a c o n s u m e r’s a c c o u n t. It
also in c o rp o ra te s th e d is c u s s io n of
cov erag e c u rre n tly a d d re s s e d in
§ 205.1(b).
P a rag rap h (b)— E le c tro n ic F u n d T ra n sfe r
T h e d e fin itio n o f “ e le c tro n ic fu n d
tra n s fe r” (c u rre n tly § 205.2(g)), w h ic h is
c e n tra l to d e te rm in in g c o v e rag e u n d e r
th e re g u la tio n , h a s b e e n m o v e d in to th e
co v erag e sectio n . A m in o r c h a n g e to th e
d e fin itio n o f a n EFT m a k e s c le a r th a t
th e te rm in c lu d e s tra n sfe rs in itia te d
th ro u g h a c o m p u te r o r th ro u g h m a g n e tic
tap e. T h is c h a n g e is p ro p o s e d b e c a u s e a
s tric t re a d in g o f th e c u rre n t re g u la tio n
m ig h t le a d to th e u n in te n d e d
c o n c lu s io n th a t a n E FT d o e s n o t in c lu d e
tran sfe rs in itia te d th ro u g h a c o m p u te r
n o t in v o lv in g ta p e. T h e d e fin itio n s o f
“ p re a u th o riz e d e le c tro n ic fu n d tra n s fe r”
a n d “ u n a u th o riz e d e le c tro n ic fu n d
tra n s fe r” re m a in in th e d e fin itio n s
se ctio n .
Q u e stio n s h a v e a rise n a b o u t
R e g u la tio n E co v e rag e o f sm a rt ca rd s.
G en e ra lly , sm a rt c a rd s are p la s tic c a rd s
th a t h a v e th e c a p a c ity to e ith e r c o m p u te
o r c o m m u n ic a te in fo rm a tio n . A t o n e
tim e , it w a s b e lie v e d th a t sm a rt c a rd
sy ste m s w e re n o t su b je c t to R e g u la tio n
E b e c a u s e n o a c c o u n t e x is te d w ith in th e
d e fin itio n o f th e a c t o r re g u la tio n . W ith
a d v a n c e s in sm a rt c a rd te c h n o lo g y , th a t
a s s u m p tio n is le ss clea r. In c re a sin g ly
m o re u se s are a v a ila b le for sm a rt c a rd s.
T h e B o ard b e lie v e s th a t sm a rt c a rd s a re
su b je c t to R e g u la tio n E if th e c a rd s are
u s e d to ac ce ss a n a c c o u n t. A sim ila r
a n a ly sis m ig h t b e a p p lie d to v a lu e a d d e d o r p r e p a id ca rd s.
T h e d e te rm in a tio n a b o u t w h e th e r
sm a rt c a rd s a n d v a lu e -a d d e d c a rd s are
su b je c t to th e re g u la tio n h a s
im p lic a tio n s b o th fo r th e p riv a te a n d
p u b lic secto rs. F o r e x a m p le , an y
d e te rm in a tio n m a d e o n co v e rag e o f
sm a rt c a rd s in th e re v ie w c o u ld a p p ly
to e le c tro n ic b e n e fit tra n s fe r sy ste m
p ro g ra m s. (See D o ck et N o. R -0 8 2 9
e lse w h e re in to d a y ’s F e d e r a l R e g iste r in
w h ic h th e B o a rd d e fe rre d to th e re v ie w
o f R e g u la tio n E for d is c u s s io n o f sm a rt
c a rd s a n d its im p lic a tio n o n e le c tro n ic
b e n e fit tra n sfe r sy stem s.) T h e B o ard
so lic its c o m m e n t o n th e co v e rag e o f
sm a rt c a rd s.
P a rag ra p h (c)— E x c lu sio n s F ro m
C overage
T h e p ro p o s a l’s e x p a n d e d se c tio n o n
co v e rag e re ta in s th e e x e m p tio n s
c u rre n tly c o n ta in e d in § 205.3.
In c lu d in g th e se e x e m p tio n s w ith th e
d e fin itio n o f “ e le c tro n ic fu n d tra n s fe r”
m o re c lo se ly tra c k s th e sta tu to ry
p ro v isio n s. In a d d itio n , th e B o ard
b e lie v e s h a v in g b o th c o v e rag e a n d
e x e m p tio n p ro v is io n s in o n e se c tio n
w o u ld fa c ilita te th e d e te rm in a tio n o f
w h e th e r c o m p lia n c e w ith th e re g u la tio n
is re q u ire d . T h e p a ra g ra p h c o n ta in s
se v era l p ro p o s e d re v is io n s to c u rre n t
e x e m p tio n s.
P a ra g ra p h (c)(3)— W ire T ra n sfe rs
T h e p ro p o s a l a m e n d s th e e x e m p tio n
for w ire tra n sfe rs c u rre n tly c o n ta in e d in
§ 205.3(b) to c la rify th a t it e x e m p ts
tra n sfe rs th ro u g h F e d w ire (or sim ila r
w ire tra n sfe r sy stem s) a n d n o t all
tra n sfe rs th ro u g h th e F e d e ra l R eserv e
C o m m u n ic a tio n s S y stem . T h e p ro p o s e d
a m e n d m e n t d o e s n o t re p re s e n t a
su b sta n tiv e c h a n g e in th e sc o p e o f th e
e x e m p tio n . R a th e r, it w o u ld c o rre c t th e
re fe re n c e to m o re a c c u ra te ly re fle c t th e
s ta tu to ry in te n t.
10685
P a ra g ra p h (c)(4)— S e c u ritie s a n d
C o m m o d itie s T ra n sfe rs
T h e B o a rd p ro p o se s to re v ise th e
e x e m p tio n for c e rta in se c u ritie s a n d
c o m m o d itie s tra n sfe rs. W h e n th e
c u r r e n t e x e m p tio n w a s in itia lly
a d o p te d , th e B o a rd o m itte d th e
re q u ire m e n t th a t th e p u rc h a s e o r sa le b e
th ro u g h a b ro k e r-d e a le r re g iste re d w ith
th e S e c u ritie s E x ch a n g e C o m m issio n
(SEC). T h e in te n t o f th is c h a n g e w a s to
b ro a d e n th e sc o p e o f th e e x e m p tio n to
in c lu d e se c u ritie s tra n s a c tio n s m a d e b y
m u tu a l fu n d s a n d p e n s io n a n d p ro fits h a rin g p la n s. T h e B o ard n o te d a t th e
tim e th a t e x is tin g fed e ra l la w s a n d th e
re g u la tio n s o f th e SEC a n d th e
C o m m o d ity F u tu re s T ra d in g
C o m m issio n (CFTC), a lth o u g h n o t
sp e c ific a lly p ro m u lg a te d for th e
re g u la tio n o f p a y m e n t tra n sfe rs,
p ro v id e d p ro te c tio n s to c o n s u m e rs th a t
w e re c o n s is te n t w ith th e r e q u ire m e n ts
o f th e E FT A a n d R e g u la tio n E.
A s c u rre n tly w ritte n , h o w e v e r, th e
e x e m p tio n d o e s n o t e x te n d to a tra n sfe r
for th e p u rc h a s e o r sa le o f s e c u ritie s if
th e se c u ritie s (for e x a m p le , m u n ic ip a l
se c u ritie s) are n o t re g u la te d b y th e SEC,
e v e n if th e tra n s fe r is e x e c u te d b y a
b ro k e r-d e a le r w h o is re g u la te d b y th e
SEC. In k e e p in g w ith th e sta tu to ry
la n g u ag e, th e p ro p o s e d c h a n g e w o u ld
e x e m p t tra n sfe rs in v o lv in g u n re g u la te d
s e c u ritie s if th e p u rc h a s e o r sa le is
tra n s a c te d b y a b ro k e r-d e a le r re g u la te d
b y th e SEC o r a fu tu re s c o m m issio n
m e rc h a n t re g u la te d b y th e CFTC. T h e
B o ard b e lie v e s th a t th e re g u la tio n o f
b ro k e r-d e a le rs a n d fu tu re s c o m m issio n
m e rc h a n ts o ffers su ffic ie n t p ro te c tio n o f
p a y m e n t tra n s fe rs for c o n s u m e rs a n d
th a t th e a p p lic a tio n o f th e p ro te c tio n s in
R e g u la tio n E w o u ld o n ly d u p lic a te
a v a ila b le safeg u ard s.
T h e B o a rd p ro p o s e s to e x te n d th e
e x e m p tio n to a ll se c u ritie s o r
c o m m o d itie s h e ld in b o o k -e n try form b y
F e d e ra l R e serv e B an k s o n b e h a lf o f th e
T re a s u ry D e p a rtm e n t a n d o th e r fe d e ra l
a g e n c ie s (for e x a m p le , T re a s u ry D irec t
issu es). C u rre n tly a tra n s fe r to p u rc h a s e
T re a s u ry s e c u ritie s is te c h n ic a lly
c o v e re d b y R e g u la tio n E b e c a u s e it is
n o t re g u la te d b y th e SEC o r th e CFTC
a n d , w h e n p u rc h a s e d from th e F e d e ra l
R eserv e B an k s, is n o t p u r c h a s e d o r so ld
b y a re g iste re d b ro k e r-d e ale r. T h e B o ard
b e lie v e s th e re is a d e q u a te re g u la tio n o f
tra n sfe rs th a t in v o lv e F e d e ra l R eserv e
B a n k s a n d fe d e ra l a g e n cies, o fferin g
s u ffic ie n t c o n s u m e r p ro te c tio n (see 31
CFR p a rt 370, re g u la tio n s g o v ern in g
p a y m e n ts b y th e a u to m a te d c le a rin g
h o u s e m e th o d o n a c c o u n t o f U n ite d
S tate s se c u ritie s).
T h e B o a rd s o lic its c o m m e n ts o n
w h e th e r th e s e p ro p o s e d c h a n g e s strik e
/O b Q ’
Z
10686
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
th e a p p ro p ria te b a la n c e b e tw e e n
fa c ilita tin g g re a te r u se o f E F T s for
se c u ritie s tra n s a c tio n s a n d p ro v id in g
a d e q u a te c o n s u m e r p ro te c tio n .
P a rag rap h (c)(7)— S m a ll In s titu tio n s
T h e B o ard p ro p o s e s to in c re a se th e
c u rre n t-a s s e t siz e c u to ff o f th e sm a ll
in s titu tio n e x e m p tio n in c u rre n t
§ 205.3(g). S e c tio n 904(c) o f th e EFTA
g iv es th e B o a rd a u th o rity to m o d ify th e
re q u ire m e n ts im p o s e d b y th e re g u la tio n
o n sm a ll fin a n c ia l in s titu tio n s if th e
B o ard d e te rm in e s th a t s u c h
m o d ific a tio n s a re n e c e ssa ry to a lle v ia te
a n y u n d u e c o m p lia n c e b u r d e n o n sm a ll
in s titu tio n s a n d th a t s u c h m o d ific a tio n s
a re c o n s is te n t w ith th e p u rp o s e s a n d
o b jectiv e o f th e act. In 1982, th e B o ard
e x e m p te d p re a u th o riz e d tra n sfe rs to or
from a c c o u n ts a t fin a n c ia l in s titu tio n s
w ith a s se ts o f le ss th a n $25 m illio n . T h e
re g u la tio n e x e m p ts th e p re a u th o riz e d
tra n sfe rs a s a c la ss o f tra n sfe rs, a n d n o t
th e fin a n c ia l in s titu tio n s th e m se lv e s. A
sm a ll fin a n c ia l in s titu tio n th a t p ro v id e s
E FT s e rv ic e s b e s id e s p re a u th o riz e d
tra n sfe rs m u s t c o m p ly w ith th e
re g u la tio n fo r th o s e o th e r se rv ic es. F or
e x a m p le , a s m a ll fin a n c ia l in s titu tio n
th a t offers A T M se rv ic e s m u s t c o m p ly
w ith R e g u la tio n E in re g a rd to th e
is s u a n c e o f d e b it c a rd s, te rm in a l
re c e ip ts , p e rio d ic sta te m e n ts , a n d o th e r
re q u ire m e n ts. In a d d itio n , th e
in s titu tio n m u s t c o m p ly w ith p ro v isio n s
o f th e ac t th a t a p p ly to th e fin a n c ia l
in s titu tio n ’s c o n d u c t ra th e r th a n to th e
e x e m p te d tra n sfe rs. F o r e x a m p le , th e
p r o h ib itio n a g a in st c o m p u lso ry u se o f
E FT s in se c tio n 913 of th e ac t— in reg ard
to c re d it o r e m p lo y m e n t (see d is c u s s io n
b e lo w in § 205.10(e))— re m a in s
a p p lic a b le .
W h e n th e B o a rd a d o p te d th e
e x e m p tio n in 1982, m a n y sm a ll
in s titu tio n s th a t d id n o t offer EFT
se rv ic es s u c h as A T M a c c e ss b e n e f ite d
from th e e x e m p tio n . G iv en th e g ro w th
in as se ts o f fin a n c ia l in s titu tio n s in th e
p a s t te n y ea rs, in c re a s in g th e a sset-siz e
c u to ff o f th e e x e m p tio n to $ 100 m illio n
c o u ld re d u c e b u r d e n w ith o u t le sse n in g
th e e x te n t o f c o n s u m e r p ro te c tio n
o rig in a lly p ro v id e d . B ecau se m a n y
sm a ll in s titu tio n s n o w offer a v a rie ty o f
E FT se rv ic es, it a p p e a rs th a t o n ly a
lim ite d n u m b e r o f in s titu tio n s w o u ld b e
e x e m p te d fro m R e g u la tio n E u n d e r th e
p ro p o s e d in c re a se . T h e B o ard so lic its
c o m m e n t o n th e p ro p o s e d in c re a se in
th e e x e m p tio n le v el. In a d d itio n , th e
B oard re q u e s ts c o m m e n t o n o th e r w ay s
th e b u r d e n o n s m a ll in s titu tio n s c o u ld
b e re d u c e d w ith o u t sa crificin g th e
c o n s u m e r p ro te c tio n s in te n d e d by th e
act.
Q u e s tio n s h a v e b e e n ra ise d a b o u t th e
im p a c t o f A rtic le 4A o f th e U n ifo rm
c o n s u m e r m a y k e e p ” w o u ld re p la c e th e
w o rd in g “ th e fin a n c ia l in s titu tio n sh a ll
m a k e a v a ila b le to th e c o n s u m e r a
w ritte n r e c e ip t o f th e
tra n sfe r(s) * *
c u rre n tly c o n ta in e d
in § 205.9(a). T h e p ro p o s e d ch a n g e is
c o n s is te n t w ith la n g u ag e in R eg ulation
Z (12 CFR 226.17(a)) a n d R eg u latio n DD
(12 CFR 230.3(a)), for ex am p le. T h e
B o ard d o e s n o t c o n s id e r th is to b e a
s u b s ta n tiv e c h a n g e , as th e p ro p o se d
la n g u ag e is d ra w n from th e c u rre n t
c o m m e n ta ry .
T h e p a ra g ra p h a lso in c o rp o ra te s
la n g u a g e c u rre n tly in § 205.9(e) th a t
p e rm its a n in s titu tio n to u se co m m o n ly
a c c e p te d o r re a d ily u n d e rs ta n d a b le
a b b re v ia tio n s in c o m p ly in g w ith th e
d o c u m e n ta tio n re q u ire m e n ts o f th e
re g u la tio n .
C o m m e rc ia l C o d e (UCC) o n th e sm a ll
in s titu tio n e x e m p tio n . In th e re v ise d
c o m m e n ta ry to R e g u la tio n E, th e B o ard
c la rifie s th a t A rtic le 4A is n o t a p p lic a b le
to th e p re a u th o riz e d tra n sfe rs th a t
q u a lify fo r th e s m a ll in s titu tio n
e x e m p tio n . A rtic le 4A a p p lie s p rim a rily
to la rg e -d o lla r c o m m e rc ia l w ire tra n sfe rs
m a d e , for e x a m p le , v ia F e d w ire , CH IPs,
SW IFT, a n d T elex . S e c tio n 4 A -1 0 8
e x c lu d e s a n y tra n s a c tio n th a t is su b je ct
to th e E FT A fro m co v erag e u n d e r
A rtic le 4A . T h e q u e s tio n is w h e th e r th e
tra n sfe rs in itia te d b y sm a ll fin a n c ia l
in s titu tio n s th a t ta k e a d v a n ta g e o f th e
re g u la to ry e x e m p tio n m a y b e su b je c t to
th e r e q u ire m e n ts o f A rtic le 4A as a
c o n s e q u e n c e . F o r e x a m p le , w o u ld a
d ire c t d e p o s it to a c o n s u m e r a c c o u n t at
a sm a ll b a n k b e c o v e re d b y A rtic le 4A
if e x e m p t fro m R e g u la tio n E? T h e B o ard
re g a rd s th e s e p re a u th o riz e d tra n sfe rs as
re m a in in g s u b je c t to c e rta in
re q u ire m e n ts o f th e EFTA , a n d th e re fo re
n o t c o v e re d b y A rtic le 4A. T h e B oard
so lic its c o m m e n t o n w h e th e r sp e c ific
la n g u ag e is n e e d e d in th e re g u la tio n to
clarify th is iss u e .
T h e B o a rd p ro p o s e s d e le tin g fo o tn o te
l a , w h ic h re fe rs to s e c tio n s 913, 915,
a n d 916 o f th e EFT A , S e c tio n 913 p la c e s
re s tric tio n s o n th e c o m p u lso ry u se of
EFTs. F o r e x a m p le , a n in s titu tio n m a y
n o t c o n d itio n th e e x te n sio n o f c re d it o n
re p a y m e n t b y p re a u th o riz e d d eb it. T h e
s ta tu to ry la n g u a g e fro m se c tio n 913 h a s
b e e n in c o rp o ra te d in p ro p o se d
§ 205.10(e). S e c tio n s 915 a n d 916
p ro v id e fo r c iv il a n d c rim in a l lia b ility ,
re sp e c tiv e ly , for v io la tio n s o f th e EFTA.
R e fe ren ce s to s e c tio n s 915 a n d 916 are
c o n ta in e d in p ro p o s e d § 205.3(c)(5)(ii).
T h e B o a rd h a s a lso a d d e d crossre fe re n c e s to § 2 0 5 .1 0 a n d se c tio n s 915
a n d 916 in th e a p p ro p ria te p a ra g ra p h s
to re p la c e fo o tn o te la .
T h e p ro p o s a l c o n ta in s ex ten siv e
e d ito ria l c h a n g e s to th is se ctio n ,
in c lu d in g th e a d d itio n of h e a d in g s to
h e lp d is tin g u is h th e ra le s for so licited
a n d u n s o lic ite d is s u a n c e o f access
d e v ic e s.
T h e p ro p o s a l d e le te s th e o b so lete
la n g u ag e in c u rre n t § 205.5(a)(3), a
p a ra g ra p h th a t g ra n d fa th e re d re n e w a ls
o f p re -1 9 7 9 a c c e ss d e v ic e s from th e
re q u ire m e n ts o f th e se ctio n . In a d d itio n ,
th e B o ard p ro p o s e s to m o v e th e
p ro v is io n s re la tin g to th e T ru th in
L e n d in g A ct (TILA) c o n ta in e d in c u rre n t
§ 205.5(c) to p ro p o s e d § 205.12 to
s im p lify th e re g u la tio n b y p la c in g all
re fe re n c e s to TILA in th e sam e sectio n .
(See th e d is c u s s io n o f § 205.12 b elo w .)
F o o tn o te lb , w h ic h p ro v id e s g u id a n c e
o n is s u a n c e o f a n ac ce ss d ev ice for a
jo in t a c c o u n t, h a s b e e n d e le te d from th e
re g u la tio n a n d m o v e d to th e
c o m m e n ta ry .
S e c tio n 2 0 5 .4 — G e n e r a l D is c lo s u r e
R e q u i r e m e n t s ; J o i n t l y O f f e r e d S erv ices
S e c tio n 2 0 5 .6 — L ia b ility o f C o n s u m e r f o r
U n a u th o r iz e d T r a n s fe r s
C u rre n t § 20 5 .4 d e s c rib e s c e rta in
re q u ire m e n ts u n d e r th e reg u la tio n . T h e
B o ard p ro p o s e s to c o n s o lid a te th e
g e n e ra l d is c lo s u re re q u ire m e n ts
c u rre n tly d is p e rs e d th ro u g h o u t th e
re g u la tio n in th is se c tio n . In a d d itio n to
a d d in g p a ra g ra p h (a), th e p ro p o sa l
c o n ta in s v a rio u s e d ito ria l ch a n g es
in c lu d in g a re o rd e rin g of th e se ctio n ; n o
s u b s ta n tiv e c h a n g e is in te n d e d .
S e c tio n 205.6 sp e c ifie s th e ru le s
g o v e rn in g c o n s u m e r lia b ility for
u n a u th o riz e d u se . T h e p ro p o sa l
sig n ific a n tly re v ise s th e se ctio n in an
effo rt to s im p lify th e te x t a n d m ak e it
e a sie r to u n d e rs ta n d .
T h e B o a rd p ro p o s e s m o v in g
e x p la n a to ry o r illu s tra tiv e m a teria l to
th e c o m m e n ta ry . T h is in c lu d e s th e
p a re n th e tic a l in c u rre n t § 205.6(a)(2),
w h ic h p ro v id e s e x a m p le s o f h o w a
fin a n c ia l in s titu tio n m a y id e n tify th e
c o n s u m e r to w h o m a n access d ev ice is
iss u e d ; § 205.6(b)(3), w h ic h e x p la in s th e
r e la tio n s h ip b e tw e e n th e v a rio u s tie rs o f
lia b ility ; a n d e x a m p le s o f e x te n u a tin g
c irc u m s ta n c e s th a t w o u ld p e rm it
d e la y e d n o tific a tio n by c o n s u m e rs in
c u rre n t § 205.6(b)(4). T h e p ro v isio n s in
c u rre n t § 2 0 5 .6 (d ) c o n c e rn in g th e
P a ra g ra p h (a)— F o rm o f D isc lo su res
T h e p ro p o s a l in c o rp o ra te s th e fo rm a t
re q u ire m e n ts for d isc lo su re s c u rre n tly
fo u n d in §§ 205.7(a) a n d 205.9. T h e
B o ard in te r p re ts th e s e re q u ire m e n ts as
g e n e ra lly a p p ly in g to all d isc lo su re s, in
a d d itio n to th e te rm in a l re c e ip ts a n d
p e rio d ic s ta te m e n ts re q u ire d b y th e
re g u la tio n . T h e p h ra s e “ in a form th e
S e c tio n 2 0 5 .5 — I s s u a n c e o f A c c e s s
D e v ic e s
re la tio n to th e TILA n o w a p p e a r i n
p ro p o s e d § 205.12.
Paragraph (a)—Conditions for Liability
T h e c u rre n t re g u la tio n a p p e a rs to
c o n d itio n c o n s u m e r lia b ility so le ly o n
th e is s u a n c e o f a n a c c e p te d a c c e ss
d e v ic e (§ 205.6(a)). T h e c o m m e n ta ry , on
th e o th e r h a n d , sta te s th a t if th e
c o n s u m e r fails to re p o rt a n
u n a u th o riz e d E FT w ith in 60 d a y s o f
tra n s m itta l o f th e p e rio d ic s ta te m e n t
re fle c tin g th e tra n sfe r, th e c o n s u m e r
c o u ld b e su b je c t to lia b ility for
s u b s e q u e n t tra n sfe rs (Q 6 -1 ). T h e B o ard
in te rp re ts se c tio n 909 o f th e EFT A as
p re c lu d in g c o n s u m e r lia b ility for
u n a u th o riz e d tra n sfe rs n o t in v o lv in g an
ac ce ss d e v ic e u n til 60 d a y s afte r
tra n s m itta l o f th e p e rio d ic s ta te m e n t
refle c tin g th e tran sfe r. A t th a t tim e , th e
c o n s u m e r c o u ld b e su b je c t to u n lim ite d
lia b ility fo r th o se tra n sfe rs o c c u rrin g
afte r th e 60 day s.
T h e p ro p o sa l in c o rp o ra te s th e c u rre n t
c o m m e n ta ry p o sitio n th a t a c o n s u m e r
c o u ld b e h e ld lia b le for u n a u th o riz e d
E FT s th a t d id n o t in v o lv e a n a c c e ss
d ev ice. T h e B o ard b e lie v e s a c o n s u m e r
c a n n o t, h o w e v e r, b e h e ld lia b le for
u n a u th o riz e d tra n sfe rs o c c u rrin g b efo re
th e 6 0 -d ay p e rio d ex p ire s.
T h e p ro p o s e d se c tio n slig h tly a lte rs
th e c u rre n t ru le b y re q u irin g th a t a
fin a n c ia l in s titu tio n p ro v id e a ll o f th e
d is c lo s u re s re q u ire d b y § 205.7 in o rd e r
to im p o s e lia b ility o n th e c o n s u m e r.
C u rre n tly § 205.6(a)(3) re q u ire s th a t o n ly
th re e o f th e d isc lo su re s fro m § 2 05.7 be
p r o v id e d b efo re a c o n s u m e r c a n b e h e ld
lia b le for u n a u th o riz e d tra n sfe rs. T h e
B o ard b e lie v e s th is p ro p o s e d c h a n g e
w o u ld n o t im p o s e a sig n ific a n t
a d d itio n a l b u rd e n as in s titu tio n s m u st
in itia lly p ro v id e a l l o f th e d is c lo s u re s to
c o m p ly w ith § 205.7(b). T h e B oard
so lic its c o m m e n t o n w h e th e r th is
c h a n g e in c re a se s th e risk o f lia b ility for
in s titu tio n s .
P ara g ra p h (b)— L im ita tio n s o n A m o u n t
o f L ia b ility
P ro p o se d p a ra g ra p h (b) in c o rp o ra te s
th e s u b s ta n c e o f c u rre n t p a ra g ra p h s (b)
(lim ita tio n s o n a m o u n t o f lia b ility ) a n d
(c) (n o tice to fin a n c ia l in s titu tio n ). In
a d d itio n , th e p ro p o sa l s p e lls o u t m o re
c le a rly e a c h o f th e th re e tie rs o f a
c o n s u m e r ’s lia b ility ($50, $ 5 0 0 , o r
u n lim ite d ). S u b h e a d in g s p ro v id e fu rth e r
cla rific a tio n .
S e c tio n 2 0 5 .7 — I n itia l D is c lo s u r e s
The proposal includes structural and
editorial changes to this section. To
provide greater clarity, text has been
organized into separate paragraphs on
timing and content of disclosures, and
subheadings have been added to make
th e se c tio n e a sie r to u n d e rs ta n d . F o rm a t
re q u ire m e n ts h a v e b e e n m o v e d to
p ro p o s e d § 205.4(a).
T n e p ro v isio n in c u rre n t § 205.7(a)(1),
g iv in g fin a n c ia l in s titu tio n s th e o p tio n
o f in fo rm in g th e c o n s u m e r a b o u t th e
a d v isa b ility o f p ro m p tly re p o rtin g lo st
o r s to le n ac c e ss d e v ic e s, h a s b e e n
m o v e d to th e c o m m e n ta ry .
T h e B o a rd p ro p o se s to m o v e th e e rro r
re s o lu tio n n o tic e fro m c u rre n t
§ 205.7(a)(10) to a p p e n d ix A (M o d el
F o rm A -3 ), to s tre a m lin e th e re g u la tio n
a n d p la c e a ll m o d e l d is c lo s u re s
to g e th er.
T h e p ro p o s a l d e le te s as o b so le te
c u rre n t § 205.7(b) re g a rd in g d is c lo s u re s
for a c c o u n ts th a t p re d a te th e sta tu te .
P a ra g ra p h (a)(3)— B u s in e ss D ays
A s d e s c rib e d in th e s u p p le m e n ta l
in fo rm a tio n to p a ra g ra p h (d), th e B o ard
p ro p o se s to c h a n g e th e d e fin itio n o f
b u s in e s s d a y to m e a n a c a le n d a r d a y
o th e r th a n a S a tu rd a y , S u n d a y , o r a n y
leg al p u b lic h o lid a y s p e c ifie d in 5
U.S.C. 6103(a). A cc o rd in g ly , in itia l
d is c lo s u re s w o u ld h a v e to in c lu d e th e
re v ise d d e fin itio n o f b u s in e s s d a y to
a s sist c o n s u m e rs in u n d e rs ta n d in g th e
tim in g p ro v is io n s o f th e lia b ility a n d
e rro r re s o lu tio n ru le s u n d e r th e
re g u la tio n .
S e c tio n 2 0 5 .8 — C h a n g e in T e r m s N o tic e ;
E rro r R e s o lu tio n N o tic e
T h e p ro p o sa l m a k e s tw o su b sta n tiv e
c h a n g e s in th is se ctio n . In a d d itio n , th e
B o ard p ro p o s e s to re s tru c tu re th e
re q u ire m e n ts o f § 205.8 a n d a d d
su b h e a d in g s to m a k e it e a sie r to
u n d e rs ta n d .
P a ra g ra p h (a)(1)— P rio r N o tic e R e q u ire d
S e c tio n 905(b) o f th e EFT A re q u ire s a
fin a n c ia l in s titu tio n to n o tify a
c o n s u m e r in w ritin g at le a st tw e n ty -o n e
d a y s b efo re th e effec tiv e d a te o f c e rta in
a d v e rse c h a n g e s in te rm s o r c o n d itio n s
c o n ta in e d in th e in itia l d isc lo su re s. T h e
T ru th in S av in g s A ct (TISA) (12 U.S.C.
4301) also re q u ire s in s titu tio n s to
p ro v id e a c h a n g e in te rm s n o tic e for
d e p o s it a c c o u n ts. S e c tio n 266(c) o f T ISA
re q u ire s a n o tic e 30 d a y s b efo re th e
effectiv e d a te o f a n y a d v e rse c h a n g e in
te rm s o r c o n d itio n s . In th e p ro p o s e d
o fficial sta ff in te rp re ta tio n o f R e g u la tio n
DD, th e B o a rd s ta te d th a t if a fin a n c ia l
in s titu tio n c h a n g e s a te rm th a t also
trig g e rs a c h a n g e in te rm s n o tic e u n d e r
R e g u la tio n E, th e in s titu tio n m a y u se
th e tim in g ru le s o f R e g u la tio n E for
se n d in g th e n o tic e to affec ted
c o n s u m e rs (see 59 FR 5 543, F e b ru a ry 7,
1994). T h e B o ard p ro p o s e s to u s e its
e x c e p tio n a u th o rity u n d e r th e E FT A to
e x te n d th e tim in g o f th e c h a n g e -in -te rm s
n o tic e in R e g u la tio n E to 30 d a y s to
c o in c id e w ith th e tim in g r e q u ire m e n ts
o f R e g u la tio n DD in o rd e r to fa c ilita te
c o m p lia n c e w ith th e re q u ire m e n ts o f
b o th re g u la tio n s. T h e B o ard s o lic its
c o m m e n t o n w h e th e r it is p re fe ra b le to
re ta in th e fle x ib ility o ffered b y th e tw o
d iffe re n t tim in g re q u ire m e n ts.
Paragraph (a)(2)—Prior Notice
Exception
C u rre n tly , p rio r n o tic e is n o t re q u ire d
w h e n a n im m e d ia te c h a n g e in te rm s is
n e e d e d to m a in ta in o r re sto re th e
se c u rity o f a n EFT sy stem o r a c c o u n t. If
a c h a n g e is m a d e p e rm a n e n t, h o w e v e r,
a fin a n c ia l in s titu tio n m u st n o tify th e
c o n s u m e r “ o n o r w ith th e n e x t re g u la rly
s c h e d u le d p e rio d ic s ta te m e n t o r w ith in
30 d a y s ” o f th e c h a n g e if d is c lo s u re
w o u ld n o t ra ise s e c u rity c o n c e rn s. In
c e rta in c irc u m sta n c e s, p e rio d ic
s ta te m e n ts a re se n t o n a q u a rte rly b asis,
a n d th u s th e c o n s u m e r m ig h t n o t
re c e iv e n o tific a tio n for u p to n in e ty
d a y s afte r th e ch a n g e. T h e B o ard
p ro p o se s to s u b s titu te a m o re sp e c ific
tim in g r u le for th is su b s e q u e n t n o tic e .
U n d e r th e p ro p o sa l, if th e c h a n g e is
m a d e p e rm a n e n t, a fin a n c ia l in s titu tio n
m u s t p ro v id e w ritte n n o tic e w ith in 45
d a y s o f th e c h a n g e u n le s s d is c lo s u re
ra ise d s e c u rity c o n c e rn s. T h e B o ard
re q u e sts c o m m e n t o n th e p ro p o s e d
tim in g re q u ire m e n t.
P a ra g ra p h (b)— E rro r R e so lu tio n N o tice
T h e B o ard p ro p o se s to m o v e th e
a lte rn a te e rro r re s o lu tio n n o tic e , w h ic h
a n in s titu tio n m a y g ive w ith e a c h
p e rio d ic s ta te m e n t in p la c e o f th e lo n g er
a n n u a l n o tic e , from c u rre n t § 205.8(b) to
a p p e n d ix A (M o d el F o rm A -3 ). T h is
w ill stre a m lin e th e re g u la tio n a n d p la ce
a ll m o d e l d is c lo s u re s in o n e lo c atio n .
S e c tio n 2 0 5 .9 — R e c e ip ts a t E le c tr o n ic
T e r m in a ls ; P e r io d ic S ta te m e n ts
T h e p ro p o s e d se c tio n c o n ta in s a
n u m b e r o f e d ito ria l re v isio n s a n d tw o
s u b s ta n tiv e c h a n g es. N ew p a ra g ra p h s
a n d h e a d in g s h a v e b e e n a d d e d to b e tte r
o rg a n iz e th e te x t c o n c e rn in g th e tim in g
a n d c o n te n ts o f d isc lo su re s. A s n o te d
e a rlie r, d is c lo s u re fo rm a t re q u ire m e n ts
h a v e b e e n m o v e d to § 205.4. C u rre n t
p a ra g ra p h (e), c o n c e rn in g u s e o f
a b b re v ia tio n s, w a s also m o v e d to
§ 2 0 5 .4 .
The Board proposes to move footnote
2, which permits a financial institution
to make receipts available through a
third party, to the commentary.
T h e p ro p o s a l d e le te s tw o o b so le te
p a ra g ra p h s, (f) a n d (g), w h ic h d e a lt w ith
re c e ip ts fro m te rm in a ls p u rc h a s e d p rio r
to 1980 a n d d e la y e d effec tiv e d a te s for
c e rta in p e rio d ic sta te m en ts.
10688
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
P a ra g ra p h (a)(1)— A m o u n t
P a ra g ra p h (a)(5)— T e rm in a l L o c a tio n
T h e c u rre n t re g u la tio n a llo w s
fin a n c ia l in s titu tio n s o t h e r th a n th e
a c c o u n t-h o ld in g in s titu tio n to in c lu d e a
ch arg e for th e tra n sfe r in th e to ta l
a m o u n t o f th e tra n sfe r, p ro v id e d th e
a m o u n t o f th e ch a rg e is d isc lo se d o n th e
re c e ip t a n d o n a sig n p o s te d o n o r a t th e
te rm in a l. T h e p ro p o sa l m a k e s tw o
ch an g es. F irst, it w o u ld p e rm it a ll
fin a n c ia l in s titu tio n s (in c lu d in g th e
a c c o u n t-h o ld in g in s titu tio n ) to in c lu d e
th e charge in th e to ta l a m o u n t o f th e
tran sfe r, if th e a p p ro p ria te d isc lo su re s
a re m ad e. S eco n d , it w o u ld p e rm it
in s titu tio n s to d is p la y th e fee o n o r at
th e te rm in a l— m e a n in g e ith e r o n a sig n
o r o n th e A T M sc re e n itself. T h e B o a rd
so lic its c o m m e n t o n w h e th e r c o n s u m e rs
w o u ld n e e d a d d e d p ro te c tio n s if th e fee
is d isp la y e d o n th e sc re e n , for e x a m p le ,
a llo w in g th e c o n s u m e r to c a n c e l th e
tra n s a c tio n afte r th e fee is d isc lo se d .
T h is p a ra g ra p h in c o rp o ra te s th e
s u b s ta n c e o f c u rre n t § 2 0 5 .9 (b )(l)(iv ).
T h e d e ta il c o n ta in e d in th e c u rre n t
re g u la tio n w h ic h s p e c ifie s a p p ro p ria te
lo c a tio n d e s c rip tio n s h a s b e e n m o v e d to
th e c o m m e n ta ry .
P a ra g ra p h (a)(3)— T y p e
T h is p a ra g ra p h c o rre s p o n d s to c u rre n t
p a ra g ra p h (a)(3) re g a rd in g d is c lo s u re o f
ty p e s o f tra n sfe r a n d a c c o u n ts. T h e
e x a m p le s in c lu d e d in th e c u rre n t
p a ra g ra p h h a v e b e e n m o v e d to th e
p ro p o s e d c o m m e n ta ry .
C u rre n tly th e re g u la tio n re q u ire s th a t
a fin a n c ia l in s titu tio n u n iq u e ly id e n tify
e a c h a c c o u n t o n th e te rm in a l re c e ip t if
m o re th a n o n e a c c o u n t o f th e sa m e ty p e
m a y b e a c c e sse d b y a sin g le ac ce ss
d ev ice . F o o tn o te 3 p ro v id e d a n
e x c e p tio n for in s ta n c e s in w h ic h th e
te rm in a l is in c a p a b le o f u n iq u e ly
id e n tify in g e a c h a c c o u n t, as w e ll a s for
tra n s a c tio n s a t te rm in a ls p u rc h a s e d o r
o rd e re d b y th e fin a n c ia l in s titu tio n p rio r
to 1980. T h e p o rtio n o f th e fo o tn o te
w h ic h p e rm its fin a n c ia l in s titu tio n s to
e x c lu d e id e n tific a tio n o f th e ty p e o f
a c c o u n t if th e ac c e ss d e v ic e m a y ac ce ss
o n ly o n e a c c o u n t a t a te rm in a l h a s b e e n
in c o rp o ra te d in to th e te x t o f th e
p ro p o s e d re g u la tio n a t § 205.9(a)(3). T h e
re m a in d e r o f th e fo o tn o te h a s b e e n
d e le te d as o bsolete.
P a ra g ra p h (a)(4)— Id e n tific a tio n
C u rren tly , th e re g u la tio n re q u ire s th a t
fin a n c ia l in s titu tio n s d isc lo se o n
te rm in a l re c e ip ts a n u m b e r o r c o d e th a t
u n iq u e ly id e n tifie s th e c o n s u m e r
in itia tin g th e tra n sfe r, th e c o n s u m e r’s
ac co u n t(s), o r th e a c c e ss d e v ic e u s e d to
in itia te th e tra n s fe r (§ 205.9(a)(4)). T h e
B o ard p ro p o se s to d e le te th e re fe re n c e
to a n u m b e r o r c o d e th a t u n iq u e ly
id e n tifie s th e “ c o n s u m e r in itia tin g th e
tra n s fe r” as su p e rflu o u s. T h e B o ard
b e lie v e s th a t th e re m a in in g
id e n tific a tio n re q u ire m e n ts su ffic ie n tly
id e n tify th e c o n su m e r.
T h e p ro p o s a l d e le te s fo o tn o te s 5, 6,
a n d 8 fro m th e re g u la tio n . F o o tn o te 5
a llo w s in s titu tio n s to o m it th e n a m e o f
th e sta te o n te rm in a l re c e ip ts for
tra n sfe rs o c c u rrin g a t te rm in a ls w ith in
50 m ile s o f th e in s titu tio n ’s m a in office.
F o o tn o te s 6 a n d 8 re fe r b a c k to th e te x t
o f fo o tn o te 5. T h e p ro p o s a l in c o rp o ra te s
th is e x c e p tio n in to th e re g u la to ry te x t.
F o o tn o te 5 a lso a llo w s in s titu tio n s to
o m it th e n a m e o f th e c ity a n d sta te if a ll
o f th e te rm in a ls a re lo c a te d in th e sa m e
c ity , a n d to o m it th e n a m e o f th e sta te
if a ll o f th e te rm in a ls a re lo c a te d in th e
sa m e sta te . T h e se e x c e p tio n s h a v e b e e n
d e le te d as o b so le te , s in c e m o st
in s titu tio n s th a t o ffer A T M a c c e ss
b e lo n g to n e tw o rk s o p e ra tin g o n a n
in te rs ta te b a sis. A c c o rd in g ly , few if a n y
fin a n c ia l in s titu tio n s a re a b le to ta k e
ad v a n ta g e o f th e e x c e p tio n p ro v id e d b y
th e fo o tn o te . T h e B o a rd so lic its
c o m m e n t o n w h e th e r th e s e la tte r
e x c e p tio n s a re s till u s e d b y in s titu tio n s .
T h e ru le s re g a rd in g te rm in a l
id e n tific a tio n o n th e re c e ip t h a v e b e e n
slig h tly m o d ifie d . S e c tio n
205.9(b)(l)(iv)(C ) a llo w s fin a n c ia l
in s titu tio n s to id e n tify th e te rm in a l
lo c a tio n b y u s in g th e n a m e o f th e e n tity
a t w h o se p la c e o f b u s in e s s th e te rm in a l
is lo c a te d , in c lu d in g id e n tify in g th e
n a m e o f th e fin a n c ia l in s titu tio n .
F o o tn o te 7 re q u ire s, h o w e v e r, th a t if th e
in s titu tio n o w n s o r o p e ra te s te rm in a ls at
m o re th a n o n e lo c a tio n , th e te rm in a l
lo c a tio n m u s t b e id e n tifie d o n th e
p e rio d ic sta te m e n t. T h e re fo re , if a n
in s titu tio n o w n s o n ly o n e te rm in a l (a n d
d o e s n o t b e lo n g to a n e tw o rk ) it c o u ld
id e n tify th e te rm in a l u s in g its o w n
n a m e . T h e p ro p o sa l p ro v id e s th a t th e
re c e ip t a n d th e p e rio d ic s ta te m e n t m a y
p ro v id e th e te rm in a l lo c a tio n b y g iv in g
th e n a m e o f th e in s titu tio n if it is o th e r
th a n th e a c c o u n t-h o ld in g in s titu tio n . In
th e p re v io u s e x a m p le , th e in s titu tio n
w o u ld h a v e to p ro v id e e ith e r a stre e t
a d d re s s o r a g e n e ra lly a c c e p te d n a m e for
th e lo c a tio n . T h e B o a rd b e lie v e s th is
c h a n g e m a k e s th e p ro v is io n a v a ila b le to
m o re in s titu tio n s , sin c e v ery few
in s titu tio n s o w n a n d o p e ra te o n ly o n e
te rm in a l a n d d o n o t b e lo n g to a
n e tw o rk . T h e B o ard s o lic its c o m m e n t o n
w h e th e r th is im p o s e s a b u r d e n o n sm a ll
in s titu tio n s , a n d also o n w h e th e r th e
c h a n g e a d v e rse ly re d u c e s c o n s u m e r
in fo rm a tio n .
P a ra g ra p h (a)(6)— T h ir d P arty T ra n sfe r
P ro p o se d p a ra g ra p h (a)(6)
in c o rp o ra te s th e su b s ta n c e o f c u rre n t
p a ra g ra p h (a)(6). T h e e x c lu d e d
la n g u ag e , d e s c rib in g th e u s e o f c o d e s o r
c irc u m s ta n c e s w h e n th e n a m e o f th e
p a y e e c a n n o t b e d u p lic a te d b y th e
te rm in a l, h a s b e e n in c o rp o ra te d in to th e
p ro p o s e d c o m m e n ta ry .
P a ra g ra p h (b)— P e rio d ic S ta te m e n ts
P a ra g ra p h (b)(1)— T ra n sa c tio n
In fo rm a tio n
T h e re g u la tio n re q u ire s fin a n c ia l
in s titu tio n s to d isc lo se o n th e p e rio d ic
s ta te m e n t e ith e r th e lo c a tio n o f th e
te rm in a l a s it a p p e a re d o n th e re c e ip t or,
if a c o d e o r te rm in a l n u m b e r w a s u s e d
to id e n tify th e lo c a tio n , b o th th e c o d e
a n d a d e s c rip tio n o f th e lo c a tio n a s
sp e c ifie d in th e re g u la tio n
(§ 2 0 5 .9 (b )(l)(iv )). T h e p ro p o s e d
re g u la tio n sim p lifie s th e r u le b y n o t
re q u irin g a re s ta te m e n t o f th e c o d e in
a d d itio n to th e lo c a tio n d e s c rip tio n (see
th e d is c u s s io n in p a ra g ra p h (a)(5)
above). P ro p o se d p a ra g ra p h (b )(l)(iv)
a lso in c o rp o ra te s th e su b s ta n c e o f
fo o tn o te 4a, w h ic h p ro v id e s th a t a
fin a n c ia l in s titu tio n n e e d n o t id e n tify
th e te rm in a l lo c a tio n for tra n s a c tio n s
th a t in v o lv e th e d e p o s it o f cash , ch e ck s,
d ra fts, o r s im ila r p a p e r in s tru m e n ts at
e le c tro n ic te rm in a ls .
F o o tn o te 4 c u rre n tly p e rm its fin a n c ia l
in s titu tio n s to p ro v id e c e rta in
in fo rm a tio n o n d o c u m e n ts th a t
a c c o m p a n y th e p e rio d ic sta te m e n t; a n d
it p e rm its th e u s e o f co d e s, if e x p la in e d
o n e ith e r th e sta te m e n t o r th e
a c c o m p a n y in g d o c u m e n ts . T h e fo o tn o te
h a s b e e n d e le te d a n d th e su b sta n c e
m o v e d to th e p ro p o s e d c o m m en tary .
F o o tn o te 9 a llo w s a n in s titu tio n to o m it
th e id e n tific a tio n o f th ir d p a rtie s from
p e rio d ic sta te m e n ts if th e ir n a m e s
a p p e a r o n ch e c k s, d rafts, o r s im ila r
p a p e r in s tru m e n ts d e p o s ite d to th e
c o n s u m e r’s a c c o u n t a t a n e le c tro n ic
te rm in a l. T h e fo o tn o te h a s b e e n d e le te d
a n d th e su b sta n c e m o v e d to th e
p ro p o s e d c o m m e n ta ry .
P a ra g ra p h (b)(3)— F ees
C u rre n tly , § 205.9(b)(3) m a k e s c lea r
th a t a p e rio d ic sta te m e n t re q u ire d b y
R e g u la tio n E n e e d n o t d isc lo se an y
fin a n c e c h a rg e im p o s e d u n d e r 12 CFR
226.7(f). T h e p ro p o sa l e lim in a te s th e
re fe re n c e from th e re g u la tio n , a n d
m o v e s th e s u b s ta n c e to th e c o m m en tary .
R e g u la tio n DD re q u ire s in s titu tio n s
th a t p ro v id e p e rio d ic s ta te m e n ts to
ite m iz e b y ty p e a n d a m o u n t c e rta in fees
im p o s e d d u rin g th e sta te m e n t p e rio d
(§ 230.6(a)(3)). C u rre n tly , § 205.9(b)(3) o f
R e g u la tio n E re q u ire s th e d is c lo s u re o f
a n y fee th a t w a s a s se ss e d ag a in st th e
/Oio9t
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
a c c o u n t d u rin g th e p e rio d for E FT s. T h e
c o m m e n ta ry to R e g u la tio n E (Q 9 -3 1 )
a llo w s fees to b e s h o w n a s a to ta l d o lla r
fig u re o r to b e ite m iz e d in p a rt o r in fu ll,
a t th e in s titu tio n ’s o p tio n . U n d e r
R e g u la tio n DD, th e B o a rd h a s p ro v id e d
th a t in s titu tio n s m a y fo llo w th e m o re
flex ib le ru le s in R e g u la tio n E fo r fees
a s so c ia te d w ith E F T s e v e n th o u g h
R e g u la tio n DD o th e rw is e re q u ire s a
m o re sp e c ific d isc lo su re . T h e B o ard
s o lic its c o m m e n t o n w h e th e r re g u la to ry
b u r d e n w o u ld b e e a se d if th e d is c lo s u re
re q u ire m e n t in R e g u la tio n E m irro re d
th e re q u ire m e n t in R e g u la tio n DD (see
12 C FR 230.6(a)(3)).
P ara g ra p h (c)— E x c e p tio n s to th e
P e rio d ic S ta te m e n t R e q u ire m e n ts for
C e rta in A c c o u n ts
T h e p ro p o sa l in c o rp o ra te s c u rre n t
p a ra g ra p h s (c), (d), (h), a n d fo o tn o te 9 a
in re v is e d § 205.9(c), p e rta in in g to th o se
c irc u m s ta n c e s in w h ic h a p e rio d ic
s ta te m e n t is n o t re q u ire d (for e x a m p le ,
for a p as sb o o k a c c o u n t th a t c a n b e
a c c e sse d e le c tro n ic a lly o n ly b y
p re a u th o riz e d tra n sfe rs to th e a c c o u n t).
N o s u b sta n tiv e c h a n g e is in te n d e d .
P a rag rap h (d)— D o c u m e n ta tio n for
F o re ig n -In itia te d T ra n sfe rs
Proposed paragraph (d) incorporates
the essence of current paragraph (i)
without substantive change.
S e c tio n 2 0 5 .1 0 — P r e a u th o r iz e d
T r a n s fe r s
T h e B o ard h a s re fo rm a tte d th is
se c tio n a n d h a s a d d e d s u b h e a d in g s. T h e
p ro p o s e d se c tio n c o n ta in s a s u b s ta n tiv e
c h a n g e from th e c u rre n t re g u la tio n a n d
a n e w p a ra g ra p h o n c o m p u lso ry u se.
P ara g ra p h (a)— P re a u th o riz e d T ra n sfe rs
to C o n s u m e r’s A c c o u n t
S e c tio n 205.10 se ts fo rth g en e ral
re q u ire m e n ts for p re a u th o riz e d
tran sfe rs. T h e re g u la tio n c u rre n tly
re q u ire s th a t w h e n a c o n s u m e r’s
a c c o u n t w ill b e c re d ite d b y a
p re a u th o riz e d tra n sfe r fro m th e sam e
p a y o r a t le a st o n c e ev e ry 60 d a y s, th e
in s titu tio n m u s t c re d it d ie fu n d s to th e
a c c o u n t as o f th e d a y th e fu n d s are
rec eiv e d ; th is re q u ire m e n t w o u ld b e
d e le te d from th e re g u la tio n as o b so le te .
T h e B o ard b e lie v e s th a t m a n d a tin g
w h e n fu n d s m u s t b e c re d ite d to a n
a c c o u n t is n o lo n g e r n e c e s sa ry sin c e
o th e r re g u la tio n s a d d re s s b o th w h e n
fu n d s m u s t b e m a d e a v a ila b le to th e
c o n s u m e r a n d w h e n in te re s t m u s t b e
p a id o n th e d e p o s it (see R e g u la tio n CC,
12 CFR p a rt 229; T re a s u ry re g u la tio n s,
31 CFR p a rt 210; a n d A CH a s so c ia tio n
ru les). T h e B oard so lic its c o m m e n t o n
w h e th e r th e re is a n e e d to m a in ta in th e
re q u ire m e n t in th e re g u la tio n .
P a ra g ra p h (b)— W ritte n A u th o riz a tio n
for P re a u th o riz e d T ra n sfe rs F ro m
C o n s u m e r’s A c c o u n t
T h e re q u ire m e n t th a t p re a u th o riz e d
E FT s fro m a c o n s u m e r ’s a c c o u n t b e
a u th o riz e d b y th e c o n s u m e r o n ly in
w ritin g h a s b e e n re v ise d . T h e
re q u ire m e n t fo r th e c o n s u m e r’s
a u th o riz a tio n to b e a w ritin g h a s b e e n
e x p a n d e d to in c lu d e a u th o riz a tio n s
w h ic h are “ s im ila rly a u th e n tic a te d ” b y
th e c o n s u m e r. T h is p ro p o s e d e x p a n s io n
a d d re sse s d e v e lo p m e n ts in e le c tro n ic
se rv ic es, s u c h as h o m e b a n k in g . T h e
b ro a d e r in te r p re ta tio n o f a “ w ritin g ”
w o u ld in c lu d e , fo r e x a m p le , e le c tro n ic
a u th o riz a tio n b y th e c o n s u m e r re c o rd e d
o n a c o m p u te r m e m o ry u n it. T h e B o ard
b e lie v e s th is b ro a d e r in te rp re ta tio n is
c o n s is te n t w ith th e re q u ire m e n t in
se c tio n 907 o f th e EFT A th a t th e
a u th o riz a tio n b e in w ritin g . T h e B o ard
so lic its c o m m e n t o n w h e th e r a d d itio n a l
sa fe g u ard s a re n e c e s sa ry to p ro te c t
c o n s u m e rs in th is situ a tio n . In a d d itio n ,
th e B o ard so lic its c o m m e n t o n o th e r
e x a m p le s th a t m ig h t c o n s titu te
“ s im ila rly a u th e n tic a te d ” for p u rp o s e s
o f th is se c tio n . T h e B o ard n o te s th a t th e
re v ise d r e q u ire m e n t for a sig n e d w ritin g
m a k es c le a r th a t o n ly th e c o n s u m e r
c o u ld p ro d u c e th e w ritte n a u th o riz a tio n
a n d n o t, for e x a m p le , a th ird -p a rty
m e rc h a n t o n b e h a lf o f th e c o n su m e r.
P a ra g ra p h (e)— C o m p u lso ry U se
S e c tio n 913 o f th e sta tu te p la c e s
c e rta in re s tric tio n s o n c o m p u lso ry u se
o f E FT s as a c o n d itio n o f c re d it,
e m p lo y m e n t, o r re c e ip t o f g o v e rn m e n t
b e n e fits. T h e c u r r e n t re g u la tio n
m e n tio n s th e p r o h ib itio n ag a in st
c o m p u lso ry u s e in fo o tn o te l a , w h ic h
re fe re n c e s a fin a n c ia l in s titu tio n ’s
c o n tin u in g d u ty to c o m p ly w ith se c tio n
913. T h e p ro p o s e d p a ra g ra p h is a
c o u n te rp a rt to th e sta tu to ry p ro v isio n
a n d w o u ld c la rify th a t th e p ro v isio n
a p p lie s to o th e r p e rs o n s (su c h as
e m p lo y ers) a n d n o t ju st to fin a n c ia l
in s titu tio n s .
S e c tio n 2 0 5 .1 1 — P r o c e d u r e s fo r
R e s o lv in g E rro rs
T h e B o ard p ro p o s e s to refo rm at th is
se c tio n a n d a d d s u b h e a d in g s to
fa c ilita te c o m p lia n c e . T h e e d ito ria l
re v isio n s, w ith o n e e x c e p tio n , are n o t
in te n d e d to m a k e su b sta n tiv e ch an g es.
P ro v is io n s c o n ta in e d in th re e
fo o tn o te s h a v e b e e n m o v e d to th e
p ro p o se d c o m m e n ta ry : F o o tn o te 10,
w h ic h p e rm its a n in s titu tio n to
p re sc rib e p ro c e d u re s for g iv in g a n e rro r
n o tic e ; fo o tn o te 11, w h ic h d e fin e s a n
a g re e m e n t for p u rp o s e s o f § 2 05.14; a n d
fo o tn o te 12, w h ic h a llo w s in s titu tio n s to
10689
u s e a p e rio d ic s ta te m e n t to in fo rm
c o n s u m e rs th a t n o e rro r h a s o cc u rre d .
T h e p ro v is io n s in c u rre n t p a ra g ra p h
(i) re la tin g to th e TILA h a v e b e e n m o v e d
to p ro p o s e d § 2 05.12.
P a ra g ra p h (c)— T im e L im its a n d E x te n t
o f In v e stig a tio n
P ro p o se d p a ra g ra p h (c) c o m b in e s
c u rre n t p a ra g ra p h s (c) a n d (d)(2) o f
§ 205.11 c o n c e rn in g in v e stig a tio n o f
e rro rs. T h e re g u la tio n c u rre n tly re q u ire s
a fin a n c ia l in s titu tio n to p ro v id e th e
c o n s u m e r w ith a w ritte n e x p la n a tio n ,
w ith in th e p re s c rib e d tim e p e rio d
(e ith e r 10 b u s in e s s d a y s o r 45 c a le n d a r
d ay s), if a n e rro r o c c u rre d . If a n erro r
d id n o t o c c u r a n d th e fin a n c ia l
in s titu tio n is o p e ra tin g u n d e r th e 45c a le n d a r-d a y ru le , th e in s titu tio n h a s
th re e a d d itio n a l d a y s to n o tify th e
c o n s u m e r o f its fin d in g s. S ectio n 908 o f
th e EFT A m a k e s c le a r th e e x tra tim e is
a v a ila b le w h e n n o e rro r o c c u rre d , b u t is
s ile n t o n th e a v a ila b ility o f ex tra tim e
w h e n a n e rro r is fo u n d (see th e
d is c u s s io n in p a ra g ra p h (e) below ).
T o fa c ilita te c o m p lia n c e , th e B oard
p ro p o se s to u s e its e x c e p tio n a u th o rity
u n d e r se c tio n 904(c) to p e rm it
in s titu tio n s to g iv e n o tic e w ith in th re e
b u s in e s s d a y s o f c o n c lu d in g its
in v e stig a tio n re g a rd le ss o f th e p ro c e d u re
b e in g fo llo w e d a n d w h e th e r o r n o t a n
e rro r h a s b e e n fo u n d . T h e sta tu to ry
la n g u ag e c o n ta in e d in se c tio n 908(d)
le n d s its e lf to s u c h a n in te rp re ta tio n ,
a n d th e B o a rd b e lie v e s th e c h a n g e w ill
fa c ilita te c o m p lia n c e w ith th e se c tio n
w ith o u t a n y s ig n ific a n t lo ss o f c o n s u m e r
p ro te c tio n .
P a ra g ra p h (d)— P ro c e d u re s if F in a n c ia l
In s titu tio n D e te rm in e s N o E rror o r
D ifferen t E rro r O c c u rre d
A s d is c u s s e d in th e p re c e d in g
p a ra g ra p h , th e B o a rd p ro p o se s to allo w
in s titu tio n s to p ro v id e n o tic e w ith in
th re e b u s in e s s d a y s o f c o n c lu d in g an
in v e stig a tio n , re g a rd le ss o f w h ic h tim e
p e rio d is b e in g fo llo w ed .
S e c tio n 2 0 5 .1 2 — R e la tio n to O th e r L a w s
T h e p ro p o s e d se c tio n c o n ta in s th e
v a rio u s re fe re n c e s to th e TILA a n d
R e g u la tio n Z c u rre n tly d is p e rs e d
th ro u g h o u t R e g u la tio n E. T h e se c tio n
also in c lu d e s th e s ta n d a rd s a p p lie d by
th e B o a rd in g ra n tin g a sta te law
p re e m p tio n o r in m a k in g an e x e m p tio n
d e te rm in a tio n .
P a ra g ra p h (a)— R e la tio n to T ru th in
L en d in g
T h e B o ard p r o p o s e s to c o n s o lid a te all
re fe re n c e s fro m §§ 20 5 .5, 205.6, a n d
205.11 to c o m p lia n c e w ith b o th th e
TILA a n d th e E FT A in a sin g le
p a ra g ra p h . T h e B o a rd b eliev e s
to m
10690
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
c o n s o lid a tin g th e se re fe re n c e s in o n e
se ctio n w ill fac ilita te c o m p lia n c e .
c o n ta in e d in a n e w § 2 0 5 .1 5 , in th is
p ro p o sa l.
R eserv e S y stem , W a sh in g to n , DC 20551,
o r b y te le p h o n e at (202) 452—
3245.
P arag rap h (b)— P re e m p tio n o f
In c o n sis te n t S tate L aw s
Appendix A— Model Disclosure
Clauses and Forms
L ist o f S u b je c ts in 12 C FR P a r t 205
C u rren t § 205.12(a) a n d (b) a re
in c o rp o ra te d in p ro p o s e d p a ra g ra p h (b),
w ith n u m e ro u s e d ito ria l re v isio n s.
P ro p o se d p a ra g ra p h (c) c o n ta in s th e
ru le s th e B o ard a p p lie s in g ra n tin g a
sta te ex e m p tio n .
M o st o f th e m o d e l d is c lo s u re c la u se s
c o n ta in e d in a p p e n d ix A re m a in
u n c h a n g e d . A s n o te d e a rlie r, th e e rro r
re s o lu tio n n o tic e s c u rre n tly c o n ta in e d
in §§ 205.7 a n d 205.8 h a v e b e e n m o v e d
fro m th e re g u la tio n in to a p p e n d ix A to
s tre a m lin e th e re g u la tio n (see M o d e l
F o rm A -3 ).
S e c tio n 2 0 5 .1 3 — A d m in is tr a tiv e
E n fo r c e m e n t; R e c o r d R e te n tio n
A p p e n d ix B — A d m in is tr a tiv e
E n fo r c e m e n t
P arag rap h (c)— S ta te E x e m p tio n s
C u rre n t § 205.13 c o n ta in s in fo rm a tio n
ab o u t a d m in is tra tiv e e n fo rc e m e n t,
iss u a n c e o f staff in te rp re ta tio n s , a n d
re c o rd re te n tio n . W ith th e e x c e p tio n of
th e re c o rd re te n tio n re q u ire m e n ts , th e
p ro p o sa l m o v es m u c h o f th is
in fo rm a tio n to th e a p p e n d ic e s.
P arag rap h (b)— R eco rd R e te n tio n
C e rtain p ro v isio n s o f th e a c t a n d
re g u la tio n a p p ly to p e rs o n s o th e r th a n
fin a n c ia l in s titu tio n s (for e x a m p le , th e
c o m p u lso ry u se p ro v isio n s o f s e c tio n
913, w h ic h a p p ly to a ll e m p lo y e rs). T h e
p ro p o sa l d iffers from th e c u r r e n t ru le by
lim itin g th e re c o rd re te n tio n
re q u ire m e n ts to fin a n c ia l in s titu tio n s ,
ra th e r th a n co v e rin g “ a n y p e rs o n su b je c t
to th e ac t a n d re g u la tio n .” T h e B o ard
so lic its c o m m e n t o n w h e th e r th is
p ro p o s e d c h a n g e w ill p ro d u c e a n
ad v e rse im p a c t o n e n fo rc e m e n t
ac tiv ities.
S e c tio n 2 0 5 .1 4 — E le c tr o n ic F u n d
T r a n s fe r S e r v ic e P r o v id e r N o t H o ld in g
C o n s u m e r ’s A c c o u n t
T h e B o ard p ro p o se s s u b s ta n tia l
e d ito ria l re v isio n s to th is se c tio n to
sim p lify th e tex t. T e x t h a s b e e n
reo rg a n iz e d in to a p p ro p ria te ca te g o rie s
a n d su b h e a d in g s a d d e d for g re a te r
clarity . F o o tn o te 13 re g a rd in g d e la y e d
effective d a te s h a s b e e n d e le te d as
obsolete. T h e B oard s o lic its c o m m e n t o n
o th e r w a y s th e se c tio n c o u ld b e
sim p lifie d to fa c ilita te c o m p lia n c e w ith
th e reg u la tio n .
S e c tio n 2 0 5 .1 5 — E le c tr o n ic F u n d
T r a n s fe r o f G o v e r n m e n t B e n e fits
T h e B o ard h a s is s u e d a fin a l r u le in
reg ard to th e co v e rag e b y th e E FT A a n d
R e g u la tio n E o f g o v e rn m e n t b e n e fits th a t
fed eral, sta te , a n d lo c a l g o v e rn m e n ts
d is b u rs e to re c ip ie n ts b y m e a n s o f
e le c tro n ic b e n e fit tra n sfe r (EBT)
p ro g ra m s. (See D ocket N o. R— 8 2 9
0
e lse w h e re in to d a y ’s F e d e r a l R e g iste r.)
H av in g ju st is s u e d th a t fin a l ru le , th e
B oard is n o t in c o rp o ra tin g th e
p ro v is io n s g o v ern in g EBT p ro g ra m s,
A p p e n d ix B lis ts th e fed e ra l
e n fo rc e m e n t a g e n c ie s re s p o n s ib le for
en fo rc in g R e g u la tio n E for p a rtic u la r
c la sse s o f in s titu tio n s .
A p p e n d i x C -^-Issu a n c e o f S ta ff
In te r p r e ta tio n s
T h e p ro p o s a l in c lu d e s a n e w
a p p e n d ix to re p la c e c u rre n t § 205.13(b)
p e rta in in g to re q u e s ts for a n d is s u a n c e
o f sta ff in te rp re ta tio n s o f R e g u la tio n E.
M u c h o f th e in fo rm a tio n c o n ta in e d in
th e c u rre n t re g u la tio n , d e s c rib in g
is s u a n c e o f sta ff in te rp re ta tio n s , h a s
b e e n d e le te d . T h e B o a rd w ill c o n tin u e
to re ly o n th e p u b lic a tio n o f
in te rp re ta tio n s in th e o ffic ia l sta ff
c o m m e n ta ry a s th e p rim a ry m e a n s o f
in te rp re tin g th e re g u la tio n . S p e c ific a lly ,
a n d in k e e p in g w ith th e p ra c tic e th a t
h a s b e e n in p la c e for y e a rs, th e p ro p o sa l
d e le te s a n y re fe re n c e to u n o ffic ia l sta ff
in te rp re ta tio n s th a t a re in w ritin g ,
lim itin g w ritte n in te rp re ta tio n s to th o se
th a t a p p e a r in th e sta ff c o m m e n ta ry , as
re v ise d . T h e B o ard b e lie v e s th is to b e
th e m o st e ffic ie n t a n d u s e fu l w a y to
fa c ilita te c o m p lia n c e .
(3) F o rm o f C o m m e n t L e tte rs
C o m m e n t le tte rs s h o u ld refer to
D o ck et N o. R -0 8 3 0 . T h e B o a rd re q u e sts
th a t, w h e n p o ssib le , c o m m e n ts b e
p r e p a re d u s in g a s ta n d a rd ty p e fa c e w ith
a ty p e siz e o f 10 o r 12 c h a ra c te rs p e r
in c h . T h is w ill e n a b le th e B o a rd to
c o n v e rt th e te x t in to m a c h in e -re a d a b le
form th ro u g h e le c tro n ic s c a n n in g , a n d
w ill fa c ilita te a u to m a te d re trie v a l o f
c o m m e n ts for rev ie w . C o m m e n ts m a y
a lso b e s u b m itte d o n c o m p u te r
d isk e tte s, u sin g e ith e r th e 3 .5 “ o r 5 .2 5 “
siz e, in a n y D O S -co m p a tib le fo rm at.
C o m m e n ts o n c o m p u te r d is k e tte s m u st
b e a c c o m p a n ie d b y a h a rd c o p y v e rsio n .
(4) E co n o m ic I m p a c t S ta te m e n t
T h e B o a rd ’s D iv isio n o f R e se a rc h a n d
S ta tistic s h a s p r e p a re d a n e c o n o m ic
im p a c t s ta te m e n t o n th e p ro p o s e d
re g u la tio n . A c o p y o f th e a n a ly s is m a y
b e o b ta in e d from P u b lic a tio n s S erv ice s,
B o ard o f G o v e rn o rs o f th e F e d e ra l
B anks, b a n k in g , C o n s u m e r p ro te c tio n ,
E le c tro n ic fu n d tra n sfe rs, R e p o rtin g a n d
re c o rd k e e p in g re q u ire m e n ts.
T e x t o f P ro p o s e d R e v isio n s
F o r th e re a so n s se t fo rth in th e
p re a m b le , th e B oard p ro p o s e s to a m e n d
12 CFR p a rt 205 as fo llo w s:
PART 20S—ELECTRONIC FUND
TRANSFERS (REGULATION E)
1. T h e a u th o rity c ita tio n fo r p a rt 205
w o u ld b e re v ise d to re a d a s follow s:
Authority: 15 U.S.C. 1693.
2. S e c tio n s 205.1 th ro u g h 205.14 are
re v ise d to re a d as follow s:
§ 205.1
Authority and purpose.
(a) A u t h o r i t y . T h is p a rt is is s u e d by
th e B o ard o f G o v ern o rs o f th e F e d e ra l
R eserve S y stem p u r s u a n t to th e
E le c tro n ic F u n d T ra n sfe r A ct (15 U.S.C.
1693 e t s e q . ) . T h e in fo rm a tio n -c o lle c tio n
re q u ire m e n ts h a v e b e e n a p p ro v e d b y th e
O ffice o f M a n a g e m e n t a n a B u d g et u n d e r
44 U .S.C. 3501 e t s e q . a n d h a v e b e e n
a s sig n e d OM B No. 7 1 0 0 -0 2 0 0 .
(b) P u r p o s e . T h is p a rt c a rrie s o u t th e
p u rp o s e s o f th e E le c tro n ic F u n d
T ra n sfe r A ct, w h ic h e s ta b lis h e s th e
b a sic rig h ts, lia b ilitie s, a n d
re s p o n s ib ilitie s o f c o n s u m e rs w h o u se
e le c tro n ic fu n d tra n sfe r s e rv ic e s a n d o f
fin a n c ia l in s titu tio n s th a t offer th e s e
se rv ic es. T h e p rim a ry o b je ctiv e o f th e
a c t a n d th is re g u la tio n is th e p ro te c tio n
o f in d iv id u a l c o n s u m e rs e n g a g in g in
e le c tro n ic fu n d tra n sfe rs.
§205.2
Definitions.
F o r p u rp o s e s o f th is p a rt, th e
fo llo w in g d e fin itio n s a p p ly :
(a)
(1) A c c e s s d e v i c e m e a n s a c a rd ,
c o d e , o r o th e r m e a n s o f a c c e ss to a
c o n s u m e r’s a c c o u n t, o r a n y c o m b in a tio n
th e re o f, th a t m a y b e u s e d b y th e
c o n s u m e r to in itia te e le c tro n ic fu n d
tran sfe rs.
(2)
A n a c c e ss d e v ic e b e c o m e s a n
a c c e p t e d a c c e s s d e v i c e w h e n th e
c o n su m e r:
(i) R e q u e sts a n d re c e iv e s, o r sig n s, o r
u se s (or a u th o riz e s a n o th e r to u se ) th e
ac c e ss d e v ic e to tra n sfe r m o n e y b e tw e e n
a c c o u n ts o r to o b ta in m o n e y , p ro p e rty ,
o r se rv ic es;
(ii) R e q u e sts v a lid a tio n o f a n ac ce ss
d e v ic e is s u e d o n a n u n s o lic ite d b asis; or
(iii) R e ce iv es a n ac ce ss d e v ic e in
re n e w a l of, o r in s u b s titu tio n for, a n
a c c e p te d a c c e ss d e v ic e fro m e ith e r th e
fin a n c ia l in s titu tio n th a t in itia lly iss u e d
th e d e v ic e o r a su c ce sso r.
(b)
(1) A c c o u n t m e a n s a d e m a n d
d e p o s it (ch e ck in g ), sa v in g s, o r o th e r
l o w
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
c o n s u m e r a s se t a c c o u n t (o th e r th a n a n
o c c a s io n a l o r in c id e n ta l c r e d it b a la n c e
in a c r e d it p la n ) h e ld d ire c tly o r
in d ire c tly b y a fin a n c ia l in s titu tio n a n d
e s ta b lis h e d p rim a rily for p e rso n a l,
fam ily , o r h o u s e h o ld p u rp o se s.
(2)
T h e te rm d o e s n o t in c lu d e a n
a c c o u n t h e ld b y a fin a n c ia l in s titu tio n
u n d e r a b o n a fid e tru s t ag re e m e n t.
(c) A c t m e a n s th e E le c tro n ic F u n d
T ra n sfe r A ct (title IX o f th e C o n s u m e r
C red it P ro te c tio n A ct, 15 U .S.C. 1693 e t
s e a .) .
(d) B u s i n e s s d a y m e a n s a n y d a y o th e r
th a n a S atu rd a y , a S u n d a y , o r a n y o f th e
legal p u b lic h o lid a y s sp e c ifie d in 5
U .S.C . 6103(a).
(e) C o n s u m e r m e a n s a n a tu ra l p e rso n .
(f) E l e c t r o n i c t e r m i n a l m e a n s a n
e le c tro n ic d ev ice , o th e r th a n a
te le p h o n e o p e ra te d b y a c o n s u m e r,
th ro u g h w h ic h a c o n s u m e r m a y in itia te
a n e le c tro n ic fu n d tran sfe r. T h e te rm
in c lu d e s , b u t is n o t lim ite d to , p o in t-o fsale te rm in a ls , a u to m a te d te lle r
m a c h in e s, a n d c a sh d is p e n s in g
m a ch in e s.
(g) F i n a n c i a l i n s t i t u t i o n m e a n s a b a n k ,
sav in g s a s so c ia tio n , c re d it u n io n , o r a n y
o th e r p e rso n th a t d ire c tly o r in d ir e c tly
h o ld s a n a c c o u n t b e lo n g in g to a
c o n s u m e r, o r th a t iss u e s a n a c c e ss
d e v ic e a n d ag re es w ith a c o n s u m e r to
p ro v id e e le c tro n ic fu n d tra n sfe r
serv ices.
(h) P e r s o n m e a n s a n a tu ra l p e rs o n o r
a n o rg a n iz a tio n , in c lu d in g a
c o rp o ra tio n , g o v e rn m e n t a g e n cy , e s ta te ,
tru st, p a rtn e rs h ip , p ro p rie to rs h ip ,
co o p e rativ e , o r a sso c ia tio n .
(i) P r e a u t h o r i z e d e l e c t r o n i c f u n d
t r a n s f e r m e a n s a n e le c tro n ic fu n d
tra n sfe r a u th o riz e d in a d v a n c e to re c u r
at su b sta n tia lly re g u la r in te rv a ls.
(j) S t a t e m e a n s a n y sta te , te rrito ry , o r
p o sse ssio n o f th e U n ite d S ta te s, th e
D istric t o f C o lu m b ia , th e
C o m m o n w e a lth o f P u e rto R ico, o r a n y
p o litic a l s u b d iv is io n o f th e ab o v e.
(k) U n a u t h o r i z e d e l e c t r o n i c f u n d
t r a n s f e r m e a n s a n e le c tro n ic fu n d
tra n sfe r from a c o n s u m e r’s a c c o u n t
in itia te d b y a p e rs o n o th e r th a n th e
c o n s u m e r w ith o u t a c tu a l a u th o rity to
in itia te th e tra n s fe r a n d fro m w h ic h th e
c o n s u m e r rec e iv e s n o b e n e fit. T h e te rm
d o e s n o t in c lu d e a n e le c tro n ic fu n d
tra n sfe r in itia te d :
( l) By a p e rs o n w h o w a s fu rn is h e d th e
ac ce ss d e v ic e to th e c o n s u m e r ’s a c c o u n t
b y th e c o n s u m e r, u n le s s th e c o n s u m e r
h a s n o tifie d th e fin a n c ia l in s titu tio n th a t
tra n sfe rs b y th a t p e rs o n a re n o lo n g e r
a u th o riz e d ;
(2) W ith fra u d u le n t in te n t b y th e
c o n s u m e r o r a n y p e rso n a c tin g in
c o n c e rt w ith th e c o n s u m e r; o r
(3) By th e fin a n c ia l in s titu tio n o r its
em p lo y ees.
§ 2 0 5.3
Coverage.
(a) G e n e r a l . T h is p a rt a p p lie s to a n y
e le c tro n ic fu n d tra n sfe r th a t a u th o riz e s
a fin a n c ia l in s titu tio n to d e b it o r c r e d it
a c o n s u m e r’s a c c o u n t. G e n e ra lly , th e
p a rt a p p lie s to fin a n c ia l in s titu tio n s . F o r
p u rp o s e s o f §§ 205.10(b), (d), (e) a n d
205.13 o f th is p a rt, th e p a rt a p p lie s to
an y p e rso n .
(b) E l e c t r o n i c f u n d t r a n s f e r . T h e te rm
e le c tro n ic fu n d tra n sfe r m e a n s a n y
tra n sfe r o f fu n d s th a t is in itia te d
th ro u g h a n e le c tro n ic te rm in a l,
te le p h o n e , c o m p u te r, o r m a g n e tic ta p e
for th e p u rp o s e o f o rd e rin g , in s tru c tin g ,
o r a u th o riz in g a fin a n c ia l in s titu tio n to
d e b it o r c re d it a n a c c o u n t. T h e te rm
in c lu d e s , b u t is n o t lim ite d to:
(1) P o in t-o f-sale tran sfe rs;
(2) A u to m a te d te lle r m a c h in e
tran sfe rs;
(3) D irec t d e p o s its o r w ith d ra w a ls o f
fu n d s;
(4) T ra n sfe rs in itia te d b y te le p h o n e ;
and
(5) T ra n sfe rs re s u ltin g fro m d e b it c a rd
tra n sa c tio n s, w h e th e r o r n o t in itia te d
th ro u g h a n e le c tro n ic te rm in a l.
(c) E x c l u s i o n s f r o m c o v e r a g e . T h e
te rm e le c tro n ic fu n d tra n sfe r d o e s n o t
in c lu d e :
(1) C h e c k s . A n y tra n sfe r o f fu n d s
o rig in a te d b y c h e c k , d ra ft, o r s im ila r
p a p e r in s tru m e n t; o r a n y p a y m e n t m a d e
b y c h e c k , d ra ft, o r sim ila r p a p e r
in s tru m e n t a t a n e le c tro n ic te rm in a l.
(2) C h e c k g u a r a n t e e o r a u t h o r i z a t i o n
s e r v i c e s . A n y tra n sfe r o f fu n d s th a t
g u a ra n te e s p a y m e n t o r a u th o riz e s
a c c e p ta n c e o f a c h e c k , d ra ft, o r sim ila r
p a p e r in s tru m e n t w h ic h d o e s n o t
d ire c tly re s u lt in a d e b it o r c r e d it to a
c o n s u m e r’s ac c o u n t.
(3) W i r e t r a n s f e r s . A n y tra n s fe r o f
fu n d s th ro u g h F e d w ire o r th ro u g h a
s im ila r w ire tra n sfe r sy stem th a t is u s e d
p rim a rily for tra n sfe rs b e tw e e n fin a n c ia l
in s titu tio n s o r b e tw e e n b u sin e sse s.
(4) S e c u r i t i e s a n d c o m m o d i t i e s
t r a n s f e r s . A n y tra n sfe r o f fu n d s th e
p rim a ry p u rp o s e o f w h ic h is th e
p u rc h a s e o r sa le o f a s e c u rity o r
c o m m o d ity , if th e se c u rity o r
c o m m o d ity is:
(i) Regulated by the Securities and
Exchange Commission or the
Commodity Futures Trading
Commission;
(ii) P u rc h a s e d o r s o ld th ro u g h a
b ro k e r-d e a le r re g u la te d b y th e S e c u ritie s
a n d E x ch a n g e C o m m issio n o r th ro u g h a
fu tu re s c o m m is s io n m e rc h a n t re g u la te d
b y th e C o m m o d ity F u tu re s T ra d in g
C o m m issio n ; o r
(iii) H e ld in b o o k -e n try form b y a
F e d e ra l R eserv e B an k o r fe d e ra l ag e n cy .
(5) A u t o m a t i c t r a n s f e r s b y a c c o u n t
h o l d i n g i n s t i t u t i o n . A n y tra n s fe r o f
fu n d s u n d e r a n a g re e m e n t b e tw e e n a
10691
c o n s u m e r a n d a fin a n c ia l in s titu tio n
w h ic h p ro v id e s th a t th e in s titu tio n w ill
in itia te in d iv id u a l tra n sfe rs w ith o u t a
s p e c ific re q u e s t from th e c o n su m e r:
(i) B e tw e e n a c o n s u m e r’s a c c o u n ts
w ith in th e fin a n c ia l in s titu tio n ;
(ii) From a consumer’s account to an
account of a member of the consumer’s
family held in the same financial
institution; or
(iii) B e tw e e n a c o n s u m e r’s a c c o u n t
a n d a n a c c o u n t o f th e fin a n c ia l
in s titu tio n , e x c e p t th a t th e se tra n sfe rs
re m a in su b je c t to § 205.10(e) o f th is p a rt
re g a rd in g c o m p u ls o ry u se a n d s e c tio n s
915 a n d 9 1 6 o f th e a c t reg a rd in g c iv il
a n d c rim in a l lia b ility .
(6) T e l e p h o n e - i n i t i a t e d t r a n s f e r s . A n y
tra n s fe r o f fu n d s th a t:
(i) Is in itia te d b y a te le p h o n e
c o n v e rsa tio n b e tw e e n a c o n s u m e r a n d
a n o fficer o r e m p lo y e e o f a fin a n c ia l
in s titu tio n ; a n d
(ii) D oes n o t ta k e p la c e u n d e r a
te le p h o n e b ill-p a y m e n t p la n o r o th e r
w ritte n a g re e m e n t in w h ic h p e rio d ic o r
re c u rrin g tra n sfe rs a re c o n te m p la te d .
(7) S m a l l i n s t i t u t i o n s . A n y
p re a u th o riz e d tra n sfe r to o r from a n
a c c o u n t if th e a s se ts o f th e a c c o u n t
h o ld in g fin a n c ia l in s titu tio n a re $ 1 0 0
m illio n o r le ss o n th e p re c e d in g
D ec em b e r 31. If a s se ts o f th e a c c o u n t
h o ld in g in s titu tio n s u b se q u e n tly e x c e e d
$ 1 0 0 m illio n , th e in s titu tio n ’s
e x e m p tio n for p re a u th o riz e d tra n sfe rs
te rm in a te s o n e y e a r from th e e n d o f th e
c a le n d a r y e a r in w h ic h th e as se ts e x c e e d
$ 100 m illio n . P re a u th o riz e d tra n sfe rs
e x e m p t u n d e r th is p a ra g ra p h re m a in
su b je c t to § 205.10(e) o f th is p a rt
re g a rd in g c o m p u ls o ry u s e a n d s e c tio n s
915 a n d 9 1 6 o f th e a c t reg a rd in g c iv il
a n d c rim in a l lia b ility .
§ 205.4 General disclosure requirements;
jointly offered services.
(a)
F o r m o f d i s c l o s u r e s . D isc lo su res
re q u ire d u n d e r th is p a rt s h a ll b e c le a r
a n d re a d ily u n d e rs ta n d a b le , in w ritin g ,
a n d in a fo rm th e c o n s u m e r m a y k e e p
A fin a n c ia l in s titu tio n m ay u se
c o m m o n ly a c c e p te d o r re a d ily
u n d e rs ta n d a b le a b b re v ia tio n s in
c o m p ly in g w ith th e d isc lo su re
re a u ire m e n ts o f th e p a rt.
( d)
A d d itio n a l in fo r m a tio n ;
d is c lo s u r e s r e q u ir e d b y o th e r la w s .
Information or disclosures required by
other laws (such as the Truth in Lending
Act or the Truth in Savings Act) may be
combined with the disclosures required
by this part.
(c)
M u ltip le a c c o u n ts a n d a c c o u n t
h o l d e r s — (1) M u l t i p l e a c c o u n t s . If a
consumer holds more than one account
at a financial institution, the institution
may combine the required disclosures
into a single statement.
fob
10692
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
(2)
M u l t i p l e a c c o u n t h o l d e r s . F o r jo into id e n tify th e c o n s u m e r to w h o m it w a s
t
(iii)
W ritte n n o tic e is c o n s id e re d
is s u e d .
a c c o u n ts h e ld b y tw o o r m o re
g iv e n a t th e tim e th e c o n s u m e r m a ils th e
c o n s u m e rs, th e fin a n c ia l in s titu tio n
(b)
L i m i t a t i o n s o n a m o u n t o f l i a b i l i t y . n o tic e o r d e liv e rs it fo r tra n s m is s io n by
n e e d p ro v id e o n ly o n e se t o f th e
T h e e x te n t o f a c o n s u m e r’s lia b ility for
a n y o th e r u s u a l m e a n s to th e in stitu tio n .
re q u ire d d isc lo su re s a n d it m a y p ro v id e
a n u n a u th o riz e d e le c tro n ic fu n d tra n sfe r N o tic e m a y b e c o n s id e re d
th e m to a n y o f th e a c c o u n t h o ld e rs.
c o n s tru c tiv e ly g iv e n w h e n t h e
o r a se rie s o f re la te d u n a u th o riz e d
(d)
S e r v i c e s o f f e r e d j o i n t l y . F in a n c ia l tra n sfe rs s h a ll b e d e te rm in e d as follows*
in s titu tio n b e c o m e s a w a re of
in s titu tio n s th a t p ro v id e e le c tro n ic fu n d
c irc u m s ta n c e s le a d in g to th e rea so n ab le
(1) T i m e l y n o t i c e g i v e n . If th e
tra n s fe r se rv ic es jo in tly m a y c o n tra c t
b e lie f th a t a n u n a u th o riz e d tra n sfe r
c o n s u m e r n o tifie s th e fin a n c ia l
a m o n g th e m se lv e s to c o m p ly w ith th e
in v o lv in g th e c o n s u m e r’s a c c o u n t h a s
in s titu tio n w ith in tw o b u s in e s s d a y s
re q u ire m e n ts th a t th is re g u la tio n
b ee n or m ay be m ade.
afte r le a rn in g o f th e lo ss o r th e ft o f th e
im p o s e s o n a n y o r a ll o f th e m . A n
(6)
L ia b ility u n d e r s ta te la w o r
a c c e ss d e v ic e , th e c o n s u m e r’s lia b ility
in s titu tio n th a t p ro v id e s e le c tro n ic fu n d
a g r e e m e n t . If sta te la w o r a n ag reem en t
s h a ll n o t e x c e e d th e le s s e r o f $ 5 0 o r th e
tra n s fe r se rv ic es u n d e r a n a g re e m e n t
b e tw e e n th e c o n s u m e r a n d th e fin an c ial
a m o u n t o f u n a u th o riz e d tra n sfe rs th a t
in s titu tio n im p o s e s le ss lia b ility th a n is
w ith o th e r in s titu tio n s n e e d m a k e o n ly
o c c u r b efo re n o tic e to th e fin a n c ia l
th o s e d isc lo su re s re q u ire d b y §§ 205.7
p r o v id e d b y th is se c tio n , th e c o n s u m e r’s
in s titu tio n .
a n d 205.8 o f th is p a rt th a t a re w ith in th e
lia b ility sh a ll n o t e x c e e d th e a m o u n t
(2) T i m e l y n o t i c e n o t g i v e n . If th e
p u rv ie w o f its r e la tio n s h ip w ith th e
im p o s e d u n d e r th e sta te la w o r th e
c o n s u m e r fails to n o tify th e fin a n c ia l
ag re e m e n t.
c o n s u m e r for w h o m it h o ld s a n a c c o u n t. in s titu tio n w ith in tw o b u s in e s s d a y s
a fte r le a rn in g o f th e lo ss o r th e ft o f th e
§ 205.5 issuance of access devices.
§205.7 Initial disclosures.
a c c e ss d e v ic e , th e c o n s u m e r’s lia b ility
(a) T i m i n g o f d i s c l o s u r e s . A fin a n c ia l
(a) S o l i c i t e d i s s u a n c e . A fin a n c ia l
s h a ll n o t e x c e e d th e le sse r o f $ 5 0 0 o r th e
in s titu tio n s h a ll m a k e th e d isc lo su re s
in s titu tio n m a y is s u e a n a c c e ss d e v ic e to su m of:
r e q u ire d b y th is se c tio n a t th e tim e a
a c o n s u m e r only:
(i) $ 5 0 o r th e a m o u n t o f u n a u th o riz e d
(1) In re sp o n se to a n o ra l o r w ritte n
c o n s u m e r c o n tr a c ts io r a n e le c tro n ic
tra n sfe rs th a t o c c u r w ith in th e tw o
re q u e s t for th e d ev ice ; o r
fu n d tra n sfe r se rv ic e o r b efo re th e first
b u s in e s s d a y s, w h ic h e v e r is less; a n d
(2) A s a re n e w a l of, o r in s u b s titu tio n
e le c tro n ic fu n d tra n s fe r is m a d e
(ii) T h e a m o u n t o f u n a u th o riz e d
for, a n a c c e p te d ac c e ss d e v ic e w h e th e r
in v o lv in g th e c o n s u m e r’s a c co u n t.
tra n sfe rs th a t o c c u r a fte r th e c lo se o f tw o
(b) C o n t e n t o f d i s c l o s u r e s . T h e
is s u e d b y th e in s titu tio n o r a su c c e sso r.
b u s in e s s d a y s a n d b efo re n o tic e to th e
(b) U n s o l i c i t e d i s s u a n c e . A fin a n c ia l
fo llo w in g d is c lo s u re s s h a ll b e p ro v id e d ,
in s titu tio n a n d th a t th e in s titu tio n
in s titu tio n m a y d is trib u te a n ac ce ss
as a p p lic a b le :
e s ta b lish e s w o u ld n o t h a v e o c c u rre d
(1) L i a b i l i t y o f c o n s u m e r . A su m m ary
d e v ic e to a c o n s u m e r o n a n u n s o lic ite d
h a d th e c o n s u m e r n o tifie d th e
o f th e c o n s u m e r’s lia b ility , u n d e r
b a s is if th e ac ce ss d e v ic e is:
in s titu tio n w ith in th a t tim e .
§ 20 5 .6 o f th is p a r t o r u n d e r sta te o r
(1) N ot v a lid a te d , w h ic h m e a n s th e
(3) P e r i o d i c s t a t e m e n t ; t i m e l y n o t i c e
in s titu tio n h a s n o t y e t p e rfo rm e d a ll th e
o th e r a p p lic a b le la w o r a g re em en t, for
n o t g i v e n . If th e c o n s u m e r fa ils to re p o rt
u n a u th o riz e d e le c tro n ic f u n d tran sfers.
p ro c e d u re s th a t w o u ld e n a b le a
a n u n a u th o riz e d e le c tro n ic fu n d tran sfe i
(2) T e l e p h o n e n u m b e r a n d a d d r e s s .
c o n s u m e r to in itia te a n e le c tro n ic fu n d
th a t a p p e a rs o n a p e rio d ic s ta te m e n t
T h e te le p h o n e n u m b e r a n d a d d re s s o f
tra n s fe r u s in g th e a c c e ss d ev ice ;
w ith in 60 d a y s o f th e fin a n c ia l
th e p e rs o n o r o ffice to b e n o tifie d w h e n
(2) A c c o m p a n ie d b y a c le a r
in s titu tio n ’s tra n s m itta l o f th e
th e c o n s u m e r b e lie v e s th a t a n
e x p la n a tio n th a t th e a c c e ss d e v ic e is n o t
sta te m e n t, th e c o n s u m e r’s lia b ility sh a ll
u n a u th o riz e d e le c tro n ic fu n d tra n sfe r
v a lid a te d a n d h o w th e c o n s u m e r m a y
n o t e x c e e d th e a m o u n t p f th e
h a s b e e n o r m a y b e m a d e.
d is p o s e o f it if v a lid a tio n is n o t d e s ire d ;
u n a u th o riz e d tra n sfe rs th a t o c c u r afte r
(3) B u s i n e s s d a y s . T h e fin a n c ia l
(3) A c c o m p a n ie d b y a c o m p le te
th e c lo se o f th e 60 d a y s a n d b efo re
in s titu tio n 's b u s in e s s d a y s.
d is c lo s u re , in a c c o rd a n c e w ith § 205.7
n o tic e to th e in s titu tio n a n d th a t th e
(4) T y p e s o f t r a n s f e r s ; l i m i t a t i o n s . T h e
o f th is p a rt, o f th e c o n s u m e r’s rig h ts a n d
in s titu tio n e sta b lish e s w o u ld n o t h a v e
ty p e o f e le c tro n ic fu n d tra n sfe rs th a t th e
lia b ilitie s th a t w ill a p p ly if th e ac c e ss
o c c u rre d h a d th e c o n s u m e r n o tifie d th e
c o n s u m e r m a y m a k e a n d a n y lim ita tio n s
d e v ic e is v a lid a te d ; a n d
in s titu tio n w ith in th a t tim e . If a n a c c e ss
o n th e fre q u e n c y a n d d o lla r a m o u n t o f
(4) V a lid a te d o n ly in re s p o n s e to th e
d e v ic e is in v o lv e d , th e c o n s u m e r’s
tra n sfe rs. T h e d e ta ils o f th e lim ita tio n s
c o n s u m e r ’s o ral o r w ritte n re q u e s t for
lia b ility m a y a lso e x te n d to th e a m o u n ts
n e e d n o t b e d is c lo s e d if c o n fid e n tia lity
v a lid a tio n , afte r th e in s titu tio n v e rifie s
se t fo rth in p a ra g ra p h s (b)(1) o r (b)(2) o f
is e s s e n tia l to m a in ta in th e s e c u rity o f
th e c o n s u m e r’s id e n tity b y a re a so n a b le
th is se c tio n , as a p p lic a b le .
th e e le c tro n ic fu n d tra n s fe r system .
m e a n s (su ch a s b y p h o to g ra p h ,
(4) E x t e n s i o n o f t i m e l i m i t s . If th e
(5) F e e s . A n y fees im p o s e d b y th e
fin g e rp rin t, p e rs o n a l v is it, o r s ig n a tu re
c o n s u m e r’s d e la y in n o tify in g th e
fin a n c ia l in s titu tio n for e le c tro n ic fu n d
c o m p ariso n ).
fin a n c ia l in s titu tio n w a s d u e to
tra n s fe rs o r for th e rig h t to m ak e
§ 205.6 Liability of consumer for
e x te n u a tin g c irc u m sta n c e s, th e
tra n sfe rs.
unauthorized transfers.
in s titu tio n s h a ll e x te n d th e tim e s
(6) D o c u m e n t a t i o n . A su m m a ry o f th e
sp e c ifie d ab o v e to a re a so n a b le p e rio d .
(a)
C o n d itio n s f o r lia b ility . A
c o n s u m e r ’s rig h t to re c e iv e
(5) N o t i c e t o f i n a n c i a l i n s t i t u t i o n — (i)
c o n s u m e r m a y b e h e ld lia b le , w ith in th e
d o c u m e n ta tio n o f e le c tro n ic fu n d
lim ita tio n s d e s c rib e d in p a ra g ra p h (b) o f N o tic e to a fin a n c ia l in s titu tio n is g iv e n
tra n s fe rs , as p ro v id e d in §§ 205.9,
w h e n a c o n s u m e r ta k e s ste p s re a so n a b ly 2 0 5 .10(a), a n d 2 0 5 .1 0 (d ) o f th is p art.
th is se c tio n , for a n u n a u th o riz e d
n e c e s sa ry to p ro v id e th e in s titu tio n w ith
e le c tro n ic fu n d tra n s fe r in v o lv in g th e
(7) S t o p p a y m e n t . A su m m a ry o f th e
c o n s u m e r ’s a c c o u n t o n ly if th e fin a n c ia l th e p e r tin e n t in fo rm a tio n , w h e th e r o r
c o n s u m e r ’s rig h t to s to p p a y m e n t o f a
n o t a n e m p lo y e e o r a g e n t o f th e
in s titu tio n h a s p ro v id e d th e d is c lo s u re s
p re a u th o riz e d e le c tro n ic fu n d tran sfe r
in s titu tio n a c tu a lly re c e iv e s th e
r e q u ire d b y § 205.7(b) o f th is p a rt. If th e
a n d th e p ro c e d u re for p la c in g a sto p in fo rm a tio n .
u n a u th o riz e d tra n s fe r in v o lv e d a n
p a y m e n t o rd e r, as p ro v id e d in
a c c e ss d ev ice , it m u s t b e a n a c c e p te d
(ii)
T h e c o n s u m e r m a y n o tify th e
§ 205.10(c) o f th is p a rt.
ac c e ss d e v ic e a n d th e fin a n c ia l
in s titu tio n in p e rso n , b y te le p h o n e , o r in
(8) L i a b i l i t y o f i n s t i t u t i o n . A su m m ary
w ritin g .
in s titu tio n m u s t h a v e p ro v id e d a m e a n s
o f th e fin a n c ia l in s titu tio n ’s lia b ility to
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th e c o n s u m e r u n d e r se c tio n 910 o f th e
ac t fo r fa ilu re to m a k e o r to sto p c e rta in
tra n sfe rs.
(9) C o n f i d e n t i a l i t y . T h e c irc u m sta n c e s
u n d e r w h ic h , in th e o rd in a ry c o u rs e o f
b u s in e s s , th e fin a n c ia l in s titu tio n m a y
p ro v id e in fo rm a tio n c o n c e rn in g th e
c o n s u m e r 's a c c o u n t to th ir d p a rtie s.
(10) E r r o r r e s o l u t i o n . A n o tic e th a t is
s u b s ta n tia lly s im ila r to th e n o tic e
c o n c e rn in g e rro r re so lu tio n c o n ta in e d in
a p p e n d ix A o f th is p art.
§ 205.8 Change In terms notice; error
resolution notice.
(a) C h a n g e i n t e r m s n o t i c e — (1) P r i o r
n o t i c e r e q u i r e d . A fin a n c ia l in s titu tio n
s h a ll m a il o r d e liv e r a w ritte n n o tic e to
th e c o n s u m e r a t le a st 30 d a y s b efo re th e
effec tiv e d a te o f an y ch a n g e in a te rm o r
c o n d itio n re q u ire d to b e d isc lo se d
u n d e r § 205.7(b) o f th is p a rt if th e
c h a n g e w o u ld re s u lt in :
(1) In c re a s e d fees;
(11) In c re a s e d lia b ility for th e
c o n s u m e r;
(iii) F e w e r ty p e s o f a v a ila b le
e le c tro n ic fu n d tran sfe rs; o r
(iv) S tric te r lim ita tio n s o n th e
fre q u e n c y o r d o lla r a m o u n t o f tran sfe rs.
(2) P r i o r n o t i c e e x c e p t i o n . A fin a n c ia l
in s titu tio n n e e d n o t give p rio r n o tic e if
a n im m e d ia te c h a n g e in te rm s or
c o n d itio n s is n e c e ssa ry to m a in ta in o r
re sto re th e s e c u rity o f a n e le c tro n ic fu n d
tra n sfe r sy ste m o r a n a c c o u n t. If s u c h a
c h a n g e is m a d e p e rm a n e n t a n d
d is c lo s u re w o u ld n o t je o p a rd iz e th e
se c u rity o f th e sy ste m o r a c c o u n t, th e
fin a n c ia l in s titu tio n s h a ll n o tify th e
c o n s u m e r in w ritin g w ith in 45 d a y s o f
th e ch a n g e.
(b) E r r o r r e s o l u t i o n n o t i c e . F o r
a c c o u n ts to o r from w h ic h e le c tro n ic
fu n d tra n sfe rs c a n b e m a d e , a fin a n c ia l
in s titu tio n s h a ll m a il o r d e liv e r to th e
c o n s u m e r, a t le a st o n c e e a c h c a le n d a r
year, th e e r ro r re s o lu tio n n o tic e se t fo rth
in a p p e n d ix A o f th is p art.
A lte rn a tiv e ly , a n in s titu tio n m a y
in c lu d e a n a b b re v ia te d n o tic e
s u b s ta n tia lly s im ila r to th e e rro r
re s o lu tio n n o tic e se t fo rth in a p p e n d ix
A o n o r w ith e a c h p e rio d ic sta te m e n t
re q u ire d b y § 205.9(b) o f th is p art.
§ 205.9 Receipts a t electronic terminals;
periodic statements.
(a)
R e c e ip ts a t e le c tr o n ic te r m in a ls .
fin a n c ia l in s titu tio n s h a ll m a k e a re c e ip t
a v a ila b le to a c o n s u m e r a t th e tim e th e
c o n s u m e r in itia te s a n e le c tro n ic fu n d
tra n sfe r a t a n e le c tro n ic te rm in a l. T h e
re c e ip t s h a ll s e t fo rth th e fo llo w in g
in fo rm a tio n , a s a p p lic a b le :
(1) A m o u n t T h e a m o u n t o f th e
tran sfer. A tra n s a c tio n fee m a y b e
in c lu d e d in th is a m o u n t, p ro v id e d th e
a m o u n t o f th e fee is d is c lo s e d o n th e
10693
re c e ip t a n d d is p la y e d o n o r a t th e
(4) A c c o u n t b a l a n c e s . T h e b a la n c e in
te rm in a l.
th e a c c o u n t a t th e beginning a n d a t th e
(2) D a t e . T h e d a te th e c o n s u m e r
c lo se o f th e sta te m e n t p e rio d .
in itia te s th e tra n sfe r.
(5) A d d r e s s a n d t e l e p h o n e n u m b e r f o r
(3) T y p e . T h e ty p e o f tra n sfe r a n d th e
i n q u i r i e s . T h e a d d r e s s a n d te le p h o n e
ty p e o f th e c o n s u m e r ’s a c c o u n t o r
n u m b e r to b e u s e d fo r in q u irie s o r
a c c o u n ts to o r fro m w h ic h fu n d s are
n o tic e o f e rro rs, p r e c e d e d b y “ D irec t
tra n sfe rre d . T h e ty p e o f a c c o u n t m a y b e
in q u irie s to ” o r sim ila r lan g u ag e. T h e
o m itte d if th e a c c e ss d e v ic e u s e d m a y
a d d re s s a n d te le p h o n e n u m b e r p r o v id e d
a c c e ss o n ly o n e a c c o u n t a t th a t te rm in a l. o n a n e rro r re s o lu tio n n o tic e g iv e n o n o r
(4) I d e n t i f i c a t i o n . A n u m b e r o r c o d e
w ith th e s ta te m e n t sa tisfie s th is
th a t u n iq u e ly id e n tifie s th e c o n s u m e r’s
re q u ire m e n t.
a c c o u n t o r th e a c c e ss d e v ic e u s e d to
(6) T e l e p h o n e n u m b e r f o r
in itia te th e tra n sfe r.
p r e a u t h o r i z e d t r a n s f e r s . A te le p h o n e
(5) T e r m i n a l l o c a t i o n . T h e lo c a tio n o r
n u m b e r th e c o n s u m e r m a y c a ll to
a n id e n tific a tio n o f th e te rm in a l w h e re
a s c e rta in w h e th e r p re a u th o riz e d
th e tra n s fe r is in itia te d (su c h as a c o d e
tra n sfe rs to th e c o n s u m e r’s a c c o u n t h a v e
o r te rm in a l n u m b e r). T h e lo c a tio n s h a ll
o c c u rre d , if th e fin a n c ia l in s titu tio n
in c lu d e th e c ity a n d sta te (th e sta te m a y
u s e s th e te le p h o n e -n o tic e o p tio n u n d e r
b e o m itte d fo r te rm in a ls th a t a re w ith in
§ 2 0 5 .1 0 (a )(l)(iii) o f th is p a rt.
50 m ile s o f th e a c c o u n t-h o ld in g
(c) E x c e p t i o n s t o t h e p e r i o d i c
in s titu tio n 's m a in office) o r fo reig n
s ta te m e n t r e q u ir e m e n ts f o r c e r ta in
c o u n try a n d o n e o f th e fo llo w in g :
a c c o u n t s — (1) P r e a u t h o r i z e d t r a n s f e r s t o
(i) T h e s tre e t a d d re ss;
a c c o u n t s . A fin a n c ia l in s titu tio n n e e d
(ii) A g e n e ra lly a c c e p te d n a m e for th e
n o t s e n d a m o n th ly p e rio d ic s ta te m e n t
sp e c ific lo c a tio n ; or
for a c c o u n ts th a t m a y o n ly b e a c c e sse d
(iii) T h e n a m e o f th e o w n e r or
b y p re a u th o riz e d tra n sfe rs to th e
o p e ra to r o f th e te rm in a l if o th e r th a n th e a c c o u n t if:
a c c o u n t-h o ld in g in s titu tio n .
(1) P a s s b o o k a c c o u n t s . T h e fin a n c ia l
(6) T h i r d p a r t y t r a n s f e r . T h e n a m e o f
in s titu tio n u p d a te s th e p a ssb o o k u p o n
a n y th ir d p a rty to o r fro m w h o m fu n d s
p re s e n ta tio n o r e n te rs o n a se p a ra te
a re tra n sfe rre d .
d o c u m e n t th e a m o u n t a n d d a te o f e a c h
(b)
P e r i o d i c s t a t e m e n t s . F o r a c c o u n ts
e le c tro n ic fu n d tra n s fe r sin c e th e
to o r from w h ic h e le c tro n ic fu n d
p a s sb o o k w a s la st p re se n te d .
tra n sfe rs c a n b e m a d e , a fin a n c ia l
(ii)
O t h e r a c c o u n t s . F o r a c c o u n ts
in s titu tio n s h a ll s e n d a p e rio d ic
o th e r th a n p a s sb o o k a c c o u n ts, th e
s ta te m e n t fo r e a c h m o n th ly c y c le in
in s titu tio n s e n d s th e p e rio d ic sta te m e n t
w h ic h a n e le c tro n ic fu n d tra n s fe r h a s
q u a rte rly .
o c c u rre d ; a n d s h a ll se n d a p e rio d ic
(2) I n t r a - i n s t i t u t i o n a l t r a n s f e r s . If an
sta te m e n t a t le a s t q u a rte rly if n o tra n sfe r
electronic fund transfer is initiated by
h a s o c c u rre d . T h e sta te m e n t s h a ll se t
the consumer between two accounts of
fo rth th e fo llo w in g in fo rm a tio n , as
the Consumer in the same institution,
a p p lic a b le :
documenting the transfer on a periodic
(1)
T r a n s a c tio n in fo r m a tio n . For each
statement for one of the two accounts
e le c tro n ic fu n d tra n sfe r o c c u rrin g
satisfies the statement requirement.
d u rin g th e cy c le :
(3) R e l a t i o n s h i p b e t w e e n p a r a g r a p h s
(1) T h e a m o u n t o f th e tran sfe r;
(c )( 1) a n d (c )(2 ) o f th is s e c tio n . A n
(ii) T h e d a te th e tra n s fe r w a s c re d ite d
a c c o u n t th a t is a c c e sse d b y
o r d e b ite d to th e c o n s u m e r’s a c c o u n t;
p re a u th o riz e d tra n sfe rs to th e a c c o u n t
(iii) T h e ty p e o f tra n sfe r a n d ty p e o f
a n d b y in tr a -in s titu tio n a l tra n sfe rs
a c c o u n t o r a c c o u n ts to o r fro m w h ic h
d e s c rib e d in p a ra g ra p h (c)(2), b u t b y n o
fu n d s w e re tra n sfe rre d ;
o th e r ty p e o f e le c tro n ic fu n d tra n sfe rs,
(iv) F o r a tra n s fe r in itia te d b y th e
q u a lifie s for th e e x c e p tio n s p r o v id e d b y
c o n s u m e r a t a n e le c tro n ic te rm in a l
p a ra g ra p h (c)(1).
(ex c ep t fo r a d e p o s it o f c a sh o r a c h e c k ,
(d) D o c u m e n t a t i o n f o r f o r e i g n d ra ft, o r s im ila r p a p e r in s tru m e n t), th e
i n i t i a t e d t r a n s f e r s . T h e fa ilu re b y a
te rm in a l lo c a tio n in a fo rm se t fo rth in
fin a n c ia l in s titu tio n to p ro v id e a
A p a ra g ra p h (a)(5) o f th is se c tio n ; a n d
te rm in a l r e c e ip t fo r a n e le c tro n ic fu n d
(v) T h e n a m e o f a n y th ir d p a rty to o r
tra n s fe r o r to d o c u m e n t th e tra n s fe r o n
fro m w h o m fu n d s w e re tra n sfe rre d .
a p e rio d ic s ta te m e n t d o e s n o t v io la te
(2) A c c o u n t n u m b e r . T h e n u m b e r o f
th is re g u la tio n if:
th e a c c o u n t to w h ic h th e sta te m e n t
(1) T h e tra n s fe r is n o t in itia te d w ith in
p e rta in s.
a sta te ; a n d
(3) F e e s . T h e a m o u n t o f a n y fees
a s se ss e d a g a in s t th e a c c o u n t d u r in g th e
(2) T h e fin a n c ia l in s titu tio n tre a ts a n
sta te m e n t p e rio d for e le c tro n ic fu n d
in q u iry for c la rific a tio n o r
tra n sfe rs, fo r th e rig h t to m a k e tra n sfe rs,
d o c u m e n ta tio n a s a n o tic e o f e rro r in
o r fo r a c c o u n t m a in te n a n c e .
a c c o rd a n c e w ith § 205.11 o f th is p a rt.
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§ 205.10 Preauthorized transfers.
(a) P r e a u t h o r i z e d t r a n s f e r s t o
c o n s u m e r ’s a c c o u n t — (1) N o t i c e b y
f i n a n c i a l i n s t i t u t i o n . W h e n a p e rs o n
in itia te s p re a u th o riz e d e le c tro n ic fu n d
tran sfe rs to a c o n s u m e r ’s a c c o u n t at
le a st o n c e ev e ry 60 d a y s, th e a c c o u n t
h o ld in g in s titu tio n s h a ll p ro v id e n o tic e
to th e c o n s u m e r by:
(1) P o s i t i v e n o t i c e . P ro v id in g o ral o r
w ritte n n o tic e o f th e tr a n s f e r w ith in tw o
b u s in e s s d a y s a fte r it o c c u rs;
s
(ii) N e g a t i v e n o t i c e . P ro v id in g o ra l o r
w ritte n n o tic e , w ith in tw o b u s in e s s d a y s
afte r th e d a te o n w h ic h th e tra n sfe r w a s
s c h e d u le d to o cc u r, th a t th e tra n s fe r d id
n o t o ccu r; o r
(iii) T e l e p h o n e . P ro v id in g a re a d ily
av a ila b le te le p h o n e lin e th a t th e
c o n s u m e r m a y c a ll to d e te rm in e
w h e th e r th e tra n s fe r o c c u rre d a n d
d isc lo sin g th e te le p h o n e n u m b e r o n th e
in itia l d is c lo s u re o f a c c o u n t te rm s a n d
o n e a c h p e rio d ic sta te m e n t.
(2) N o t i c e b y p a y o r . A fin a n c ia l
in s titu tio n n e e d n o t p ro v id e n o tic e if
th e p a y o r g iv es th e c o n s u m e r p o sitiv e
n o tic e th a t th e tra n s fe r h a s b e e n
in itia te d .
(b) W r i t t e n a u t h o r i z a t i o n f o r
p r e a u th o r iz e d tr a n s fe r s fr o m
c o n s u m e r ’s a c c o u n t . P re a u th o riz e d
e le c tro n ic fu n d tra n s fe rs fro m a
c o n s u m e r’s a c c o u n t m a y b e a u th o riz e d
o n ly b y a w ritin g sig n e d o r sim ila rly
a u th e n tic a te d b y th e c o n s u m e r. T h e
p e rs o n th a t o b ta in s th e a u th o riz a tio n
s h a ll p ro v id e a c o p y to th e c o n su m e r.
(c) C o n s u m e r ’s r i g h t t o s t o p
p a y m e n t —(1) N o t i c e . A c o n s u m e r m a y
sto p p a y m e n t o f a p re a u th o riz e d
e le c tro n ic fu n d tra n s fe r fro m th e
c o n s u m e r’s a c c o u n t b y n o tify in g th e
fin a n c ia l in s titu tio n o ra lly o r in w ritin g
at le ast th re e b u s in e s s d a y s b efo re th e
s c h e d u le d d a te o f th e tran sfe r.
(2)
W r itte n c o n fir m a tio n . T he
fin a n c ia l in s titu tio n m a y re q u ire th e
c o n s u m e r to g ive w ritte n c o n firm a tio n
o f a sto p -p a y m e n t o rd e r w ith in 14 d a y s
o f a n o ral n o tific a tio n . A n in s titu tio n
th a t re q u ire s w ritte n c o n firm a tio n s h a ll
in fo rm th e c o n s u m e r o f th e re q u ire m e n t
a n d p ro v id e th e a d d re s s w h e re
c o n firm a tio n m u s t b e s e n t w h e n th e
c o n s u m e r g ives th e o ra l n o tific a tio n . A n
o ral sto p -p a y m e n t o rd e r c e ases to b e
b in d in g afte r 14 d a y s if th e c o n s u m e r
fails to p ro v id e th e re q u ire d w ritte n
co n firm a tio n .
(d) N o t i c e o f t r a n s f e r s v a r y i n g i n
a m o u n t —(1) N o t i c e . W h e n a
p re a u th o riz e d e le c tro n ic fu n d tra n sfe r
fro m th e c o n s u m e r’s a c c o u n t w ill v a ry
in a m o u n t fro m th e p re v io u s tra n sfe r
u n d e r th e sa m e a u th o riz a tio n o r from
th e p re a u th o riz e d a m o u n t, th e
d e s ig n a te d p a y e e o r th e fin a n c ia l
in s titu tio n s h a ll s e n d w ritte n n o tic e o f
th e a m o u n t a n d d a te o f th e tra n sfe r to
th e c o n s u m e r a t le a s t 10 d a y s b efo re th e
s c h e d u le d d a te o f tra n sfe r.
(2)
R a n g e . T h e d e s ig n a te d p a y e e o r
th e in s titu tio n s h a ll in fo rm th e
c o n s u m e r o f th e rig h t to re c e iv e n o tic e
o f a ll v a ry in g tra n sfe rs, b u t m a y g ive th e
c o n s u m e r th e o p tio n o f re c e iv in g n o tic e
o n ly w h e n a tra n s fe r fa lls o u ts id e a
s p e c ifie d ra n g e o f a m o u n ts o r o n ly
w h e n a tra n sfe r d iffe rs fro m th e m o st
re c e n t tra n sfe r b y m o re th a n a n ag reed u p o n am o u n t.
(e)
C o m p u l s o r y u s e — (1) C r e d i t . N o
fin a n c ia l in s titu tio n o r o th e r p e rs o n m a y
c o n d itio n th e e x te n s io n o f c r e d it to a
c o n s u m e r o n th e c o n s u m e r ’s re p a y m e n t
b y p re a u th o riz e d e le c tro n ic fu n d
tra n sfe rs, e x c e p t for c r e d it th a t is
e x te n d e d u n d e r a n o v e rd ra ft c re d it p la n
o r th a t is e x te n d e d to m a in ta in a
sp e c ifie d m in im u m b a la n c e in th e
c o n s u m e r’s a c c o u n t.
(2)
E m p lo y m e n t o r g o v e r n m e n t
b e n e f i t . N o fin a n c ia l in s titu tio n o r o th e r
p e rso n m a y re q u ire a c o n s u m e r to
e s ta b lish a n a c c o u n t fo r re c e ip t o f
e le c tro n ic fu n d tra n s fe rs w ith a
p a rtic u la r in s titu tio n as a c o n d itio n o f
e m p lo y m e n t o r re c e ip t o f a g o v e rn m e n t
b e n e fit.
§ 205.11
Procedures for resolving errors.
(a) D e f i n i t i o n o f e r r o r — (1) T y p e s
i n c l u d e d . T h e te rm “ e r r o r ” m e an s:
(1) A n u n a u th o riz e d e le c tro n ic fu n d
tran sfe r;
(ii) A n in c o rre c t e le c tro n ic fu n d
tra n sfe r to o r fro m th e c o n s u m e r’s
a c c o u n t;
(iii) T h e o m is s io n o f a n e le c tro n ic
fu n d tra n sfe r fro m a p e rio d ic s ta te m e n t;
(iv) A c o m p u ta tio n a l o r b o o k k e e p in g
e rro r m a d e b y th e fin a n c ia l in s titu tio n
re la tin g to a n e le c tro n ic fu n d tra n sfe r;
(v) T h e c o n s u m e r’s r e c e ip t o f a n
in c o rre c t a m o u n t o f m o n e y from a n
e le c tro n ic te rm in a l;
(vi) A n e le c tro n ic fu n d tra n sfe r n o t
id e n tifie d in a c c o rd a n c e w ith § 205.9 o r
§ 205.10(a) o f th is p a rt; o r
(vii) T h e c o n s u m e r’s re q u e s t for
d o c u m e n ta tio n r e q u ire d b y § 205.9 o r
§ 205.10(a) o f th is p a r t o r for a d d itio n a l
in fo rm a tio n o r c la rific a tio n c o n c e rn in g
a n e le c tro n ic fu n d tra n sfe r, in c lu d in g a
re q u e s t th e c o n s u m e r m a k e s to
d e te rm in e w h e th e r a n e rro r e x ists u n d e r
p a ra g ra p h s (a)(1) (i) th ro u g h (vi) o f th is
se ctio n .
(2) E x c l u s i o n s . T h e te rm “ e rro r” d o e s
n o t in c lu d e :
(i) A r o u tin e in q u iry a b o u t th e
c o n s u m e r’s a c c o u n t b a la n c e ;
(ii) A re q u e s t fo r in fo rm a tio n for ta x
o r o th e r re c o rd k e e p in g p u rp o se s; o r
(iii) A re q u e s t fo r d u p lic a te c o p ie s o f
d o c u m e n ta tio n .
(b) N o t i c e o f e r r o r f r o m c o n s u m e r — [ 1 )
T i m i n g ; c o n t e n t s . A fin a n c ia l in s titu tio n
s h a ll c o m p ly w ith th e re q u ire m e n ts o f
th is se c tio n w ith r e s p e c t to a n y o ral or
w ritte n n o tic e o f e rro r fro m th e
c o n s u m e r th a t:
(1) Is re c e iv e d b y th e in s titu tio n n o
la te r th a n 60 d a y s a fte r th e in s titu tio n
s e n d s th e p e rio d ic s ta te m e n t o r p ro v id e s
th e p a s sb o o k d o c u m e n ta tio n o n w h ic h
th e a lle g e d e rro r is first re fle c te d ;
(ii) Enables the institution to identify
the consumer’s name and account
number; and
(iii) In d ic a te s w h y th e c o n s u m e r
b e lie v e s a n e rro r e x ists a n d in c lu d e s to
th e e x te n t p o ssib le th e ty p e , d ate, a n d
a m o u n t o f th e e rro r, e x c e p t for req u e sts
d e s c rib e d in p a ra g ra p h (a )(l)(v ii) o f th is
se c tio n .
(2) W r i t t e n c o n f i r m a t i o n . A fin a n c ia l
in s titu tio n m a y re q u ire th e c o n s u m e r to
g iv e w ritte n c o n firm a tio n o f a n e rro r
w ith in 10 b u s in e s s d a y s o f a n oral
n o tic e . A n in s titu tio n th a t re q u ire s
w ritte n c o n firm a tio n s h a ll in fo rm th e
c o n s u m e r o f th e re q u ire m e n t a n d
p ro v id e th e a d d re s s w h e re c o n firm a tio n
m u s t b e se n t w h e n th e c o n s u m e r gives
th e o ral n o tific a tio n .
(3) R e q u e s t f o r d o c u m e n t a t i o n o r
c l a r i f i c a t i o n s . W h e n a n o tic e o f e rro r is
b a s e d o n d o c u m e n ta tio n o r c larifica tio n
th a t w a s re q u e s te d u n d e r p a ra g ra p h
(a )(l)(v ii) o f th is se c tio n , th e n o tic e is
tim e ly if re c e iv e d b y th e fin a n c ia l
in s titu tio n w ith in 60 d a y s o f
tra n s m ittin g th e r e q u e s te d in fo rm atio n .
(c)
T im e lim its a n d e x te n t o f
i n v e s t i g a t i o n — (1) T e n - d a y p e r i o d . A
fin a n c ia l in s titu tio n s h a ll p ro m p tly
in v e stig a te a n d d e te rm in e w h e th e r a n
e rro r o c c u rre d w ith in 10 b u s in e s s d ay s
o f re c e iv in g a n o tic e o f erro r. T h e
in s titu tio n sh a ll re p o rt th e re s u lts to th e
c o n s u m e r w ith in th re e b u s in e s s d ay s
a fte r c o m p le tin g its in v e stig a tio n . T h e
in s titu tio n sh a ll c o rre c t th e e rro r w ith in
o n e b u s in e s s d a y a fte r d e te rm in in g th a t
a n e rro r o c c u rre d .
(2)
F o r t y - f i v e d a y p e r i o d . If th e
fin a n c ia l in s titu tio n is u n a b le to
c o m p le te its in v e stig a tio n w ith in 10
b u s in e s s d a y s, th e in s titu tio n m ay tak e
u p to 45 d a y s afte r re c e iv in g a n o tic e of
e rro r, p ro v id e d th e in s titu tio n :
(i) P ro v is io n a lly c re d its th e
c o n s u m e r’s a c c o u n t in th e a m o u n t o f
th e alle g e d e rro r (in c lu d in g in te re st
w h e re a p p lic a b le ) w ith in 10 b u s in e s s
d a y s afte r re c e iv in g th e e rro r n o tic e. If
th e fin a n c ia l in s titu tio n h a s a rea so n a b le
b a s is for b e lie v in g th a t a n u n a u th o riz e d
e le c tro n ic fu n d tra n s fe r h a s o c c u rre d
a n d it h a s s a tisfie d th e re q u ire m e n ts o f
§ 205.6(a) o f th is p a rt, th e in s titu tio n
m a y w ith h o ld a m a x im u m o f $50 from
th e a m o u n t c re d ite d . A n in s titu tio n
n e e d n o t p ro v is io n a lly c re d it th e
c o n s u m e r’s a c c o u n t if:
/O b ? 2
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
sim ila r in s tru m e n ts p a y a b le to th ir d
(A) It re q u ire s b u t d o e s n o t re c e iv e
w ritte n c o n firm a tio n w ith in 10 b u s in e s s p a rtie s a n d p r e a u th o riz e d tra n s fe rs from
th e c o n s u m e r’s a c c o u n t (w ith o u t ch a rg e
d a y s o f a n o ral n o tic e o f e rro r; o r
(B) T h e alleg e d e rro r in v o lv e s a n
to th e c o n s u m e r as a re s u lt o f a n
a c c o u n t th a t is su b je ct to R e g u la tio n T
o v erd raft) for five b u s in e s s d a y s a fte r
(c re d it b y b ro k ers a n d d e a le rs, 12 CFR
th e n o tic e ; a n d h o n o r ite m s as s p e c ifie d
p a rt 220);
in th e n o tic e . T h e in s titu tio n n e e d o n ly
(ii) In fo rm s th e c o n s u m e r, w ith in tw o
h o n o r ite m s th a t it w o u ld h a v e p a id if
b u s in e s s d a y s after th e p ro v is io n a l
th e p ro v isio n a lly c re d ite d fu n d s h a d n o t
c re d itin g , o f th e a m o u n t a n d d a te o f
b e e n d e b ite d .
c re d itin g a n d gives th e c o n s u m e r fu ll
(e)
R e a s s e r t i o n o f e r r o r . A fin a n c ia l
u s e o f th e fu n d s d u rin g th e
in s titu tio n th a t h a s fu lly c o m p lie d w ith
in v e stig a tio n ;
th e e rro r re s o lu tio n re q u ire m e n ts h a s n o
(iii) C o rrects th e e rro r, if a n y , w ith in
fu rth e r re s p o n s ib ilitie s u n d e r th is
o n e b u s in e s s d ay afte r d e te rm in in g th a t
se c tio n s h o u ld th e c o n s u m e r la te r
a n e rro r o cc u rre d ; a n d
re a sse rt th e sa m e erro r, e x c e p t th a t th e
(iv) R ep o rts th e re s u lts to th e
in s titu tio n s h a ll in v e stig a te a n e rro r
c o n s u m e r w ith in th re e b u s in e s s d a y s o f
a s se rte d b y th e c o n s u m e r fo llo w in g
c o m p le tin g its in v e stig a tio n (in c lu d in g ,
re c e ip t o f in fo rm a tio n re q u e s te d u n d e r
if a p p lic a b le , n o tic e th a t a p ro v is io n a l
p a ra g ra p h (a)(l)(v ii) o f th is se c tio n .
c re d it h a s b e e n m a d e final).
§ 205.12 Relation to other laws.
(3) E x t e n s i o n o f t i m e p e r i o d s . T h e
(a) R e l a t i o n t o T r u t h i n L e n d i n g . (1)
a p p lic a b le tim e p e rio d s in th is
T h e E le c tro n ic F u n d T ra n sfe r A c t a n d
su b se c tio n s h a ll b e 20 b u s in e s s d a y s in
th is pent g o vern:
p la c e o f 10 b u sin e ss d a y s, a n d 90 d a y s
(1) T h e a d d itio n to a n a c c e p te d c re d it
in p la c e o f 45 d ay s, if a n o tic e o f e rro r
in v o lv e s a n e le c tro n ic fu n d tra n s fe r th a t: c a rd , as d e fin e d u n d e r R e g u la tio n Z (12
CFR 226.12(a)(2), fo o tn o te 21), o f th e
(i) W as n o t in itia te d w ith in a sta te ; o r
(ii) R e su lte d from a p o in t-o f-sa le d e b it c a p a b ility to in itia te e le c tro n ic fu n d
tra n sfe rs;
c a rd tra n sa c tio n .
(ii) T h e is s u a n c e o f a n a c c e ss d e v ic e
(4) I n v e s t i g a t i o n . W ith th e e x c e p tio n
th a t p e rm its c re d it e x te n s io n s o n ly
o f tra n sfe rs c o v e red b y § 2 0 5 .1 4 o f th is
u n d e r a p re e x istin g a g re e m e n t b e tw e e n
p a rt, a fin a n c ia l in s titu tio n ’s re v ie w o f
a c o n s u m e r a n d a fin a n c ia l in s titu tio n to
its o w n re c o rd s reg a rd in g a n a lle g e d
e x te n d c re d it w h e n th e c o n s u m e r ’s
e rro r sa tisfie s th e re q u ire m e n ts o f th is
a c c o u n t is o v e rd ra w n o r to m a in ta in a
se c tio n if:
s p e c ifie d m in im u m b a la n c e in th e
(i) T h e alleg e d e rro r c o n c e rn s a
c o n s u m e r’s a c c o u n t; a n d
tra n sfe r to o r from a th ir d p a rty ; a n d
(iii) A c o n s u m e r’s lia b ility fo r a n
(ii) T h e re is n o a g re e m e n t b e tw e e n th e
u n a u th o riz e d e le c tro n ic fu n d tra n sfe r
in s titu tio n a n d th e th ir d p a rty fo r th e
a n d th e in v e stig a tio n o f a n a lle g e d erro r
ty p e o f e le c tro n ic fu n d tra n sfe r
th a t in v o lv e s an e x te n sio n o f c re d it, if
in v o lv e d .
(d)
P r o c e d u r e s i f f i n a n c i a l i n s t i t u t i o n th e e x te n sio n o f c re d it o c c u rs u n d e r a n
d e te r m in e s n o erro r o r d iffe r e n t erro r
a g re e m e n t b e tw e e n th e c o n s u m e r a n d a
o c c u r r e d . In a d d itio n to th e p ro c e d u re s
fin a n c ia l in s titu tio n to e x te n d c re d it
s p e c ifie d in p a ra g ra p h (c) o f th is
w h e n th e c o n s u m e r’s a c c o u n t is
se ctio n , th e fin an c ia l in s titu tio n sh a ll
o v e rd ra w n o r to m a in ta in a sp e c ifie d
follow th e p ro c e d u re s se t fo rth in th is
m in im u m b a la n c e in th e c o n s u m e r ’s
p a ra g ra p h if it d e te rm in e s th a t n o erro r
a c c o u n t.
(2) T h e T ru th in L e n d in g A c t a n d
o c c u rre d o r th a t a n e rro r o c c u rre d in a
R e g u la tio n Z, w h ic h p ro h ib it th e
d iffe re n t m a n n e r o r a m o u n t fro m th a t
u n s o lic ite d is s u a n c e o f c re d it c a rd s,
d e s c rib e d b y th e c o n su m e r:
(1) W r i t t e n e x p l a n a t i o n . T h e
govern:
(i) T h e a d d itio n o f a c re d it fe a tu re to
in s titu tio n ’s re p o rt o f th e r e s u lts o f th e
an a c c e p te d ac ce ss d e v ic e ; a n d
in v e stig a tio n s h a ll in c lu d e a w ritte n
(ii) T h e is s u a n c e o f a c re d it c a rd th a t
e x p la n a tio n o f th e in s titu tio n ’s fin d in g s
is also an ac c e ss d e v ic e , e x c e p t as
a n d sh a ll n o te th e c o n s u m e r's rig h t to
p ro v id e d in p a ra g ra p h (a )(l)(ii) o f th is
re q u e st th e d o c u m e n ts th a t th e
se ctio n .
in s titu tio n re lie d o n in m a k in g its
(b) P r e e m p t i o n o f i n c o n s i s t e n t s t a t e
d e te rm in a tio n . T h e in s titu tio n sh a ll,
l a w s — (1) I n c o n s i s t e n t r e q u i r e m e n t s .
u p o n re q u e st, p ro m p tly p ro v id e c o p ie s
T h e B o ard s h a ll d e te rm in e , u p o n its
o f th e d o c u m e n ts.
o w n m o tio n o r u p o n th e re q u e s t o f a n y
(2) D e b i t i n g p r o v i s i o n a l c r e d i t . U p o n
sta te , fin a n c ia l in s titu tio n , o r o th e r
d e b itin g a p ro v isio n a lly c r e d ite d
in te re s te d p a rty , w h e th e r th e a c t a n d
a m o u n t, th e fin a n c ia l in s titu tio n sh a ll:
th is re g u la tio n p re e m p t s ta te la w
(i) N otify th e c o n s u m e r o f th e d a te
re la tin g to e le c tro n ic fu n d tra n sfe rs.
a n d a m o u n t o f th e d eb itin g ;
O n ly th o se sta te la w s th a t are
(ii) N otify th e c o n s u m e r th a t th e
in c o n s is te n t w ith th e a c t a n d th is
in s titu tio n w ill h o n o r c h e c k s , d ra fts, or
10695
re g u la tio n s h a ll b e p re e m p te d a n d th e n
o n ly to th e e x te n t o f th e in c o n s is te n c y .
A s ta te la w is n o t in c o n s is te n t w ith th e
a c t a n d th is re g u la tio n if it is m o re
p ro te c tiv e o f c o n su m e rs.
(2)
S t a n d a r d s f o r d e t e r m i n a t i o n . S tate
la w is in c o n s is te n t w ith th e
r e q u ire m e n ts o f th e a c t a n d th e
re g u la tio n if it:
(i) R e q u ire s o r p e rm its a p ra c tic e o r
a c t p r o h ib ite d b y th e fe d e ra l law ;
(ii) P ro v id e s for c o n s u m e r lia b ility for
u n a u th o riz e d e le c tro n ic fu n d tra n s fe rs
th a t e x c e e d th e lim its im p o s e d b y th e
fe d e ra l law ;
(iii) A llo w s lo n g e r tim e p e rio d s th a n
th e fe d e ra l la w for th e in v e s tig a tio n a n d
c o rre c tio n o f e rro rs a lle g e d b y a
c o n s u m e r, o r fails to re q u ire th e
c re d itin g o f th e c o n s u m e r’s a c c o u n t
d u rin g th e in v e stig a tio n o f e rro rs as set
fo rth in § 205.11(c)(2)(i) o f th is p a rt; o r
(iv) R e q u ire s in itia l d is c lo s u re s ,
p e rio d ic s ta te m e n ts , o r re c e ip ts th a t are
d iffe re n t in c o n te n t fro m th o s e re q u ire d
b y th e fe d e ra l la w e x c e p t to th e e x te n t
th a t th e d is c lo s u re s re la te to rig h ts
g ra n te d to c o n s u m e rs b y th e sta te la w
a n d n o t b y th e fe d e ra l law .
(c)
S t a t e e x e m p t i o n s — (1) G e n e r a l
r u l e . A n y s ta te m a y a p p ly to th e B o ard
for a n e x e m p tio n fro m th e re q u ire m e n ts
o f th e fe d e ra l la w for a n y c la s s o f
e le c tro n ic fu n d tra n sfe rs w ith in th e
sta te . T h e B o a rd s h a ll g ra n t a n
e x e m p tio n if th e B o a rd d e te rm in e s th at:
(1) U n d e r sta te la w th a t c la ss o f
e le c tro n ic fu n d tra n sfe rs is su b je c t to
r e q u ire m e n ts s u b s ta n tia lly sim ila r to
th o s e im p o s e d b y th e fe d e ra l law ; a n d
(ii) T h e re is a d e q u a te p ro v is io n for
sta te e n fo rc e m e n t.
(2) E x c e p t i o n . T o a s su re th a t th e
fe d e ra l a n d sta te c o u rts w ill c o n tin u e to
h a v e c o n c u rre n t ju ris d ic tio n , a n d to aid
in im p le m e n tin g th e act:
(i) N o e x e m p tio n s h a ll e x te n d to th e
c iv il lia b ility p ro v is io n s o f se c tio n 915
o f th e act; a n d
(ii) W h e n a n e x e m p tio n h a s b e e n
g ra n te d , th e re q u ire m e n ts o f th e
a p p lic a b le sta te la w s h a ll c o n s titu te th e
r e q u ire m e n ts o f th e fe d e ra l la w , for th e
p u rp o s e s o f se c tio n 915 o f th e act,
e x c e p t for sta te la w r e q u ire m e n ts n o t
im p o s e d b y th e fe d e ra l law .
§ 205.13 Adm inistrative enforcement;
record retention.
(a) E n f o r c e m e n t b y f e d e r a l a g e n c i e s .
C o m p lia n c e w ith th is p a r t is e n fo rc e d
b y th e a g e n c ie s lis te d in a p p e n d ix B o f
th is p art.
(b) R e c o r d r e t e n t i o n — (1) A fin a n c ia l
in s titu tio n s h a ll re ta in e v id e n c e o f
c o m p lia n c e w ith th e re q u ire m e n ts
im p o s e d b y th e a c t a n d th is re g u la tio n
for a p e rio d o f n o t le ss th a n tw o y ears.
R e c o rd s m a y b e sto re d b y u s e o f
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Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
(iv) T ra n s m its to th e a c c o u n t-h o ld in g
in s titu tio n th e in fo rm a tio n sp e c ifie d in
§ 205.9(b)(1) o f th is p a r t in th e fo rm at
p re s c rib e d b y th e a u to m a te d
c le a rin g h o u s e sy ste m u s e d to c le a r th e
fu n d tra n sfe rs;
(v) E x te n d s th e tim e p e rio d se t fo rth
in § 205.6(b) (1) a n d (2) o f th is p a rt for
n o tic e o f lo ss o r th e ft o f a d e b it c a rd ,
fro m tw o b u s in e s s d a y s to fo u r b u s in e s s
d a y s afte r th e c o n s u m e r le a rn s o f th e
lo ss o r th e ft; a n d
(vi) E x te n d s th e tim e p e rio d s se t fo rth
in §§ 205.6(b)(3) a n d 2 0 5 .1 1 (b )(l)(i) o f
th is p a rt for re p o rtin g u n a u th o riz e d
tra n sfe rs o r e rro rs, fro m 60 d a y s to 90
d a y s fo llo w in g th e tra n s m itta l o f a
§ 205.14 Electronic fund transfer service
p e rio d ic sta te m e n t b y th e a c c o u n t
provider not holding consum er's acco u n t
h o ld in g in s titu tio n .
(2)
E r r o r r e s o l u t i o n — (i) E x t e n s i o n o f
(a) E l e c t r o n i c f u n d t r a n s f e r s e r v i c e
e r r o r n o t i f i c a t i o n p e r i o d . T h e e le c tro n ic
p r o v id e r s s u b je c t to r e g u la tio n . A n
e le c tro n ic fu n d tra n s fe r se rv ic e p ro v id e r fu n d tra n sfe r se rv ic e p ro v id e r sh a ll
e x te n d b y a re a so n a b le tim e th e p e rio d
th a t d o e s n o t h o ld th e c o n s u m e r's
sp e c ifie d in § 2 0 5 .1 1 (b )(l)(i) o f th is p a rt
a c c o u n t q u a lifie s as a fin a n c ia l
in s titu tio n su b je c t to th is re g u la tio n if it: in w h ic h n o tic e o f a n e rro r m u s t b e
re c e iv e d if a d e la y re s u lte d fro m th e
(1) Issu e s a n ac c e ss d e v ic e to a
in itia l a tte m p t b y th e c o n s u m e r to n o tify
c o n s u m e r;
th e a c c o u n t-h o ld in g in s titu tio n .
(2) P ro v id e s e le c tro n ic fu n d tra n s fe r
(ii) D i s c l o s u r e o f p r o v i s i o n a l c r e d i t .
se rv ic e to th e c o n s u m e r b y a llo w in g th e
T h e se rv ic e p ro v id e r s h a ll d isc lo se to
a c c e ss d e v ic e to b e u s e d to ac c e ss th e
th e c o n s u m e r th e d a te o n w h ic h it
c o n s u m e r’s a c c o u n t h e ld b y a n o th e r
in itia te s a tra n s fe r to effect a p ro v isio n a l
fin a n c ia l in s titu tio n ; a n d
c re d it in a c c o rd a n c e w ith
(3) H as n o a g re e m e n t w ith th e
§ 205.11(c)(2)(ii) o f th is p art.
a c c o u n t-h o ld in g in s titu tio n re g a rd in g
(iii) E r r o r o c c u r r e d . If th e se rv ic e
se rv ic e in v o lv in g th a t a c c e ss d ev ice .
p ro v id e r d e te rm in e s a n e rro r o c c u rre d ,
(b) C o m p l i a n c e b y e l e c t r o n i c f u n d
it s h a ll tra n sfe r fu n d s to o r fro m th e
t r a n s f e r s e r v i c e p r o v i d e r . In a d d itio n to
c o n s u m e r’s a c c o u n t, in th e a p p ro p ria te
th e r e q u ire m e n ts g e n e ra lly a p p lic a b le
a m o u n t a n d w ith in th e a p p lic a b le tim e
u n d e r th is p a rt, th e se rv ic e p ro v id e r
p e rio d , in a c c o rd a n c e w ith
s h a ll c o m p ly w ith th e fo llo w in g sp e c ia l
§ 205.1 l(c)(2)(i) o f th is p a rt.
ru les:
(iv) N o e r r o r o c c u r r e d . If fu n d s w e re
(1)
D i s c l o s u r e s a n d d o c u m e n t a t i o n . p ro v isio n a lly c re d ite d a n d th e se rv ic e
T h e e le c tro n ic fu n d tra n s fe r se rv ic e
p ro v id e r d e te rm in e s n o e rro r o c c u rre d ,
p ro v id e r s h a ll p ro v id e th e d isc lo su re s
it m a y re v e rse th e c re d it. T h e se rv ic e
a n d d o c u m e n ta tio n r e q u ire d b y
p ro v id e r s h a ll th e n n o tify th e a c c o u n t
§§ 205.7, 205.8, a n d 2 0 5 .9 o f th is p a rt
h o ld in g in s titu tio n o f th e p e rio d d u rin g
th a t a re w ith in th e p u r v ie w o f its
w h ic h th e a c c o u n t-h o ld in g in s titu tio n
r e la tio n s h ip w ith th e c o n s u m e r, b u t
m u s t h o n o r d e b its to th e a c c o u n t in
n e e d n o t fu rn is h a p e r io d ic sta te m e n t to
a c c o rd a n c e w ith § 2 0 5 .1 1 (d )(2 )(h ) o f th is
th e c o n s u m e r u n d e r § 205.9(b) o f th is
p a rt. If a n o v e rd ra ft re s u lts , th e se rv ic e
p a rt if th e s e rv ic e p ro v id e r:
p ro v id e r s h a ll p ro m p tly re im b u rse th e
(i) Issu es a d e b it c a rd (to b e u s e d b y
a c c o u n t-h o ld in g in s titu tio n in th e
th e c o n s u m e r to in itia te e le c tro n ic fu n d
a m o u n t o f th e o v e rd ra ft.
tra n sfe rs) b e a rin g th e se rv ic e p ro v id e r’s
(c)
C o m p lia n c e b y a c c o u n t-h o ld in g
n a m e a n d a n a d d re s s o r te le p h o n e
i n s t i t u t i o n . T h e a c c o u n t-h o ld in g
n u m b e r for c o n s u m e r in q u irie s o r for
in s titu tio n n e e d n o t c o m p ly w ith th e
c o n s u m e rs to g iv e n o tic e o f erro r;
re q u ire m e n ts o f th e a c t a n d th is
(ii) P ro v id e s th e c o n s u m e r a n o tic e
re g u la tio n w ith re s p e c t to e le c tro n ic
c o n c e rn in g tra n s a c tio n s m a d e w ith th e
fu n d tra n sfe rs m a d e b y th e e le c tro n ic
d e b it c a rd th a t is s u b s ta n tia lly sim ila r to fu n d tra n sfe r s e rv ic e p ro v id e r e x c e p t as
th e n o tic e c o n ta in e d in a p p e n d ix A o f
fo llo w s:
th is p art;
(1)
T h e a c c o u n t-h o ld in g in s titu tio n
s h a ll p ro v id e a p e rio d ic s ta te m e n t
(iii) P ro v id e s, o n o r w ith th e re c e ip ts
d e s c rib in g e a c h e le c tro n ic fu n d tra n sfe r
re q u ire d b y § 205.9(a) o f th is p a rt, th e
in v o lv in g tra n s a c tio n s in itia te d b y th e
a d d re s s a n d te le p h o n e n u m b e r to b e
c o n s u m e r w ith th e a c c e ss d e v ic e is s u e d
u s e d for a n in q u iry , o r to g iv e n o tic e o f
b y th e se rv ic e p ro v id e r. T h e a c c o u n t
a n p rro r, to re p o rt th e lo ss o r th e ft o f th e
h o ld in g in s titu tio n h a s n o lia b ility for
d e b it ca rd ;
m ic ro fic h e, m ic ro film , m a g n e tic ta p e , o r
a n y o th e r m e th o d c a p a b le o f a c c u ra te ly
re ta in in g a n d r e p ro d u c in g in fo rm a tio n .
(2)
A fin a n c ia l in s titu tio n h a v in g
a c tu a l n o tic e th a t it is th e su b je c t o f a n
in v e stig a tio n o r a n e n fo rc e m e n t
p ro c e e d in g b y a n ag e n c y c h a rg e d w ith
m o n ito rin g c o m p lia n c e w ith th e a c t a n d
th is re g u la tio n , o r h a v in g b e e n se rv e d
w ith n o tic e o f a n a c tio n file d u n d e r
se c tio n s 9 1 0 ,9 1 5 , o r 916(a) o f th e a c t,
s h a ll re ta in th e r e c o rd s th a t p e rta in to
th e a c tio n o r p ro c e e d in g u n til fin a l
d is p o s itio n o f th e m a tte r, u n le s s a n
e a rlie r tim e is a llo w e d b y c o u rt o r
ag en cy o rd er.
fa ilu re to c o m p ly w ith th is re q u ire m e n t
if th e se rv ic e p ro v id e r d id n o t p ro v id e
th e n e c e s sa ry in fo rm a tio n ; a n d
(2)
T h e a c c o u n t-h o ld in g in s titu tio n
s h a ll p ro v id e , u p o n re q u e s t, in fo rm atio n
o r c o p ie s o f d o c u m e n ts n e e d e d b y th e
se rv ic e p ro v id e r to in v e stig a te erro rs or
to fu rn is h c o p ie s o f d o c u m e n ts to th e
c o n s u m e r. T h e a c c o u n t-h o ld in g
in s titu tio n s h a ll a lso h o n o r d e b its to th e
a c c o u n t in a c c o rd a n c e w ith
§ 205.11(d)(2)(ii) o f th is p a rt.
3.
A p p e n d ic e s A a n d B a re rev ise d ,
a n d A p p e n d ix C is a d d e d to p a rt 205 to
re a d as fo llo w s:
Appendix A to Part 205— Model
Disclosure Clauses and Forms
A - l—Model Clauses for Unsolicited Issuance
(§ 205.5(b)(2))
A -2—Model Clauses for Initial Disclosures
(§ 205.7(b))
A -3—Model Forms for Error Resolution
Notice (§§ 205.7(b)(10) and 205.8(b))
A -4—Model Form for Service-Providing
Institutions (§ 205.14(b)(1)(H))
A -l—Model Clauses for Unsolicited
Issuance (§ 205.5(b)(2))
(a) Accounts using cards. You cannot use
the enclosed card to transfer money into or
out of your account until we have validated
it. If you do not w ant to use the card, please
(destroy it at once by cutting it in half).
F in a n c ia l in s titu tio n m a y a d d v a lid a tio n
in s tru c tio n s h e re
(b) Accounts using codes. You cannot use
the enclosed code to transfer money into or
out of your account until we have validated
it. If you do not w ant to use the code, please
(destroy this notice at once).
F in a n c ia l in s titu tio n m a y a d d v a lid a tio n
in s tru c tio n s h e re
A-2—Model Clauses for Initial Disclosures
(§ 205.7(b))
(a) Consumer Liability (§ 205.7(b)(1)). (Tell
us AT ONCE if you believe your [card] [code]
has been lost or stolen. Telephoning is the
best way of keeping your possible losses
down. You could lose all the money in your
account (plus your maxim um overdraft line
of credit). If you tell us w ithin 2 business
days, you can lose no more the $50 if
someone used your [card] [code] w ithout your
permission. (If you believe your [card] [code]
has been lost or stolen, and you tell us within
2^>usiness days after you learn of the loss or
theft, you can lose no more than $50 if
someone used your [card] [code] w ithout
your permission.)
If you do NOT tell us w ithin 2 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] w ithout 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 w ithin 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
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
prove that we could have stopped someone
from taking the money if you had told us in
time.
If a good reason (such as a long trip or a
hospital stay) kept you from telling us, we
w ill extend the time periods.
fb) C o n t a c t i n e v e n t o f u n a u t h o r i z e d
tr a n s f e r ( § 2 0 5 .7 (b )(2 )). If you believe your
(card] (code] has been lost or stolen or that
someone has transferred or may transfer
money from your account w ithout your
perm ission, call:
[Telephone number]
or write:
[Name of person or office to be notified] *
1
[Address]
(c) B u sin ess days (§ 205.7(b)(3)). For .
purposes of these disclosures, our business
days include every day other than Saturday,
Sunday or one of the federal holidays.
(d) Transfer types a n d lim ita tio n s
( § 205.7(b)(4))— (1) A c c o u n t access. You may
use your [card][code] to:
(1) W ithdraw cash from your [checking] [or]
[savings] account.
(ii) Make deposits to your (checking] [or]
[savings] account
(iii) Transfer funds between your checking
and savings accounts whenever you request.
(iv) Pay for purchases at places that have
agreed to accept the [card] [code].
(v) Pay bills directly [by telephone] from
your [checking] [or] [savings] account in the
am ounts and on the days you request.
Some of these services may not be
available at all terminals.
(2) L im itations on fre q u e n c y o f transfers .—
(i) You may make only [insert number, e.g.,
3] cash withdrawals from our term inals each
[insert time period, e.g., week]. *
(ii) You can use your telephone billpaym ent service to pay [insert number] bills
each [insert time period] [telephone call].
(iii) You can use our point-of-sale transfer
service for [insert number] transactions each
[insert time period],
(iv) For security reasons, there are lim its on
the num ber of transfers you can make using
our [terminals] [telephone bill-payment
service] [point-of-sale transfer service].
(3) L im itations on dollar a m o u n ts o f
transfers —(i) You may w ithdraw up to [insert
dollar amount] from our term inals each
[insert time period] time you use the [card]
[code].
(ii) You may buy up to [insert dollar
amount] worth of goods or services each
[insert time period] time you use the [card]
[code] in our point-of-sale transfer service.
(e) Fees (§ 205.7(b)(5))— (1) Per transfer
charge. We will charge you [insert dollar
amount] for each transfer you make using our
[automated teller machines] [telephone billpaym ent service] [point-of-sale transfer
service].
(2) F ixed charge. We will charge you
[insert dollar amount] each [insert time
period] for our [automated teller machine
service] [telephone bill-payment service]
[point-of-sale transfer service].
(3) A verage or m in im u m balance charge.
We w ill 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]
(accounts] fells below [insert dollar amount].
If it does, we will charge you [insert dollar
amount] each [transfer] [insert time period].
(f) C onfidentiality ( § 205.7(b)(9)). 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.
(g) D ocum entation (§ 205.7(b)(6)) —(1)
T erm inal transfers. You can get a receipt at
the time you make any transfer to or from
your account using one of our [automated
teller machines] [or] [point-of-sale terminals).
(2) P reauthorized credits. If you have
arranged to have direct deposits made to your
account at least once every 60 days from the
same person or company, (we w ill 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 number)
to find out whether or not the deposit has
been made].
(3) P eriodic statem ents. You w ill 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).
(4) P assbook account w here th e o n ly p o ssib le electronic fu n d transfers are
prea u th o rized 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.
(h) P reauthorized p a y m e n ts ( § 205.7(b)(6),
(7) a n d (8))—(1) R ight to stop p a y m e n t a n d
p rocedu re 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 3 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.)
(2) N otice o f varying am o u n ts. If these
regular payments may vary in amount, [we]
[the person you are going to pay] w ill tell
you, 10 days before each payment, when it
will be made and how much it w ill 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.)
(3) L iability fo r fa ilu re to sto p p a y m e n t o f
prea u th o rized transfer. If you order us to stop
one of these payments 3 business days or
more before the transfer is scheduled, and we
do not do so, we will be liable for your losses
or damages.
(i) F inancial in s titu tio n ’s lia b ility
(§ 205.7(b)(8)). If we do not complete a
10697
transfer to or from your account on tim e or
in the correct am ount according to our
agreement w ith you, we will be liable for
your losses or damages. However, there are
some exceptions. We will not be liable, for
instance:
• If, through no fault of ours, you do not
have enough money in your account to make
the transfer.
• If the transfer w ould go over the credit
lim it on your overdraft line.
• If the automated teller machine where
you are making the transfer does not have
enough cash.
• If the [terminal] [system] was not
working properly and you knew about the
breakdown w hen you started the transfer.
• If circumstances beyond our control
(such as fire or flood) prevent the transfer,
despite reasonable precautions that we have
taken.
• There may be other exceptions stated in
our agreement w ith you.
A-3—Model Forms for Error Resolution
Notice
1. In itia l a n d a n n u a l error resolution notice
§§ 205.7(b)(10) a n d 205.8(b))
In Case of Errors or Questions About Your
Electronic Transfers, Telephone us at [insert
telephone number] or Write us at [insert
address] as soon as you can, if you think your
statem ent or receipt is wrong or if you need
more inform ation about a transfer listed on
the statem ent or receipt. We m ust 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 am ount of the
suspected error.
If you tell us orally, we may require that
you send us your com plaint or question in
w riting w ithin 10 business days.
We w ill tell you the results of our
investigation w ithin 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
com plaint or question. If we decide to do
this, we will credit your account w ithin 10
business days for the am ount you think is in
error, so that you will have the use of the
money during the time it takes us to
com plete our investigation. If we ask you to
put your com plaint or question in writing
and we do not receive it w ithin 10 business
days, we may not credit your account
If we decide that there was no error, we
w ill send you a written explanation w ithin
three business days after we finish our
investigation. You may ask for copies of the
docum ents that we used in our investigation.
2. Error resolution notice on periodic
sta te m e n ts § 205.8(b)
In Case of Errors or Questions About Your
Electronic Transfers, Telephone us at [insert
telephone number] or Write us at [insert
address] as soon as you can, if you think your
statem ent or receipt is wrong or if you need
/o b 9r
10698
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
more information about a transfer on the
statement or receipt. We m ust hear from you
no later than 60 days after we sent you the
FIRST statement on w hich the error or
problem appeared.
(1) Tell us your nam e and account number
(if any).
(2) Describe the error or the transfer you
are unsure about, and explain as clearly as
you can w hy you believe it is an error or why
you need more information.
(3) Tell us the dollar am ount of the
suspected error.
We will investigate your com plaint and
will correct any error promptly. If we take
more than 10 business days to do this, we
will credit your account for the am ount 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.
A-4— Model Form for Service-Providing
Institutions §205.14(b)(l)(ii)
ALL QUESTIONS ABOUT
TRANSACTIONS MADE WITH YOUR
(NAME OF CARD) CARD MUST BE
DIRECTED TO US (NAME OF SERVICE
PROVIDER), AND NOT TO THE BANK OR
OTHER FINANCIAL INSTITUTION WHERE
YOU HAVE YOUR ACCOUNT. We are
responsible for the [name of service) service
and for resolving any errors in transactions
made w ith your (name of card) card.
We will not send you a periodic statement
listing transactions that you make using your
[name of card] card. The transactions will
appear only on the statem ent issued by your
bank or other financial institution. SAVE
THE RECEIPTS YOU ARE GIVEN WHEN
YOU USE YOUR [NAME OF CARD] CARD,
AND CHECK THEM AGAINST THE
ACCOUNT STATEMENT YOU RECEIVE
FROM YOUR BANK OR OTHER FINANCIAL
INSTITUTION. If you have any questions
about one of these transactions, call or write
us at [telephone num ber and address] [the
telephone num ber and address indicated
below].
IF YOUR [NAME OF CARD] CARD IS
LOST OR STOLEN, NOTIFY US AT ONCE
by calling or w riting to us at [telephone
number and address].
Appendix B to Part 205—Federal
Enforcement Agencies
The following list indicates w hich Federal
agency enforces Regulation E for particular
classes of institutions. Any questions
concerning com pliance by a particular
institution should be directed to the
appropriate enforcing agency. Terms that are
not defined in the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the
meaning given to them in the International
Banking Act of 1978 (12 U.S.C. 3101).
N ational b anks, a n d Federal branches a n d
Federal agencies o f foreign ba n ks
District office of the Office of the
Comptroller of the Currency where the
institution is located.
State m e m b e r banks, branches a n d agencies
o f foreign b a n ks (other than Federal
branches. Federal, agencies, a n d in su red state
branches o f foreign banks), com m ercial
len d in g c o m p a n ies o w n e d or controlled b y
foreign banks, a n d organizations operating
u n d er section 25 or 25(a) o f th e Federal
R eserve A c t
Federal Reserve Bank serving the District
in w hich the institution is located.
S cope o f Interpretations
No staff interpretations will be issued
approving financial institutions’ forms or
statements. This restriction does not apply to
forms or statem ents whose use is required or
sanctioned by a government agency.
By order of the Board of Governors of the
Federal Reserve System, February 24,1994.
W illia m W . W iles,
Secretary o f th e Board.
N o n m em b er in su re d b a n ks a n d in su red state
branches o f foreign b a n ks
BILLING CODE 6 21 0-0t-P
Federal Deposit Insurance Corporation
regional director for the region in which the
institution is located.
FEDERAL RESERVE SYSTEM
[FR Doc. 94-4680 Filed 3-2-94; 12:38 pm]
Savings in stitu tio n s in su red u n d e r the
Savings A sso cia tio n Insurance F u n d o f the
FDIC a n d federally-chartered savings b a n ks
in su red u n d e r th e B a n k Insurance F u n d o f
the FDIC (but n o t in clu d in g state-chartered
savings b a n ks in su re d u nder the B ank
Insurance F und)
AGENCY: B o a rd o f G o v ern o rs o f th e
Office of Thrift Supervision Regional
Director for the region in which the
institution is located.
F e d e ra l R e serv e S y stem .
ACTION: P ro p o s e d O fficial S taff
In te rp re ta tio n .
Federal C redit U nions
SUMMARY: T h e B o a rd is p u b lis h in g for
Division of Consumer Affairs, National
Credit Union A dministration, 1775 Duke
Street, Alexandria, Virginia 22314-3428
c o m m e n t a p ro p o s a l to re v ise th e
o fficial sta ff c o m m e n ta ry to R eg u latio n
E (E le c tro n ic F u n d T ran sfers). T h is
p ro p o sa l is p a rt o f th e B o a rd ’s c u rre n t
re v ie w o f R e g u la tio n E. T h e
c o m m e n ta ry in te r p re ts th e re q u ire m e n ts
o f R e g u la tio n E in o rd e r to fac ilita te
c o m p lia n c e b y fin a n c ia l in s titu tio n s th a t
offer e le c tro n ic fu n d tra n sfe r se rv ic es to
c o n s u m e rs. T h e p ro p o s e d re v isio n s
c h a n g e th e q u e s tio n a n d a n s w e r fo rm at
to a n a rra tiv e o n e in o rd e r to m ak e th e
c o m m e n ta ry e a s ie r to u s e a n d to
c o n fo rm it w ith th e fo rm at o f th e
B o a rd ’s o th e r sta ff c o m m e n ta rie s. It also
in c lu d e s in te rp re ta tiv e p ro v isio n s
p re v io u sly c o n ta in e d in th e re g u la tio n
th a t w e re m o re e x p la n a to ry in n a tu re .
T h e p ro p o s a l in c lu d e s a d d itio n a l
in te rp re ta tio n s o n m a tte rs n o t
p re v io u sly a d d re s s e d .
DATES: C o m m e n ts m u s t b e re c e iv e d o n
o r b efo re M ay 3 1 ,1 9 9 4 .
ADDRESSES: C o m m e n ts s h o u ld refer to
D o ck et N o. R -0 8 3 1 a n d b e m a ile d to
W illia m W . W iles, S ecre tary , B o ard o f
G o v e rn o rs o f th e F e d e ra l R eserve
S y stem , W a sh in g to n , DC 20551. T h ey
m a y a lso b e d e liv e re d to th e g u ard
s ta tio n in th e E c c le s B u ild in g C o u rty a rd
o n 2 0 th S tre e t N W . (b etw e en
C o n s titu tio n A v e n u e a n d C Street)
b e tw e e n 8:45 a.m . a n d 5:15 p.m .
w e e k d a y s. E x c e p t as p ro v id e d in th e
B o a rd ’s ru le s re g a rd in g th e av a ila b ility
o f in fo rm a tio n (12 C FR 261.8),
c o m m e n ts re c e iv e d w ill b e av a ila b le for
in s p e c tio n a n d c o p y in g b y a n y m e m b e r
o f th e p u b lic in th e F re e d o m o f
In fo rm a tio n O ffice, R o o m M P -5 0 0 o f th e
M a rtin B u ild in g b e tw e e n 9 a m . a n d 5
p .m . w e e k d a y s.
A ir Carriers
Assistant General Counsel for Aviation
Enforcement and Proceedings, Department of
Transportation, 400 Seventh Street, SW.,
Washington, DC 20590.
Brokers a n d D ealers
Division of Market Regulation, Securities
and Exchange Commission, Washington, DC
20549.
Retailers, C onsum er F inance C om panies,
Certain O ther F inancial Institutions, a n d all
others n o t covered above
Federal Trade Commission, Electronic
Fund Transfers, W ashington, DC 20580.
Appendix C to Part 205—Issuance of
Staff Interpretations
O fficial S ta ff Interpretations
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,
official staff interpretations of this regulation.
Except in unusual circumstances, such
interpretations w ill not be issued separately
but will be incorporated in an official
commentary to the regulation, w hich will be
am ended periodically.
R equests fo r Issu a n ce o f O fficial S ta ff
Interpretations
A request for an official staff interpretation
shall be in w riting and addressed to the
Director, Division of Consumer and
Community Affairs, Board of Governors of
the Federal Reserve System, W ashington, DC
20551. The request shall contain a complete
statement of all relevant facts concerning the
issue, including copies of all pertinent
documents.
12C FR Part 205
[Regulation E; Docket No. R-0831]
Electronic Fund Transfers
loi» 9 ?
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
FOR FURTHER INFORMATION CONTACT: Jane
Je n sen G ell o r M ary Jane S e e b a c h , S taff
A tto rn e y s, o r Jo h n W ood, S e n io r
A tto rn e y , D iv isio n o f C o n s u m e r a n d
C o m m u n ity A ffairs, B o ard o f G o v e rn o rs
o f th e F e d e ra l R eserve S y stem ,
W a sh in g to n , DC 20551, a t (202) 4 5 2 2412 o r (202) 4 5 2 -3 6 6 7 . F o r th e h e a rin g
im p a ire d o n ly , co n ta c t D o ro th e a
T h o m p s o n , T e le c o m m u n ic a tio n s D evice
for th e D eaf (TDD), a t (202) 4 5 2 -3 5 4 4 .
SUPPLEMENTARY INFORMATION:
(1) Background
T h e E le c tro n ic F u n d T ra n sfe r A c t
(EFTA) (15 U.S.C. 1693), e n a c te d in
1978, p ro v id e s a b a sic fra m e w o rk
e s ta b lish in g th e rig h ts, lia b ilitie s , a n d
re s p o n s ib ilitie s o f p a rtic ip a n ts in
e le c tro n ic fu n d tra n sfe r (EFT) sy stem s.
T h e E FT A is im p le m e n te d b y th e
B o a rd ’s R e g u la tio n E (12 C FR p a r t 205).
In 1981, th e B oard p u b lis h e d a n o fficial
sta ff co m m e n ta ry to R e g u la tio n E. T h e
c o m m e n ta ry su b stitu te s for in d iv id u a l
o fficial sta ff in te rp re ta tio n s a n d is
d e s ig n e d to fac ilita te c o m p lia n c e a n d
p ro v id e p ro te c tio n fro m c iv il lia b ility ,
u n d e r s e c tio n 915(d)(1) o f th e act, for
fin a n c ia l in s titu tio n s th a t a c t in
co n fo rm ity w ith it.
T h e q u e s tio n a n d a n s w e r fo rm a t o f
th e p re s e n t c o m m e n ta ry w a s d e s ig n e d
to m a k e c o m p lia n c e e a sie r b y p ro v id in g
sp e cific a n s w e rs , in n o n te c h n ic a l
lan g u ag e, to co m m o n ly a s k e d q u e s tio n s.
T h e B o ard p ro p o se s to re p la c e th e
c u rre n t a p p ro a c h w ith a n a rra tiv e
form at, sim ila r to o th e r c o m m e n ta rie s
is s u e d b y th e B oard. T h e p ro p o s e d
ch a n g e is in te n d e d to p ro v id e m o re
g en e ral a p p lic a b ility , a s th e c u r r e n t
fo rm at u s u a lly relie s o n s p e c ific fa c tu a l
s itu a tio n s a n d o ften re s tric ts th e sc o p e
o f a n in te rp re ta tio n .
T h e o rd e r o f c o m m e n ts in th e
p ro p o sa l c o rre sp o n d s w ith th e n e w
se c tio n s in th e re g u la to ry p ro p o sal.T h ro u g h o u t th e c o m m e n ta ry , re fe re n c e
to “ th is s e c tio n ” o r “ th is p a ra g ra p h ”
m e a n s th e se ctio n o r p a ra g ra p h in th e
re g u la tio n th a t is th e su b je c t o f th e
c o m m e n t. E ach c o m jn e n t in th e
c o m m e n ta ry is id e n tifie d b y a n u m b e r
a n d th e re g u la to ry s e c tio n o r p a ra g ra p h
th a t it in te rp re ts.
T h e p ro p o s e d c o m m e n ta ry
in c o rp o ra te s te x t th a t w a s m o v e d fro m
th e re g u la tio n b e c a u se it is m o re
e x p la n a to ry in n a tu re th a n re g u la to ry . In
a d d itio n , a n u m b e r o f c o m m e n ts w o u ld
b e d e le te d a s o bsolete. T h e B o a rd
so lic its c o m m e n t o n w h e th e r d e le tin g
an y o f th e s e c o m m e n ts c re a te s
c o n fu s io n a s to th e B o a rd ’s c u r r e n t
in te rp re ta tio n o f a p a rtic u la r m a tte r.
T h e se c tio n -b y -se c tio n d e s c rip tio n
th a t fo llo w s p o in ts o u t th o s e p ro v is io n s
th a t d iffe r in so m e s ig n ific a n t w a y fro m
th e c u rre n t c o m m e n ta ry . S im ila rly ,
th o se p o rtio n s o f th e c u rre n t re g u la tio n
th a t w o u ld b e m o v e d to th e c o m m e n ta ry
are a lso d isc u sse d . C o m m e n ts in th e
e x istin g c o m m e n ta ry w ill b e re fe rre d to
as “ q u e s tio n s ” a n d w ill b e c ite d b y th e
se c tio n n u m b e r a n d th e n u m b e r o f th e
q u e s tio n . F o r e x a m p le , Q 2 -1 1 w o u ld b e
th e c ita tio n for q u e s tio n n u m b e r 11 in
th e c o m m e n ta ry to § 205.2. A s th e
s u b s ta n c e o f m a n y q u e s tio n s d o e s n o t
c h a n g e in th e n e w fo rm at, th o s e
c o m m e n ts are n o t sp e c ific a lly
d isc u sse d . A t th e b e g in n in g o f e a c h
se c tio n o f th e p ro p o s e d c o m m e n ta ry is
a lis tin g th a t m a tc h e s e x istin g c o m m e n ts
w ith th e p ro p o s e d n e w c o m m e n ta ry
p ro v isio n s. It a lso p ro v id e s a lis tin g o f
c o m m e n ts th a t w o u ld b e d e le te d fro m
th e c o m m e n ta ry , c o m m e n ts th a t a re
n e w , a n d c o m m e n ts th a t w o u ld b e
m o v e d to o th e r se ctio n s.
(2) F o rm o f C o m m e n t L e tte rs
C o m m e n t le tte rs s h o u ld re fe r to
D o ck et N o. R -0 8 3 1 . T h e B o a rd re q u e s ts
th a t, w h e n p o ssib le , c o m m e n ts b e
p r e p a re d u s in g a s ta n d a rd ty p e fa c e w ith
a ty p e siz e o f 10 o r 12 c h a ra c te rs p e r
in c h . T h is w ill e n a b le th e B o a rd to
c o n v e rt th e te x t in to m a c h in e -re a d a b le
form th ro u g h e le c tro n ic sc a n n in g , a n d
w ill fa c ilita te a u to m a te d re trie v a l o f
c o m m e n ts for rev ie w . C o m m e n ts m a y
a lso b e s u b m itte d o n 3Vz in c h o r 5 1
/*
in c h c o m p u te r d isk e tte s in a n y IBMc o m p a tib le D O S -b ased form at.
(3) E x p la n a tio n o f P ro p o s e d R e v is io n s
S e c tio n 2 0 5 .2 — D e fin itio n s
New
< a H .............
( b H .............
(b)-2 .............
(cl)— .............
1
(0-1 ..............
(0 -2 ..............
(0 -3 ..............
(k)-1 .............
(k)-2 .............
(k)-3 .............
(k)— .............
4
Old
Q 2 -1 .
Q 2 -2 , Q 2 -3 , Q 2 -4 ,
Q 2-6.5.
Q 3 -2 0 , Q 3-21.
Q 2 -8 .
Q 2-25.5, Q 2 -2 3 .
Q 2-24.
Q 2 -2 5 .
Q 2-26.
Q 2 -2 7 .
Q 2 -2 7 .
Q 2 -2 8 .
Q 2 -5 ,
Comments Deleted
Q 2 -6 : B u s in e ss d a y — s u b s ta n tia lly a ll
b u s in e s s fu n c tio n s
Q 2 -7 : B u s in e ss d a y — d u ra tio n
Q 2 -9 : B u s in e ss d ay — sh o rt h o u r s
Q 2 -2 2 : E le c tro n ic te rm in a l— te le p h o n e
b ill p a y m e n t
P a ra g ra p h 2(b)(2)
In th e re g u la to ry p ro p o sa l, th e
e x e m p tio n for tru s t a c c o u n ts h a s b e e n
in c o rp o ra te d in to th e d e fin itio n o f
a c c o u n t. A c c o rd in g ly , Q 3 -2 0 (c u sto d ia l
10699
a g re e m e n ts) a n d Q 3 -2 1 (tru s t a c c o u n ts )
w o u ld b e in c lu d e d in th is se c tio n . T h e
c h a n g e m irro rs th e sta tu to ry d e fin itio n
o f a c c o u n t.
(d) B u s in e ss D ay
T h e re g u la to ry p ro p o sa l in c lu d e s a
n e w d e fin itio n o f b u s in e s s d ay .
C u rre n tly , th e te rm is d e fin e d as a n y
d a y o n w h ic h th e offices o f th e
c o n s u m e r’s fin a n c ia l in s titu tio n a re
o p e n to th e p u b lic for c a rry in g o n
s u b s ta n tia lly a ll b u s in e s s fu n c tio n s . T h e
p ro p o s a l d e fin e s a b u s in e s s d a y as a
c a le n d a r d a y o th e r th a n a S a tu rd a y ,
S u n d a y , o r a n y leg al p u b lic h o lid a y
s p e c ifie d in 5 U .S.C. 6103(a). Q 2 -6 , Q 2 7 a n d Q 2 -9 p ro v id e g u id a n c e o n
in te rp re tin g “ s u b s ta n tia lly a ll b u s in e s s
f u n c tio n s ” a n d w o u ld b e d e le te d as
o b so le te .
(k) U n a u th o riz e d E le c tro n ic F u n d
T ra n sfe r
P ro p o se d c o m m e n t (k )-2 in c o rp o ra te s
Q 2 -2 7 , w h ic h p ro v id e s th a t w h e n th e
c o n s u m e r fu rn is h e s a n ac ce ss d e v ic e
a n d g ra n ts a c tu a l a u th o rity to m a k e
tra n sfe rs to a n o th e r p e rso n (a fam ily
m e m b e r o r co -w o rk e r, for e x a m p le ) w h o
th e n e x c e e d s th a t a u th o rity , th e
c o n s u m e r is lia b le for th e tra n sfe rs
u n le s s th e c o n s u m e r n o tifie s th e
fin a n c ia l in s titu tio n th a t tra n sfe rs b y
th a t p e rs o n a re n o lo n g e r a u th o riz e d .
T h e B o a rd so lic its c o m m e n t o n w h e th e r
fin a n c ia l in s titu tio n s s h o u ld b e re q u ire d
to d is c lo s e a c o n s u m e r’s lia b ility in th is
in s ta n c e as p a r t o f th e in itia l d is c lo s u re s
o f § 205.7. W h ile in s titu tio n s are
re q u ire d to p ro v id e a su m m a ry o f th e
c o n s u m e r’s lia b ility u n d e r § 205.6 in th e
in itia l d is c lo s u re s , th e c u rre n t m o d e l
c la u se s d o n o t re fe r to th is ty p e o f
situ a tio n .
S e c tio n 2 0 5 .3 — C o v e r a g e
New
Old
o n .............
(a )-2 .............
( b H .............
New (revised Q 9 -1 5 ).
New (foreign applicability).
Q 2 -1 1 , reverses Q 2 -1 6 , Q 2 18, Q 2 -1 9 , Q 2-2 1 .5 .
Q 2 -1 0 , Q 2 -1 2 , Q 2 -2 1 .
Q 3 -1 .
Q 3 -3 .
New (UCC Article 4A/wire
transfer).
New (similar fund transfer sys
tems).
New (securities exemption).
Q 3 -3 .5 , Q 3 -3 .6 , new (margin
call).
Q 3 -8 , Q 3 -9 , Q 3 -1 0 , 0 3 -1 1 ,
Q 3 -1 2 .
Q 3-13.
Q 3 -1 4 , Q 3 -1 5 , Q 3 -1 6 , Q 3 19.5.
(b>-2 .............
(c ) ( 2 H ........
( c )(3 H ........
( c ) ( 3 ) - 2 ........
(c)(3)— ........
3
(c)(4)— ........
1
(c)(4)-2 ........
(c)(5)—1 ........
(c)(5)-2 ........
(c)(6)— ........
1
/O b 9?
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New
Old
(c)(6)— ........
2
Q 3-17, Q 3 -1 8 , Q 3 -1 9 , new
(facsimile machine).
New (UCC Article 4A/small institutions).
( c ) ( 7 H .......
Comments Deleted
Q 2 -1 2 .5 : F u n d tra n sfe r— w ith h o ld in g o f
in c o m e ta x o n in te re st
Q 2 -1 2 .6 : F u n d tra n sfe r— EBT
Q 2 -1 3 : F u n d tra n sfe r— w ith d ra w a l a t
a n o th e r in s titu tio n
Q 2 -1 4 : F u n d tra n sfe r— c h e c k tru n c a tio n
Q 2 -1 5 : F u n d tra n sfe r— p a y e e
in fo rm a tio n , n o n e le c tro n ic form
Q 2 -1 7 : F u h d tra n sfe r— ACH
Q 2 -2 0 : F u n d tra n sfe r— p re a u th o riz e d
d e b its b y p a p e r d ra fts, A CH
Q 3 -2 : W ire tran sfe r— in s tru c tio n s o n
m a g n e tic ta p e
Q 3— T e le p h o n e tra n sfe r p la n s—
4:
a p p lic a b ility o f in tra in s titu tio n a l
e x e m p tio n
Q 3 -5 : C o m p u lso ry u se— p re a u th o riz e d
lo a n p a y m e n ts
Q 3 -2 2 : S m all in s titu tio n s e x e m p tio n —
g race p e rio d
Comments Moved
Q 3 -6 , Q 3 -7 , a n d Q 3 -7 .5 (see p ro p o se d
c o m m e n ta ry to § 205.10(e))
Q 3 -2 0 a n d Q 3 -2 1 (see p ro p o se d
c o m m e n ta ry to § 205.2)
S e c tio n 205.3 o f th e p ro p o s e d
re g u la tio n is a n e w se c tio n o n th e
re g u la tio n ’s coverag e. It in c lu d e s th e
e x is tin g la n g u ag e o n th e sc o p e o f
R e g u la tio n E, as w e ll a s th e d e fin itio n
o f E FT a n d th e e x e m p tio n s fro m th e
re g u la tio n .
3(a) G en eral
T o c o rre s p o n d w ith th e re g u la to ry
p ro p o s a l, th e c o m m e n ta ry p ro p o sa l
c o n s o lid a te s ex istin g a n d n e w
c o m m e n ts o n th e re g u la tio n ’s co v erag e.
Q 9— w h ich sp ecifies w h e n p eriod ic
15,
s ta te m e n ts are re q u ire d , a lso d e ta ils th e
ty p e s o f a c c o u n ts su b je c t to th e
re q u ire m e n ts o f th e re g u la tio n a n d h a s
b e e n in c o rp o ra te d in to c o m m e n t (a)—
1.
P ro p o s e d c o m m e n t (a)— is n e w . It
2
e x p la in s th e a p p lic a tio n o f R e g u la tio n E
in s itu a tio n s in v o lv in g fo re ig n -b ase d
fin a n c ia l in s titu tio n s , c o n s u m e rs w h o
a re n o t U .S. c itiz e n s, o r b o th . L an g u ag e
fo r th is p ro p o s e d c o m m e n t w a s
m o d e le d u p o n th e c o m m e n ta ry to
R e g u la tio n Z o n fo re ig n a p p lic a b ility (12
C FR p a r t 226, su p p . I, c o m m e n t 1(c)—
1).
T h e B o a rd re q u e sts c o m m e n t on
w h e th e r th e sc o p e o f th e p ro p o se d
c o m m e n t offers su ffic ie n t co v e rag e o f
fo re ig n -re la te d EFTs.
(b) E le c tro n ic F u n d T ra n sfe r
In th e re g u la to ry p ro p o sa l, th e
d e f in itio n o f “ e le c tro n ic fu n d tra n s fe r”
(c u rre n tly § 205.2(g)) h a s b e e n
in c o rp o ra te d in to th e co v e rag e se c tio n
a s th e d e fin itio n is c e n tra l to
d e te rm in in g co v e rag e u n d e r th e
re g u la tio n . T h e p ro p o s e d c o m m e n ta ry
re fle c ts th is ch a n g e a n d c o n s o lid a te s in
th is se c tio n th e m a jo rity o f q u e s tio n s
p e rta in in g to EFTs. A n u m b e r o f
c o m m e n ts h a v e b e e n d e le te d d u e to a
c h a n g e in B o ard p o sitio n . F o r e x a m p le ,
Q 2 -1 2 .6 d e a ls w ith th e e le c tro n ic
p a y m e n t o f g o v e rn m e n t b e n e fits a n d
sta te s th a t s u c h tra n sfe rs a re n o t su b je ct
to R e g u la tio n E. As th e B o ard h a s
a d o p te d a m e n d m e n ts to R e g u la tio n E
e x te n d in g c o v e rag e to e le c tro n ic b e n e fit
tra n s fe r p ro g ra m s e s ta b lis h e d b y fed e ra l,
sta te , o r lo c al g o v e rn m e n t a g e n cies, Q 2 12.6 h a s b e e n d e le te d (see D o ck et N o.
R -0 8 2 9 in to d a y ’s Federal Register).
P ro p o s e d c o m m e n t (b)— p ro v id e s
1
e x a m p le s o f E FT s su b je c t to R e g u la tio n
E. T h e c o m m e n t in c o rp o ra te s Q 2 -1 9 ,
a n d re v e rse s Q 2 -1 6 to a c h ie v e
c o n s iste n c y . Q 2 -1 6 sta te s th a t c re d its to
c o n s u m e r s ’ a c c o u n ts m a d e b y a
c o m p o s ite c h e c k a c c o m p a n ie d b y a
m a g n e tic ta p e c o n ta in in g p a y e e
in fo rm a tio n are n o t E FT s for p u rp o s e s o f
R e g u la tio n E. Q 2 -1 9 , o n th e o th e r h a n d ,
sta te s th a t d e b its m a d e to c o n s u m e r
a c c o u n ts b y u s e o f a m a g n e tic ta p e
c o n ta in in g c o n s u m e rs ’ b illin g
in fo rm a tio n w ill b e c o n s id e re d E FT s
c o v e re d b y th e re g u la tio n e v e n if a ll th e
d e b its are c o m b in e d o n o n e c o m p o site
c h e c k s e n t to th e p ay ee. T h e p ro p o s e d
c o m m e n t tre a ts b o th c re d its a n d d e b its
to c o n s u m e r a c c o u n ts b y u se o f
c o m p o s ite c h e c k s as EFTs.
P ro p o s e d c o m m e n t (b )-2 p ro v id e s
e x a m p le s o f E FT s th a t are n o t c o v e re d
b y th e re g u la tio n . T h e c o m m e n t
g e n e ra lly sta te s th a t a n y p a y m e n t th a t
d o e s n o t d e b it o r c r e d it a c o n s u m e r
a s se t a c c o u n t is n o t a n EFT. It also
in c o rp o ra te s Q 2 -1 0 a n d Q 2 -1 2 . Q 2 -1 0
p ro v id e s th a t a E FT e x c lu d e s n o t o n ly
p a y m e n ts m a d e b y ch e c k , d ra ft, o r
sim ila r p a p e r in s tru m e n t a t a n
e le c tro n ic te rm in a l, b u t a lso p a y m e n ts
in c u rre n c y sin c e th e y d o n o t d e b it or
c r e d it a c o n s u m e r’s a c c o u n t. Q 2 -1 2
p ro v id e s th a t p a y ro ll a llo tm e n ts are
tra n sfe rs n o t c o v e re d b y R e g u la tio n E;
a n e x a m p le is a su m d e s ig n a te d b y th e
c o n s u m e r to b e d e d u c te d fro m p a y ro ll
to re p a y a d e b t o f th e c o n su m e r. T h is
a m o u n t is d e d u c te d b efo re a d e p o s it is
m a d e to th e c o n s u m e r’s a c c o u n t a n d so
th e p a y ro ll a llo tm e n t is n o t a d e b it to a
c o n s u m e r a sse t a c c o u n t.
(c) Exclusions From Coverage
T h e re g u la to ry p ro p o sa l in c o rp o ra te s
th e e x e m p tio n s fro m c u rre n t § 205.3
in to th e e x p a n d e d se c tio n o n coverage.
T h e B o a rd b e lie v e s h a v in g co v e rag e a n d
e x e m p tio n p ro v is io n s in o n e se c tio n
s im p lifie s th e a n a ly s is o f w h e th e r o r n o t
c o m p lia n c e w ith th e re g u la tio n is
re q u ire d .
T w o n e w c o m m e n ts a d d re s s th e
r e la tio n s h ip o f R e g u la tio n E to A rticle
4 A o f th e U n ifo rm C o m m e rc ial C ode
(UCC). A rtic le 4A p ro v id e s
c o m p re h e n s iv e ru le s g o v e rn in g th e
rig h ts a n d re s p o n s ib ilitie s a risin g from
w ire tra n sfe rs. It a p p lie s p rim a rily to
la rg e -d o lla r, c o m m e rc ia l w ire tran sfe rs
m a d e v ia F e d w ire , C lea rin g H o u se
In te rb a n k P a y m e n ts S y stem s (CHIPS),
S o c ie ty for W o rld w id e In te rb a n k
P a y m e n ts S y ste m s (SW IFT) a n d T elex.
(c)(3) W ire T ra n sfers
UCC § 4 A -1 0 8 p ro v id e s th a t A rticle
4A d o e s n o t c o v e r a fu n d tra n sfe r an y
p a rt o f w h ic h is g o v e rn e d b y th e EFTA.
In d ra ftin g A rtic le 4A , th e N a tio n al
C o n fe re n c e o f C o m m issio n e rs on
U n ifo rm S tate L aw s sta te d th a t if a fu n d
tra n s fe r is m a d e in p a rt b y F e d w ire a n d
in p a rt v ia a u to m a te d c le a rin g h o u se
(ACH ), b e c a u s e th e EFTA a p p lie s to th e
A C H p a r t o f th e tra n sfe r, A rtic le 4A
d o e s n o t a p p ly to a n y p a rt o f th e
tra n sfe r. In s titu tio n s th a t offer F ed w ire
se rv ic e s h a v e b e e n c o n c e rn e d th a t th e se
tra n s fe rs w o u ld lo se th e leg al ce rta in ty
o ffe re d b y c o m p ly in g w ith th e
r e q u ire m e n ts o f A rtic le 4A if so m e p art
o f th e tra n sfe r w a s su b je c t to th e EFTA.
T h is c o n c e rn m u s t b e b a la n c e d w ith th e
p o te n tia l o f su b je ctin g c o n s u m e rs to full
lia b ility for u n a u th o riz e d tra n sfe rs
m e re ly b e c a u s e so m e p a rt o f th e
tra n sfe r, w h ic h w o u ld o rd in a rily b e
c o v e re d b y R e g u la tio n E, w a s m a d e via
F e d w ire .
In 1 990, th e B o ard a d o p te d a
c o m p re h e n s iv e re v isio n o f s u b p a rt B to
R e g u la tio n J (55 FR 4 0 7 9 1 , O cto b e r 5,
1990). R e g u la tio n J (12 CFR p a rt 210)
sp e c ifie s th e ru le s a p p lic a b le to fu n d s
tra n s fe rs h a n d le d b y F e d e ra l R eserve
B an k s. T o ensure th a t th e ru le s for all
fu n d s tra n sfe rs th ro u g h F e d w ire are
c o n s is te n t, th e B o ard u s e d its
p re e m p tiv e a u th o rity u n d e r UCC se ctio n
4 A -1 0 7 to d e te rm in e th a t su b p a rt B,
in c lu d in g th e p ro v isio n s o f A rticle 4A,
a p p lie s to a ll fu n d s tra n sfe rs th ro u g h
F e d w ire , e v e n if a p o rtio n o f th e fu n d
tra n s fe r is g o v e rn e d b y th e EFTA . T h e
p o rtio n o f th e fu n d tra n sfe r th a t is
g o v e rn e d b y th e EFTA is n o t g o v ern ed
b y s u b p a rt B.
E v e n w ith th is relief, th e B oard h as
re c e iv e d q u e s tio n s a b o u t th e effect of
d u a l co v erag e. F o r e x a m p le , if an
in s titu tio n offers c o n s u m e rs th e ab ility
to in itia te F e d w ire tra n sfe rs p u rs u a n t to
a te le p h o n e tra n sfe r ag re e m e n t, th e
tra n s fe r w o u ld b e c o v e re d b y b o th
R e g u la tio n E a n d A rtic le 4A. UCC
s e c tio n 4 A -2 0 2 e n c o u ra g e s v erific atio n
o f th e a u th e n tic ity o f a F e d w ire
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p a y m e n t o rd e r p u r s u a n t to a “ se c u rity
p r o c e d u re ” e s ta b lis h e d b y ag re e m e n t
b e tw e e n th e c u s to m e r a n d a re c e iv in g
b an k . P u ttin g s u c h a n a g re e m e n t in
w ritin g c o u ld b e d e e m e d to c o n s titu te a
te le p h o n e tra n s fe r p la n for p u rp o s e s o f
R e g u la tio n E. T h e B o a rd b e lie v e s th a t if
a n in s titu tio n offers F e d w ire p a y m e n ts
as a se rv ic e to c o n s u m e rs a n d d o e s n o t
m a k e th e se rv ic e a v a ila b le in
c o n ju n c tio n w ith a te le p h o n e p la n
su b je c t to R e g u la tio n E, th e n th e
p ro te c tio n s o f A rtic le 4A are a p p lic a b le
to th e tran sfe r. P ro p o s e d c o m m e n t
(c)(3)— e x p la in s th a t i f th e se rv ic e is
2
offered as a p r o d u c t se p a ra te fro m th e
m o re ty p ic a l te le p h o n e b ill-p a y m e n t or
o th e r p re a rra n g e d p la n , th e n an y
s e c u rity p ro c e d u re fo llo w e d to e s ta b lish
a n a g re em e n t w ill n o t b e d e e m e d to
c re ate a te le p h o n e p la n su b je c t to
R e g u la tio n E.
T h e w ire tra n s fe r e x e m p tio n e x te n d s
to a n y tra n sfe r o f fu n d s th ro u g h F e d w ire
o r th ro u g h a sim ila r fu n d tra n sfe r
system . C o m m e n t (c)(3)— p ro v id e s
3
ex a m p le s o f s u c h sy stem s.
(c)(4) S e c u ritie s a n d C o m m o d itie s
T ran sfers
T h e B oard h a s p ro p o s e d to re v ise th e
c u rre n t e x e m p tio n fo r c e rta in se c u ritie s
a n d c o m m o d itie s tra n sfe rs c o n ta in e d in
§ 205.3(c). T h e e x e m p tio n w o u ld a p p ly
to a tra n sfe r for th e p u rc h a s e o r sa le o f
se c u ritie s o r c o m m o d itie s, e v e n if th e
se c u rity o r c o m m o d ity is n o t re g u la te d
b y th e S e c u ritie s a n d E x ch a n g e
C o m m issio n o r th e C o m m o d ity F u tu re s
T ra d in g C o m m issio n so lo n g a s it is so ld
b y a re g istered b ro k e r-d e a le r o r fu tu re s
co m m issio n m e rc h a n t (for e x a m p le ,
m u n ic ip a l secu ritie s). P ro p o se d
c o m m e n t (c)(4)— p ro v id e s a d d itio n a l
1
c la rific a tio n o n th is p o in t.
P ro p o se d c o m m e n t (c)(4 )-2 p ro v id e s
ex a m p le s fro m th e c u r r e n t c o m m e n ta ry
o f c o v e red a n d e x e m p t se c u ritie s
transfers* (Q 3 -3 .5 a n d Q 3 -3 .6 ). T h e
co m m e n t also c o n ta in s a n e w e x a m p le
o f a n e x e m p t tra n sfe r, th a t o f a
te le p h o n e o rd e r to e x e rc ise a m a rg in
call. T h e B o ard b e lie v e s th a t th e
e x e rcise o f a m a rg in c a ll is so c lo se ly
lin k e d to th e p u rc h a s e o r sale of
se c u ritie s as to c o m e w ith in th e p u rv ie w
o f th e ex e m p tio n . T h e B o ard so lic its
c o m m e n t o n w h a t a d d itio n a l e x a m p le s
m ay b e n e e d e d to illu s tra te th e e x te n t o f
th is ex e m p tio n .
h a s re c e iv e d q u e s tio n s a b o u t p la n s in
w h ic h th e c o n s u m e r u s e s fac sim ile
p a p e r d e s ig n e d to lo o k lik e a p a p e r
“ d ra ft” to in itia te a tra n s fe r se n t v ia
fa c sim ile m a c h in e . T h e E F T A ’s
d e fin itio n o f E FT in c lu d e s a n y tra n sfe r
th ro u g h a “ te le p h o n ic in s tru m e n t.” T h e
B o ard c o n s id e rs a fa c sim ile m a c h in e to
b e th e fu n c tio n a l e q u iv a le n t o f a
te le p h o n e . S in c e it is a te le p h o n e , it is
in c o n s e q u e n tia l w h e th e r in fo rm a tio n
a b o u t th e tra n sfe r is tra n s m itte d o rally
o r b y fac sim ile. T h e B o a rd re q u e sts
c o m m e n t o n th is in te rp re ta tio n a n d
so lic its a d d itio n a l e x a m p le s o f b o th
c o v e re d a n d e x e m p t tra n sfe rs.
(c)(7) S m a ll In s titu tio n s
P ro p o se d c o m m e n t (c)(7)— c la rifie s
1
th a t A rtic le 4A is n o t a p p lic a b le to
tra n sfe rs e x e m p t fro m R e g u la tio n E
u n d e r th e sm a ll in s titu tio n e x e m p tio n .
A s n o te d a b o v e , th e d ra fte rs o f A rtic le
4 A c o n s id e re d th e E FT A a n d R e g u la tio n
E to b e m u tu a lly e x c lu siv e . T h e B o ard
h a s b e e n a s k e d w h e th e r p re a u th o riz e d
tra n sfe rs b y sm a ll in s titu tio n s
(c u rre n tly , in s titu tio n s w ith a sse ts
u n d e r $25 m illio n ) w h ic h are larg ely
e x e m p t fro m R e g u la tio n s E a re th u s
su b je c t to th e re q u ire m e n ts o f A rtic le 4 A
b y v irtu e o f th e e x e m p tio n (for e x a m p le ,
a d ire c t d e p o s it to a c o n s u m e r’s a c c o u n t
a t a sm a ll b an k ). A s n o te d in th e
p ro p o s e d c o m m e n t, th e B o ard reg a rd s
th e tra n sfe rs as g e n e ra lly su b je c t to th e
EFT A , a n d th e re fo re n o t c o v e re d b y
A rtic le 4A.
S e c tio n 2 0 5 .4 — G e n e r a l D is c lo s u r e
R e q u ir e m e n ts ; J o in tly O ffe r e d S e r v ic e s
OkJ
New
(a)-1 .............
(a)— .............
2
Q 7 -3 , Q9—
4.
New (revises Q 7-4).
C o m m e n ts D e le te d
Q 4 -1 : S h a re d sy ste m — sc o p e of
d isc lo su re s
Q 4 -2 : S h a re d sy ste m — d isc lo su re s o n
b e h a lf 6 f a n o th e r in s titu tio n
Q 4 -3 : M u ltip le a c c o u n ts a n d a c c o u n t
h o ld e rs (c la rifie d in § 205.4(c)(1) o f
p ro p o s e d re g u la tio n )
T h e B o a rd ’s re g u la to ry p ro p o sa l
in c lu d e s b o th g e n e ra l d is c lo s u re
re q u ire m e n ts a n d s p e c ia l re q u ire m e n ts
for p ro v id in g th e v a rio u s d isc lo su re s in
a re v ise d § 205.4.
(c)(6) T e le p h o n e -In itia te d T ra n sfe rs
(a) F o rm o f D isc lo su re s
P ro p o se d c o m m e n t (c)(6)—
2
in c o rp o ra te s e x a m p le s c o n ta in e d in th e
c u rre n t c o m m e n ta ry o f c o v e re d tra n sfe rs
u n d e r a w ritte n p la n (Q 3 -1 7 , Q 3 -1 8 a n d
Q 3 -1 9 ). T h e p ro p o s a l a ls o c o n ta in s a
n e w ex a m p le , u s e o f a fa c sim ile
m a c h in e to in itia te a tra n sfe r. T h e B o ard
T h e B o ard h a s c o n s is te n tly
in te rp re te d th e fo rm a t re q u ire m e n ts
c u rre n tly c o n ta in e d in §§ 205.7(a) a n d
2 05.9 as g e n e ra lly a p p lic a b le to a ll o f
th e d is c lo s u re s re q u ir e d b y th e
re g u la tio n . C o m m e n ts in c o rp o ra tin g
Q 7 -3 a n d Q 9 -4 h a v e b e e n m o v e d to th is
se c tio n o f th e c o m m e n ta ry to p ro v id e
a d d itio n a l g u id a n c e o n d isc lo su re
re q u ire m e n ts.
C u rre n tly , Q 7— p ro v id e s th a t
4
S p a n is h la n g u a g e d is c lo s u re s satisfy th e
re q u ire m e n t th a t d is c lo s u re s b e re a d ily
u n d e rs ta n d a b le so lo n g as d isc lo su re s in
E n g lish are g iv e n to c o n s u m e rs w h o
re q u e s t th e m . P ro p o s e d c o m m e n t (a)—
2
p ro v id e s th a t d is c lo s u re s m a y b e m a d e
in la n g u ag e s o th e r th a n E n g lish , if th e
d is c lo s u re s a re a v a ila b le in E n g lish
u p o n re q u e st. T h is is c o n s is te n t w ith
th e n e w d is c lo s u re re q u ire m e n ts in
R e g u la tio n DD (see 12 C FR 230.3(b))
S e c tio n 2 0 5 .5 — I s s u a n c e o f A c c e s s
D e v ic e s
New
Old
1 ....................
(a)(1)— ........
1
Q 5 -1 .5 .
New (footnote 1b to current
§ 205.5(a)(1)).
Q 5 -1 , Q 5 -2 .
Q 5 -3 .
Q 5 -6 , Q 5 -7 .
Q5—
4.5.
Q 5 -5 .
Q 5 -8 .
(a)(2)—1 ........
(a )(2 > -2 ........
fl> H .............
<b)-2 .............
(b )-3 .............
( b M .............
C o m m e n t D e le te d
Q 5 -4 : R e n e w a l o r s u b s titu tio n — p reF e b ru a ry 8 ,1 9 7 9 d e v ic e
C o m m e n ts M o v e d
Q 5 -9 , Q 5 -1 0 (see p ro p o s e d co m m en tary
to § 2 0 5 .1 2 )
S e c tio n 205.5 p ro v id e s th e ru le s for
iss u a n c e o f a c c e ss d e v ic e s. T h e
s u b s ta n c e o f e x istin g c o m m e n ta ry
p ro v is io n s h a v e b e e n in c o rp o ra te d in to
th e p ro p o sa l, w ith o n e a d d itio n .
(a) S o lic ite d Issu a n c e
(a)(1)
F o o tn o te l b to c u r r e n t § 205.5(a)(1)
p ro v id e s th a t fin a n c ia l in s titu tio n s m ay
is s u e a n a c c e ss d e v ic e to e a c h jo in t
a c c o u n t h o ld e r for w h o m th e re q u e stin g
a c c o u n t h o ld e r sp e c ific a lly re q u e sts a n
a c c e ss d e v ic e . T h e fo o tn o te w o u ld b e
d e le te d fro m th e re g u la tio n a n d m o v e d
to c o m m e n t (a)(1)—
1.
S e c tio n 2 0 5 .6 — L ia b ility o f C o n s u m e r f o r
U n a u th o r iz e d T r a n s fe r s
New
(a)-1 .............
'(a)— .............
2
(b)-1 .............
(b)-2 .............
(b ) (1 H ........
(b)(1)— ........
2
(b )(2 M ........
(b)(3)— ........
1
( b ) (3 ) -2 ........
(b)<4)-1 ........
(b)(5)— ........
1
Old
Q 6 -4 , new (current
§ 205.6(a)(2)).
Q 6 -3 .
Q 6 -5 (revised).
Q 6 -6 .5 .
Q 6 -5 (revised).
Q 6 -6 (revised).
Q 6 -5 (revised).
Q 6 -5 (revised).
Q 6 -5 (revised).
New (current § 205.6(b)(4)).
Q 6 -7 .
10702
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
New
(b)(5)— ........
2
(b)(5)— ........
3
Old
New (notice from third party).
Q 6 -8 .
C o m m e n t D e le te d
Q 6 -1 : U n a u th o riz e d tra n sfe rs— ac ce ss
d e v ic e n o t in v o lv e d
Q 6 -2 : F a ilu re to d isc lo se b u s in e s s d a y s
C o m m e n ts M o v e d
Q 6— Q 6 -1 0 , a n d Q 6 -1 1 (see p ro p o s e d
9,
c o m m e n ta ry to § 205.12)
(a) C o n d itio n s for L ia b ility
T h e c u rre n t re g u la tio n c o n d itio n s
c o n s u m e r lia b ility so le ly o n th e
is s u a n c e o f a n a c c e p te d a c c e ss d e v ic e
(§ 205.6(a)). Q 6 -1 , o n th e o th e r h a n d ,
sta te s th a t if th e c o n s u m e r fails to re p o rt
a n u n a u th o riz e d EFT w ith in 60 d a y s o f
tra n s m itta l o f th e p e rio d ic sta te m e n t
refle c tin g th e tran sfe r, th e c o n s u m e r
c o u ld b e su b ject to lia b ility for
s u b se q u e n t tran sfers. T h e B o a rd h a s
in c o rp o ra te d th e c u rre n t c o m m e n ta ry
in to th e reg u lato ry te x t. A cc o rd in g ly ,
Q 6 -1 h a s b e e n d e le te d .
C u rre n t § 205.6(a)(2) o f th e re g u la tio n
re q u ire s th a t th e in s titu tio n p ro v id e a
m e a n s o f id e n tify in g th e c o n s u m e r to
w h o m th e access d e v ic e is iss u e d . T h e
re g u la tio n c u rre n tly p ro v id e s e x a m p le
o f s u c h p e rm issib le m e a n s; th is
e x p la n a to ry lan g u ag e h a s b e e n m o v e d to
p ro p o s e d c o m m e n t ( a ) - l .
C u rre n t § 205.6(a)(3) o f th e re g u la tio n
re q u ire s in s titu tio n s to d is c lo s e c e rta in
in fo rm a tio n to th e c o n s u m e r b efo re
im p o s in g lia b ility for u n a u th o riz e d
E F T s in v o lv in g th e c o n s u m e r ’s a c c o u n t.
T h e in fo rm a tio n r e q u ire d to b e
d is c lo s e d is a lre a d y p a rt o f th e in itia l
d is c lo s u re s u n d e r § 2 05.7. T h e
re g u la to ry p ro p o sa l to th is se c tio n
re q u ire s d ra t a n in s titu tio n h a v e
c o m p lie d w ith § 205.7(b) b efo re
im p o s in g lia b ility . A c c o rd in g ly , Q 6 -2 ,
w h ic h p e rta in s to th e s e d is c lo s u re s , h a s
b e e n d e le te d .
(b)(5) N o tic e to F in a n c ia l In s titu tio n
T h e B o ard h a s re c e iv e d q u e s tio n s
a b o u t w h e th e r n o tic e fro m a th ir d p a rty
is s u ffic ie n t u n d e r § 205.6. P ro p o se d
c o m m e n t (b)(5)— in d ic a te s th a t su c h
2
n o tic e is c o n s id e re d a d e q u a te if it is
c o m m u n ic a te d b y a th ir d p a rty o n th e
c o n s u m e r ’s b eh a lf.
S e c tio n 2 0 5 .7 — I n itia l D is c lo s u r e s
New
O H ..........
(a )-2 .............
(a)-3 ..........
(a H ..........
(a)(2M .....
(b)-1 ..........
Old
Q 8 -6 .
Q 8 -3 , Q 8 -5 .
Q 8 -4 .
Q 8 -2 .
New (45 calendar days
send notice).
Q 8 -8 .
to
C o m m e n ts D e le te d
(a)-1
(a)—
2
(a)—
3
(a H
....... «...
......... ..
.............
.............
(a )-5 .............
(a )-6 .............
(b)(1)— ........
1
(b)(1)— ........
2
(b)(1)— ........
3
(b)(2)— ........
1
(b)(4)— ........
1
(b)(4)— ........
2
( b ) (4 ) -3 ........
(b)(5)-1 ........
( b ) (5 ) -2 ........
( b )(5 H J ........
(b)(9)— ........
1
(b)(10)-1 ......
( b )(1 0 )-2 ......
Q 7 -1 .
Q 7 -2 .
Q 7-5.5.
Q 7 -6 , new (timing of disclo
sures).
Q 7-6.5.
Q 7 -5 .
Q 7 -8 .
Q 7 -7 .
New (current § 205.7(a)(1)).
Q 7 -1 9 , Q 7 -2 0 .
Q 7 -1 1 .
Q 7-11.5.
Q 7-10.
Q 7 -1 2 , 7 -1 3 .
Q 7 -1 4 , 7 -1 5 .
Q 7-15.5.
Q 7 -1 6 , 7 -1 7 .
Q 7 -1 8 .
Q 7-18.5.
C o m m e n ts D e le te d
Q 7 -9 : S u m m a ry d is c lo s u re o f rig h ts
C o m m e n ts M o v e d
Q 7 -3 , Q 7— (see p ro p o s e d c o m m e n ta ry
4
to § 205.4)
Q 8 -1 : T e rm s re q u irin g ch a n g e in term s
n o tic e
Q 8 -7 : E rro r re s o lu tio n n o tic e — n o
p e rio d ic sta te m e n ts se n t
(a) C h a n g e in T e rm s N o tic e
(a)(2) P rio r N o tice E x c e p tio n
P ro p o se d c o m m e n t (a)(2)— a d d re sse s
1
c irc u m s ta n c e s w h e n fin a n c ia l
in s titu tio n s are re q u ire d to se n d a
s u b s e q u e n t n o tic e u p o n m a k in g a
p e rm a n e n t ch a n g e in te rm s re la te d to
se c u rity . T h e B o ard p ro p o se s to ex ten d
th e tim e p e rio d in w h ic h fin a n c ia l
in s titu tio n s m u s t s e n d s u c h n o tic e to 45
d a y s (from th e c u rre n t 30 d ays) to allo w
in s titu tio n s to m o re e a sily u s e th e
p e rio d ic sta te m e n t as a v e h ic le of th e
c o n s u m e r n o tic e .
S e c tio n 2 0 5 .9 — R e c e ip ts a t E le c tr ic
T e r m in a ls ; P e r io d ic S ta te m e n ts
New
Old
(a)— .............
1
(a )-2 .............
Q 9 -1 .
New (footnote 2 to current
§ 205.9(a)). Q 9 -2 .
Q 9-3.5.
Q 9 -5 .
Q 9 -6 .
Q 9 -4 .
New (displaying amount of fee
on ATM screen).
0 9 -7 .
New (current § 205.9(a)(3)).
New (footnote 3 to current
§ 205.9(a)(3)), Q -9 , 9 -1 0 .
Q 9 -8 .
New (current § 205.9(a)(3)),
Q 9 -3 7 .
Q 9 -3 6 , Q 9 -2 7 .
New (identification among ac
counts held by, or access
devices issued by an institu
tion).
Q 9-38.
0 9 -4 0 .
New (current
§205.9(b)(1)(iv)(A)).
New (current
§205.9fb)(1)(iv)(B)).
New (current
§205.9(b)(1)(iv)(C)).
Q 9 -1 3 , new (current
§ 205.9(a)(6)).
Q 9 -1 4 .
Q 9 -1 9 , 9 -2 0 .
New (defining periodic cycle).
(a) T im in g o f D isc lo su re s
<a)-3 .............
Q 6— p ro v id e s e x a m p le s o f w h e n th e
5
lia b ility ru le s ap p ly . M a te ria l fro m Q 6 5, in re v is e d form , h a s b e e n
in c o rp o ra te d in to th e c o m m e n ta ry to
p a ra g ra p h (b).
(b)(4) E x te n sio n o f T im e L im its
(b) C o n te n t o f D isc lo su re s
C u rre n t § 205.6(b)(4) p ro v id e s
e x a m p le s o f w h a t c o n s titu te s
e x te n u a tin g c irc u m s ta n c e s for p u rp o s e s
o f d e la y in g n o tific a tio n to th e
in s titu tio n th a t a n a c c e ss d e v ic e h a s
b e e n lo st o r sto len . T h e e x a m p le s h a v e
b e e n d e le te d from th e p ro p o s e d
re g u la tio n a n d m o v e d to c o m m e n t
(b)(4)—
1.
C u rre n t § 205.7(a)(1) g iv e s fin a n c ia l
in s titu tio n s th e o p tio n o f in c lu d in g
a d v ic e a b o u t p ro m p tly re p o rtin g th e lo ss
o r th e ft o f th e ac ce ss d e v ic e o r o th e r
u n a u th o riz e d tra n sfe rs in th e su m m a ry
o f th e c o n s u m e r’s lia b ility . T h is
la n g u a g e h a s b e e n d e le te d fro m th e
p ro p o s e d re g u la tio n a n d m o v e d to
c o m m e n t (b)(1)—
3.
New
Old
P ro p o se d c o m m e n t (a)— e x p a n d s o n
4
Q 7 -6 , w h ic h d isc u sse s th e a d d itio n o f
n e w E FT serv ices. T h e c u rre n t
c o m m e n ta ry re q u ire s fin a n c ia l
in s titu tio n s to p ro v id e d is c lo s u re s for
th e a d d itio n a l se rv ic e if it is su b je c t to
te rm s a n d c o n d itio n s d iffe re n t from
th o s e p re v io u sly d e s c rib e d in th e in itia l
d isc lo su re s; th e c o m m e n ta ry is sile n t,
h o w e v e r, a s to w h e n s u c h d is c lo s u re s
s h o u ld b e p ro v id e d . T h e p ro p o s e d
c o m m e n t re q u ire s th a t s u c h d is c lo s u re s
b e g iv e n e ith e r w h e n th e c o n s u m e r
c o n tra c ts for th e n e w se rv ic e o r b efo re
th e first E FT is m a d e u s in g th e n e w
se rv ic e .
(b) L im ita tio n s o n A m o u n t o f L ia b ility
S e c tio n 2 0 5 .8 — C h a n g e in T e r m s N o tic e ;
E rro r R e s o lu tio n N o tic e
(a H ..........
(a )-5 .............
(a )-6 .............
(a)(1)— ........
1
(a)(2)-1 ........
(a)(3H ......
(a)(3)— ........
2
( a ) ( 3 ) - 3 ........
(a )(3 M ........
( a ) ( 3 ) - 5 ........
(a)(4H ........
(aM5H
........
( a ) ( 5 ) - 2 ........
(a)(5)(i)-1 ....
(a)(5)(ii)— ....
1
(a )(5 )(i« H ...
(a)(6)—1 ........
( a ) ( 6 ) - 2 ........
( b H .............
(b)— .............
2
n y y g
Federal Register
New
(b )-3
(b M
(b)-5
(b )-6
.............
.............
.............
.............
(b)(1)-1 ........
(b )(1 )(iM ....
(b)(1)(iii>— ...
1
(b )(i)(iv M ...
(b)(1)(v)-1 ...
(b)(1)(v)-2 ...
(b)(1)(v)— ...
3
(b)(1 )(v)— ...
4
(b)(1 )(v)— ...
5
(b)(1)(v)-6 ...
(b )(3 )-1 ........
(b)(3)— ........
2
( b ) (3 ) -3 ........
(b)(4)—1 ........
(b)(5)&(6)—1 .
(c)-1 .............
(d)-1 .............
/
Vol.
Old
Q 9-17.
Q 9-18.
Q 9-21.
Q 9 -2 3 , new (footnote 4 to
§ 205.9(b)(1)).
Q 9-25.
0 9 -3 5 .
Q 9-36.
Q 9-40.5.
Q 9-28.
Q 9-30.
Q 9-41.
Q 9-43.
Q 9-44.
New (footnote 9 to current
§205.9(b)(1)(v)).
Q 9-31.
Q 9-31.5.
New (current § 205.9(b)(3)).
Q 9-32.
Q 9-33.
Q 9-50.
Q 9-51.
C o m m e n ts D e le te d
Q 9 -3 : R eceip ts— in fo rm a tio n d is p la y e d
o n sc re e n
Q 9—
10.5: R eceip ts— ty p e o f a c c o u n t,
in te rc h a n g e sy stem
Q 9 -1 1 : R eceip ts— u n iq u e id e n tifie r
Q 9 -1 2 : R eceip ts— te rm in a l lo c a tio n
Q 9 -1 6 : P e rio d ic s ta te m e n ts— fre q u en c y
Q 9 -2 4 : P e rio d ic s ta te m e n ts—
a c c o m p a n y in g d o c u m e n ts
Q 9—
29: P e rio d ic s ta te m e n ts— m u ltip le
tra n sfe re e s
Q 9 -3 4 : P e rio d ic sta te m e n ts— te le p h o n e
n u m b e rs
Q 9 -3 9 : R e c e ip ts/p e rio d ic s ta te m e n ts—
lo c a tio n co d e
Q 9 -4 2 : R e c e ip ts/p e rio d ic sta te m e n ts—
in te rm e d ia te p a rty
Q 9 -4 5 : P assb o o k u p d a te s — w h e n
re q u ire d
Q 9—
46: P assb o o k a c c o u n ts— te le p h o n e
n o tic e a lte rn a tiv e
Q 9 -4 7 : P assb o o k u p d a te s — d isc a rd in g of
d a ta
Q 9—
43: P assb o o k u p d a te s — p e rio d ic
tra n s m itta ls
Q 9 -4 9 : Q u a rte rly s ta te m e n ts —
c o m p lia n c e w ith re g u la r re q u ire m e n ts
C o m m e n ts M o v e d
Q 9 -4 (see p ro p o s e d c o m m e n ta ry to
§ 2 0 5 .4 )
Q 9— (see p ro p o s e d c o m m e n ta ry to
15
§ 205.2)
Q 9 -2 6 (see p ro p o se d c o m m e n ta ry to
§ 2 0 5 .1 1 )
T h e E o ard h a s p ro p o s e d a n u m b e r o f
e d ito ria l re v isio n s to § 2 05.9 s u c h as
a d d in g n e w p a ra g ra p h s a n d h e a d in g s to
b e tte r o rg an ize th e te x t c o n c e rn in g
tim in g a n d c o n te n t o f d isc lo su re s. A
n u m b e r o f c o m m e n ts h a v e b e e n d e le te d
from th e p ro p o se d c o m m e n ta ry to th is
se ctio n . M any o f th e c u rre n t q u e s tio n s
are v ery fact sp e c ific , a n d b e lie v e d to be
59,
No.
44 / M o n d a y , M a rc h 7, 1 9 9 4 /
u n n e c e s s a ry in th e re v ise d co m m e n ta ry .
N o su b s ta n tiv e c h a n g e s are in te n d e d .
(a) R e c e ip ts a t E le c tro n ic T e rm in a ls
F o o tn o te 2 to c u rre n t § 205.9(a) a llo w s
a n a c c o u n t-h o ld in g in s titu tio n to m a k e
te rm in a l re c e ip ts av a ila b le th ro u g h th ir d
p a rtie s. T h e fo o tn o te w o u ld b e d e le te d
fro m th e re g u la tio n a n d m o v e d to
c o m m e n t (a)—
2.
(a)(1) A m o u n t
C u rre n t § 205.9(a)(1) p ro v id e s th a t
fin a n c ia l in s titu tio n s o th e r th a n th e
a c c o u n t-h o ld in g in s titu tio n m a y in c lu d e
a fee for a tra n sfe r in th e a m o u n t o f th e
tra n s fe r if th e fee is d isc lo se d on th e
re c e ip t a n d o n a sig n p o ste d o n o r at th e
te rm in a l. T h e re g u la to ry p ro p o sa l w o u ld
m o d ify th e s e re q u ire m e n ts a n d a llo w
th e a c c o u n t-h o ld in g in s titu tio n to ta k e
a d v a n ta g e o f th e ex c e p tio n . In a d d itio n ,
p ro p o s e d c o m m e n t (a)(1)— p ro v id e s
1
th a t th e re q u ire m e n t to d is p la y th e
a m o u n t o f a tra n s a c tio n fee “ o n o r a t th e
te rm in a l” c o u ld b e m e t b y d isp la y in g
th e fee o n th e te rm in a l s c re e n b efo re th e
c o n s u m e r h a s in itia te d th e tra n sfe r if
d is p la y e d for a re a so n a b le d u ra tio n . T h e
B o a rd re q u e sts c o m m e n t o n w h e th e r th e
p ro p o s e d c h a n g e s p ro v id e a d e q u a te
n o tic e to th e c o n su m e r.
(a)(3) T y p e
C u rre n t § 205.9(a)(3) re q u ire s
d is c lo s u re o f th e ty p e o f tra n s fe r a n d th e
ty p e o f c o n s u m e r’s a c c o u n t to o r from
w h ic h fu n d s are tra n sfe rre d . It also
p ro v id e s e x a m p le s o f d e s c rip tio n s for
s u c h a c c o u n ts. T h e e x a m p le s w o u ld b e
d e le te d from th e re g u la tio n a n d m o v e d
to c o m m e n t (a )(3 )-l. In a d d itio n ,
§ 205.9(a)(3) p ro v id e s g e n e ric
d e s c rip tio n s for a c c o u n ts th a t are
sim ila r in fu n c tio n . T h e se e x a m p le s
w o u ld a lso b e d e le te d from th e
re g u la tio n a n d in c o rp o ra te d w ith th e
s u b s ta n c e o f Q 9 -3 7 in p ro p o s e d
c o m m e n t (a)(3 )-4 .
F o o tn o te 3 to c u rre n t § 205.9(a)(3)
p ro v id e s an e x c e p tio n to th e
r e q u ire m e n t to d isc lo se th e ty p e of
tra n s fe r a n d a c c o u n t if th e c o n s u m e r
c a n a c c e ss o n ly o n e a c c o u n t a t a
p a rtic u la r tim e o r te rm in a l. T h e
e x c e p tio n w o u ld b e d e le te d from th e
re g u la tio n a n d th e s u b s ta n c e m o v e d to
c o m m e n t (a)(3)—
2.
(a)(4) Id e n tific a tio n
P ro p o se d c o m m e n t (a )(4 )-l clarifies
th a t a n id e n tify in g n u m b e r or co d e th a t
u n iq u e ly id e n tifie s th e c o n s u m e r’s
a c c o u n t o r ac ce ss d e v ic e — am o n g all
a c c o u n ts h e ld b y a n in s titu tio n o r ac ce ss
d e v ic e s is s u e d b y a n in s titu tio n — is
su ffic ie n t to m e et th e re q u ire m e n ts o f
th e re g u la tio n .
Proposed Rules
10703
(a)(5) T e rm in a l L o c a tio n
T h e c u rre n t re g u la tio n in c lu d e s
d e ta ile d g u id a n c e for sp e c ify in g th e
te rm in a l lo c a tio n o n b o th th e re c e ip t
a n d p e rio d ic sta te m e n t (see c u rre n t
§ 2 0 5 .9 (b )(l)(iv )). W h ile th e s u b s ta n tiv e
re q u ire m e n t to d isc lo se th e lo c a tio n
re m a in s u n c h a n g e d , th e illu s tra tiv e
la n g u a g e w o u ld b e m o v e d to co m m en ts
(a)(5)(i)— (a)(5)(ii)— a n d (a )(5 )(iii)-l.
1,
1,
(a)(6) T h ir d P arty T ra n sfe r
C u rre n t § 205.9(a)(6) re q u ire s th a t th e
n a m e o f a n y th ir d p a rty to o r from
w h o m fu n d s are tra n sfe rre d b e d is c lo s e d
o n th e re c e ip t. It a lso p ro v id e s g u id a n c e
o n th e u s e o f c o d e s a n d a n e x c e p tio n to
th e d is c lo s u re re q u ire m e n t w h e n th e
n a m e o f th e p a y e e c a n n o t b e d u p lic a te d
b y th e te rm in a l. T h is se c o n d a ry
in fo rm a tio n w o u ld b e d e le te d from th e
re g u la tio n a n d m o v e d to c o m m e n t
(a) (6)—
1.
(b) P e rio d ic S ta te m e n ts
C u rre n t § 205.9(b) p ro v id e s th a t
p e r io d ic sta te m e n ts m u s t b e s e n t for
e a c h m o n th ly o r s h o rte r c y c le in w h ic h
a n E F T h a s o c c u rre d , b u t a t le a st
q u a rte rly if n o tra n sfe r h a s o c c u rre d . A s
th e B o a rd b e lie v e s th a t few in s titu tio n s
s e n d a sta te m e n t (for R e g u la tio n E
p u rp o s e s ) for a c y c le s h o rte r th a n o n e
m o n th , th e re g u la to ry p ro p o s a l h a s
d e le te d re fe re n c e to a “ s h o rte r c y c le .”
T h e re fe re n c e w o u ld b e m o v e d to
c o m m e n t (b)—
1.
P ro p o s e d c o m m e n t (b)— p ro v id e s
2
a d d itio n a l g u id a n c e o n w h a t is
c o n s id e re d a cy c le for p u rp o s e s o f
R e g u la tio n E. T h e c o m m e n t r e q u ir e s
th a t fin a n c ia l in s titu tio n s p ro v id e
re le v a n t in fo rm a tio n fo r th e cy c le or
p e rio d sin c e th e la s t s ta te m e n t w as
is s u e d . T h e B o ard h a s a d o p te d a s im ila r
a p p ro a c h in th e p ro p o s e d c o m m e n ta ry
to R e g u la tio n DD (see 59 FR 5536,
F e b ru a ry 7 ,1 9 9 4 ). F o r e x a m p le , if an
in s titu tio n m a y iss u e q u a rte rly
s ta te m e n ts in M a rc h , Ju n e, S e p te m b e r,
a n d D ec em b e r a n d th e c o n s u m e r
in itia te s a n E FT in F e b ru a ry , a n in te rim
s ta te m e n t w o u ld b e p ro v id e d . T h e
c o m m e n t in d ic a te s th a t th e sta te m e n t
s h o u ld p ro v id e in fo rm a tio n fo r th e
m o n th s o f Ja n u a ry a n d F e b ru ary . T h e
re g u la rly s c h e d u le d M a rc h sta te m e n t
w o u ld p ro v id e in fo rm a tio n o n ly ab o u t
th e m o n th o f M arch . T h e p ro p o s e d
R e g u la tio n DD c o m m e n ta ry p ro v id e s
th a t d is c lo s u re s g iv e n o n th e in te rim
s ta te m e n t c a n n o t b e re p e a te d o n th e
re g u la rly s c h e d u le d s ta te m e n t. In th e
e x a m p le ab o v e, th e M a rc h s ta te m e n t
c o u ld n o t re p e a t in fo rm a tio n d isc lo se d
o n th e F e b ru a ry s ta te m e n t. T h e B o ard
s o lic its c o m m e n t o n w h e th e r th e sa m e
/ 0^9S’
10704
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
a p p ro a c h s h o u ld b e a d o p te d in
R eg u latio n E.
F o o tn o te 4 to c u r r e n t § 205.9(b)(1)
p e rm its fin a n c ia l in s titu tio n s to p ro v id e
c e rta in p e rio d ic sta te m e n t d is c lo s u re s
o n d o c u m e n ts th a t a c c o m p a n y th e
sta te m en t; it also p e rm its in s titu tio n s to
u s e co d e s for th e d is c lo s u re s if th e y a re
e x p la in e d e ith e r o n th e sta te m e n t o r
ac c o m p a n y in g d o c u m e n ts . T h e fo o tn o te
w o u ld b e d e le te d fro m th e re g u la tio n
a n d th e su b sta n c e m o v e d to c o m m e n t
(b)—
6.
P arag rap h 9(b)(l)(v)
F o o tn o te 9 to c u r r e n t § 2 0 5 .9 (b )(l)(v )
p ro v id e s th a t a fin a n c ia l in s titu tio n
n e e d n o t id e n tify o n th e p e rio d ic
sta te m e n t th ir d p a rtie s w h o se n a m e s
a p p e a r o n ch e ck s, d ra fts, o r s im ila r
p a p e r in s tru m e n ts d e p o s ite d to th e
c o n s u m e r’s a c c o u n t a t a n e le c tro n ic
te rm in a l. T h e fo o tn o te w o u ld b e d e le te d
from th e re g u la tio n a n d th e su b sta n c e
m o v e d to c o m m e n t (b )(l)(v )—
6.
(b)(3) F ees
S ectio n 205.9(b)(3) p ro v id e s th a t
fin a n c ia l in s titu tio n s m u s t d isc lo se th e
a m o u n t o f a n y fees o th e r th a n a fin a n c e
ch a rg e im p o s e d u n d e r R e g u la tio n Z, 12
CFR 226.7(f) th a t w e re a s se ss e d ag a in st
th e a c c o u n t d u rin g th e sta te m e n t p e rio d
fo r EFTs. T h e re fe re n c e to fin a n c e
ch a rg es w o u ld b e d e le te d fro m th e
re g u la tio n a n d m o v e d to c o m m e n t
(b)(3)—
3
S e c tio n 2 0 5 .1 0 — P r e a u th o r iz e d
T r a n s fe r s
New
Old
........ 'Q 1 0 -5 , Q 1 0 -6 .
........ Q 1 0 -1 .
........ Q 1 0 -7 .
........ Q 1 0 -8 , Q 1 0 -9 , New (reverses
part of Q 1 0 -7 ).
(a)(1)— ........ Q 10 -1 0 .
5
(a)(1 > 6 ........ Q 1 0 -1 2 .
—
( a ) ( 1 )- 7 ........ Q 10 -1 1 .
( b M ............. Q 16-17, New (example of
preexisting authorization).
(b)-2 ............. Q 16-18.
(b )-3 ............. Q16 -1 8 .6 .
( b M ............. Q 10-18.5.
(b)-5 ............. New (similarly authorized).
(c)-1 ............. Q 16-19.
(c>— ............. Q16 -1 9 .5 .
2
< d ) ( i M ........ Q 16 -2 1 .
( d ) ( 2 H ........ new (range).
(6)(1)-1 .—
Q 3 -7 , Q 3 -7 .5 .
(e)(1)— ........ New (repayment of over
2
drafts).
(e)(2)— ........ Q 3 -6 .
1
< a )(1 H
(a)(1)—
2
(a)(1)—
3
(a )(1 M
Comments Deleted
Q 1 0 -2 : N o tice o f c r e d it— w h e n re c e ip t
g u a ra n te e d
Q lO -3 : N o tic e p ro v id e d b y p a y o r
Q 1 0 -4 : N o tice p r o v id e d b y p a y o r— form
Q 1 0 -1 3 : P re a u th o riz e d c r e d its —
a v a ila b ility o f fu n d s
Q lO — P re a u th o riz e d c re d its — p o stin g
14:
s c h e d u le
Q 1 0 -1 5 : P re a u th o riz e d c re d its — fu n d s
re c e iv e d p rio r to a g re e d c re d itin g d a te
Q 1 0 -1 6 : P re a u th o riz e d d e b its —
p re e x istin g a u th o riz a tio n s
Q 1 0 -2 0 : T e n - d a y n o tic e o f v ary in g
d e b its— p re e x istin g a u th o riz a tio n s
Q 3 -5 : C o m p u lso ry u s e — p re a u th o riz e d
lo a n p a y m e n ts
S e c tio n 205.10 se ts fo rth th e
su b sta n tiv e a n d d is c lo s u re re q u ire m e n ts
for a u th o riz in g p re a u th o riz e d .tra n s fe rs
to a n d fro m a c o n s u m e r’s a c c o u n t. T h e
B o ard h a s p ro p o s e d to e x p a n d th is
se c tio n to in c lu d e g u id a n c e o n th e
p ro h ib itio n s a g a in st c o m p u ls o ry u se ,
a n d c o rre sp o n d in g c o m m e n ta ry h a s
b e e n a d d e d . T h e se c tio n c o n ta in s
se v e ra l n e w in te rp re ta tio n s , as
d is c u s s e d b elo w .
(a) P re a u th o riz e d T ra n sfe rs to
C o n s u m e r’s A c c o u n t
R e g u la tio n E c u rre n tly re q u ire s
fin a n c ia l in s titu tio n s th a t re c e iv e
p re a u th o riz e d tra n sfe rs to c re d it th e
fu n d s to th e c o n s u m e rs a c c o u n t as o f
th e d a y th e fu n d s a re re c e iv e d . T h e
re g u la to ry p ro p o sa l w o u ld d e le te th is
re q u ire m e n t as o b so le te . A c c o rd in g ly ,
Q 1 0 -1 3 ,1 0 -1 4 , a n d Q 1 0 -1 5 a lso h a v e
b e e n d e le te d .
(a) (1) N o tic e b y F in a n c ia l In s titu tio n
S e c tio n 906(b) o f th e E FT A a n d
c u rre n t § 205.10(a)(1) o f th e re g u la tio n
p ro v id e th a t w h e n a p a y o r c re d its a
c o n s u m e r’s a c c o u n t b y p re a u th o riz e d
E FT a t le a st o n c e e v e ry 6 0 d ay s, th e
a c c o u n t-h o ld in g in s titu tio n m u s t
in fo rm th e c o n s u m e r e ith e r th a t th e
tra n sfe r h a s o r h a s n o t o c c u rre d o r
p ro v id e a p h o n e n u m b e r for th e
c o n s u m e r to u s e to v erify th e tran sfe r.
Q lO — p ro v id e s th a t th e a b se n c e o f a
7
d e p o s it e n try o n a p e rio d ic s ta te m e n t
c a n se rv e as n o tic e th a t a p re a u th o riz e d
tra n sfe r h a s n o t o c c u rre d . P ro p o se d
c o m m e n t ( a )(l)-4 re v e rse s th e c u rre n t
p o s itio n a n d sta te s th a t th e a b se n c e o f
a d e p o s it e n try is n o t n e g a tiv e n o tic e .
T h e B o ard b e lie v e s th e r e q u ire m e n t is
a n affirm a tiv e d u ty to p ro v id e n o tic e
e ith e r p o sitiv e ly o r n e g a tiv e ly .
(b) W ritte n A u th o riz a tio n for
P re a u th o riz e d T ra n sfe rs F ro m
C o n s u m e r’s A c c o u n t
P ro p o se d c o m m e n t ( b ) - l in c o rp o ra te s
Q 1 0 -1 7 , w h ic h p ro v id e s th a t a fin a n c ia l
in s titu tio n o r d e s ig n a te d p a y e e d o e s n o t
n e e d to o b ta in n e w a u th o riz a tio n s
b efo re sh iftin g fro m a p a p e r-b a se d to a n
e le c tro n ic d e b itin g sy ste m . T h e
p ro p o s e d c o m m e n t a lso p ro v id e s th a t a
su c c e sso r p a y e e o r in s titu tio n m a y re ly
on. a p re e x istin g a u th o riz a tio n to d e b it
p a y m e n ts fro m th e c o n s u m e r ’s a c co u n t,
for e x a m p le w h e n a n in s titu tio n
p u rc h a s e s th e m o rtg a g e se rv ic in g rig h ts
fro m a p a rty th a t p re v io u s ly o b ta in e d
th e c o n s u m e r’s a u th o riz a tio n . T h e
B o a rd so lic its c o m m e n t o n o th e r
in s ta n c e s in w h ic h a n e w a u th o riz a tio n
m a y n o t b e n e c e ssa ry .
T h e re q u ire m e n t in c u rre n t
§ 205.10(b) th a t p re a u th o riz e d EFTs
fro m a c o n s u m e r’s a c c o u n t b e
a u th o riz e d b y th e c o n s u m e r o n ly in
w ritin g h a s b e e n re v ise d . T h e
re q u ire m e n t fo r th e a u th o riz a tio n to be
a sig n e d w ritin g h a s b e e n e x p a n d e d to
in c lu d e a u th o riz a tio n s w h ic h are
“ s im ila rly a u th e n tic a te d ” b y th e
c o n s u m e r. T h is e n h a n c e m e n t a d d re sse s
d e v e lo p m e n ts in e le c tro n ic serv ices,
s u c h as h o m e b a n k in g . P ro p o se d
c o m m e n t (b )-5 p ro v id e s a n e x a m p le o f
a c o n s u m e r’s a u th o riz a tio n th a t is
“ s im ila rly a u th e n tic a te d .” T h e c o m m e n t
p ro v id e s th a t fo r a h o m e b a n k in g sy stem
to sa tisfy th e re q u ire m e n t, th e re m u s t b e
so m e m e a n s to id e n tify th e c o n s u m e r
(su c h as a s e c u rity co d e ), a n d th e
c o n s u m e r m u s t h a v e th e a b ility to
o b ta in a p rin te d c o p y o f th e
a u th o riz a tio n (e ith e r fro m th e
c o n s u m e r’s p r in te r o r fro m th e payee).
T h e B o ard so lic its c o m m e n t o n w h e th e r
a d d itio n a l sa fe g u a rd s a re n e c e ssa ry to
p ro te c t c o n s u m e rs in th is situ a tio n . F or
e x a m p le , s h o u ld th e c o m m e n ta ry
re q u ire th a t th e a u th o riz a tio n re m a in in
th e in s titu tio n ’s c o m p u te r m e m o ry a n d
b e a v a ila b le to th e c o n s u m e r th ro u g h
th e h o m e b a n k in g d e v ic e u n til it is
m o d ifie d o r te rm in a te d ? S h o u ld th e
c o m m e n ta ry e x p lic itly re q u ire th a t th e
a u th o riz a tio n m a y o n ly b e p ro v id e d b y
th e c o n s u m e r (by u s in g a p e rso n a l
id e n tific a tio n co d e ) a n d n o t b y a p ay ee
o n th e c o n s u m e r’s b e h a lf? H ow w o u ld
th is c h a n g e afreet th e sto p p a y m e n t
ru le s u n d e r § 205.10(c)? T h e B oard
so lic its c o m m e n t o n th e s e a n d o th e r
is s u e s re la te d to th e re q u ire m e n ts o f a
w ritte n a u th o riz a tio n u n d e r th is sectio n .
T h e B o ard so lic its c o m m e n t o n tw o
is s u e s th a t h a v e n o t b e e n d isc u sse d
p re v io u sly in th e c o m m e n ta ry . T h e
B o a rd h a s re c e iv e d in q u ir ie s a b o u t
te le p h o n e -in itia te d tra n s fe rs w h e n th e
c o n s u m e r p ro v id e s a n a c c o u n t n u m b e r
to th e c a lle r a n d a u th o riz e s a d raft o r a n
A C H d e b it to b e s u b m itte d a g a in st th e
c o n s u m e r ’s a c c o u n t. T h e B o a rd b e lie v e s
s u c h tra n sfe rs a re E F T s sin c e th e y are
in itia te d b y te le p h o n e a n d a u th o riz e th e
d e b itin g o f th e c o n s u m e r ’s a c c o u n t. T h e
tra n sfe rs a re n o t “p r e a u th o riz e d
tra n s fe rs ,” h o w e v e r, a n d th e ru le s
re g a rd in g w ritte n a u th o riz a tio n b y th e
c o n s u m e r th u s a r e n o t a p p lic a b le . T h e
B o a rd so lic its c o m m e n t o n w h e th e r th is
ty p e o f tra n s fe r p o se s s u ffic ie n t
/Ota9g
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
c o n s u m e r risk as to w a rra n t sp e c ia l
p ro v is io n in th e re g u la tio n o r
c o m m en tary .
T h e B o ard h a s a lso re c e iv e d q u e s tio n s
o n w h a t a re a p p ro p ria te m e a n s fo r
o b ta in in g a c o n s u m e r’s a u th o riz a tio n fo r
p re a u th o riz e d tran sfe rs. F o r e x a m p le ,
th e B o ard h a s b e e n a sk e d w h e th e r
s e n d in g th e c o n s u m e r a c h e c k w h ic h
in c o rp o ra te s in th e e n d o rs e m e n t a n
a u th o riz a tio n for th e fin a n c ia l
in s titu tio n to a u to m a tic a lly d e b it th e
c o n s u m e r’s a c c o u n t o n a m o n th ly b a s is
is a le g itim a te m e th o d fo r o b ta in in g th e
c o n s u m e r’s a u th o riz a tio n . T h e B o ard
so lic its co m m e n t o n w h e th e r th e
c o m m e n ta ry o r re g u la tio n s h o u ld
a d d re s s s u c h form at issu e s.
(d) N o tic e o f T ra n sfe rs V ary in g in
A m ount
(d) (2) R ange
P ro p o se d c o m m e n t (d)(2)— p ro v id e s
1
g u id a n c e o n w h a t is a n a c c e p ta b le ra n g e
fo r p u rp o s e s o f th is se c tio n . T h e
c o m m e n t p ro v id e s th a t a n a c c e p ta b le
ra n g e is o n e th a t c o u ld p la u s ib ly b e
a n tic ip a te d b y th e co n su m e r. F o r ,
e x a m p le , i f th e c o n s u m e r’s m o n th ly
p a y m e n t is a p p ro x im a te ly $50,
p ro v id in g a ran g e b e tw e e n ze ro a n d
$ 1 0 ,0 0 0 d o e s n o t se em rea so n a b le . T h e
B o a rd so lic its c o m m e n t o n h o w
fin a n c ia l in s titu tio n s c u rre n tly
d e te rm in e s u c h a ran g e , a s w e ll as
re a c tio n to th e p ro p o s e d a n a ly sis.
(e) C o m p u lso ry U se
(e)(1) C red it
T h e reg u la to ry p ro p o sa l in c o rp o ra te s
th e sta tu to ry re s tric tio n s a g a in st
c o m p u lso ry u se o f E FT s as a c o n d itio n
o f c re d it, em p lo y m e n t, o r re c e ip t o f
g o v e rn m e n t b en e fits in to § 205.10(e).
T h e q u e s tio n s p e rta in in g to c o m p u lso ry
u s e in th e c u rre n t c o m m e n ta ry (u n d e r
§ 205.3) h av e , for th e m o st p a rt, b e e n
in c o rp o ra te d in to th e c o m m e n ta ry
p ro p o sa l. T h e re g u la to ry p ro p o sa l a lso
in c o rp o ra te s th e su b sta n c e o f fo o tn o te
l a to § 205.3 in to p ro p o s e d
§ 205.10(e)(1), w h ic h p ro v id e s th a t a
fin a n c ia l in s titu tio n m a y re q u ire th e
a u to m a tic re p a y m e n t o f c re d it th a t is
e x te n d e d u n d e r a n o v e rd ra ft c re d it p la n
o r th a t is e x te n d e d to m a in ta in a
sp e c ifie d m in im u m b a la n c e in th e
c o n s u m e r’s a c co u n t. T h e c o m m e n ta ry
p ro p o sa l in c lu d e s a n e w c o m m e n t
(e)(1)— w h ic h a llo w s a n in s titu tio n to
2
u s e th e e x c e p tio n e v e n if th e o v e rd ra ft
e x te n sio n is ch a rg e d to a n o p e n -e n d
a c c o u n t th a t m ay b e a c c e sse d b y th e
c o n s u m e r in w ay s o th e r th a n by
o v erd rafts. F o r ex a m p le , in a d d itio n to
o v erd raft p ro te c tio n , a c o n s u m e r m a y b e
ab le to o b ta in c a sh a d v a n c e s d ire c tly
from th e c re d it lin e w ith o u t going
th ro u g h a c h e c k in g a c c o u n t. T h e B o a rd
b e lie v e s th a t th e e x e m p tio n a p p lie s to
s u c h p la n s a n d th a t it is n o t p ra c tic a b le
to d is tin g u is h b e tw e e n e x te n sio n s o f
c re d it trig g e re d u n d e r s u c h p la n s
b e c a u s e o f th e o v e rd ra ft m e c h a n ism
v e rs u s th o se a d v a n c e d to th e c o n s u m e r
b y so m e o th e r m e an s.
S e c tio n 2 0 5 .1 1 — P r o c e d u r e s f o r
R e s o lv in g E rro rs
10705
S e c tio n 205.11 se ts fo rth th e
re g u la tio n ’s p ro c e d u re s fo r e rro r
re s o lu tio n . T h e re g u la to ry p ro p o sa l
re fo rm a tte d th e se c tio n to fa c ilita te
c o m p lia n c e a n d th e c o m m e n ta ry
p ro v is io n s h a v e a c c o rd in g ly b e e n
a s sig n e d . T h e p ro p o s e d c o m m e n ta ry
c o n ta in s se v eral n e w c o m m e n ts, m o st o f
w h ic h h a v e b e e n re m o v e d from th e
re g u la tio n .
(b) N o tic e o f E rro r F ro m C o n s u m e r
New
Old
(a)-1 .............
(a )-2 .............
(a )-3 .............
( a H .............
(b )(1 )-1 ........
( b ) ( U - 2 ........
Q 9-26.
Q 1 1-2.
Q 11-3.
Q 11-4.
Q 1 1 -8 , new (example added).
New (required submission of
an affidavit).
Q 11-5.
Q 11-6.
Q 11-7.
New (footnote 10 to current
§205.11(b)(1)(i)).
Q 1 1 -9 , new (provisional cred
iting).
New (provide notices either
orally or in writing).
Q 11-10.
New (strengthens Q 11—
31).
New (current § 2 0 5 .1 1(d)(3)).
Q 11-20, new (footnote 12 to
current § 2 0 5 .1 1(e)(2)).
New (current § 2 0 5 .1 1(e)(1)),
Q 11-19.
New current § 2 0 5 .1 1(d)(1)~
New (current § 2 0 5 .1 1(c)(3)).
Q 1 1-11.5.
Q 11-13.
Q 11-14.
Q 11-16.
New (footnote 11 to current
§ 205.11(d)(1)).
Q 11-17.
Q 1 1-25.
Q 11-23.
Q 1 1-24.
Q 11-30.
(b)(1)— ........
3
(b)(1)—4 ........
(b)(1)— ........
5
( b )(1 H 5 ........
(b)(2)— ........
1
(c M
.............
(c)-2
(c)-3
(c M
(c)—
5
.............
.............
.............
.............
(cH 3 .............
(c)— .............
7
(c)(2)<i>— .....
1
(c)(3)— ........
1
(C ) ( 4 ) —1 ........
(C)(4)— ........
2
(c)(4)-3 ........
(C )(4 M ........
( d H .............
(d )(1 )-1 ........
(d )(2 M ........
(d)(2)—1 ........
( e H .............
C o m m e n ts D e le te d
Q l l - 1 : T ra n sfe rs— in itia te d by
in s titu tio n
Q l l - 1 1 : D e a d lin e s for in v e stig a tio n o f
e rro r
Q l l - 1 2: R e q u est for d o c u m e n ta tio n —
fa c sim ile o r p h o to c o p y
Q l l - 1 5: S c o p e o f in v e stig a tio n —
p re a u th o riz e d c re d its
Q l l - 1 8 : C re d itin g o f in te re st
Q l l - 2 1 : W ritte n e x p la n a tio n — tim in g
Q l l - 2 2 : D eb itin g o f re c re d ite d fu n d s —
ite m s to b e h o n o re d
Q l l - 2 6 : D o c u m e n ts re lie d o n — p riv a c y
iss u e
Qii - 2 7 : D o c u m e n ts re lie d o n — n o
in fo rm a tio n o n re le v a n t ta p e s
Q l l - 2 8 : W ith d ra w a l o f e rro r n o tic e
Q l l - 2 9 : W ith d ra w a l o f e rro r n o tic e
C o m m e n ts M o v e d
Q l l - 3 2 , Q l l - 3 3 (see p ro p o se d
c o m m e n ta ry to § 205.12)
(b)(1) T im in g ; C o n te n ts
S e c tio n 908 o f th e E FT A a n d § 205.11
o f th e re g u la tio n re q u ire in s titu tio n s to
in v e stig a te a n d m a k e a fin a l
d e te rm in a tio n as to a c o n s u m e r’s
a lle g a tio n o f a n e rro r w ith in e ith e r 10
b u s in e s s d a y s o r 45 c a le n d a r d ay s.
F in a n c ia l in s titu tio n s h a v e a sk e d
w h e th e r th e y c a n d e la y in itia tin g o r
c o m p le tin g a n in v e stig a tio n p e n d in g
r e c e ip t o f a n a ffid a v it re la te d to th e
a lle g e d erro r. P ro p o se d c o m m e n t (b )(1 )2 p ro h ib its in s titu tio n s fro m d e la y in g
th e ir in v e stig a tio n u n til a c o n s u m e r h a s
p ro d u c e d th e a ffid av it. T h e B o ard
b e lie v e s th a t p e rm ittin g d e la y w o u ld
a llo w in s titu tio n s to c irc u m v e n t th e
in v e stig a tio n p ro c e d u re s c u rre n tly
m a n d a te d b y th e a c t a n d reg u la tio n .
F o o tn o te 10 to c u rre n t
§ 2 0 5 .1 1 (b )(l)(i), w h ic h p e rm its a
fin a n c ia l in s titu tio n to p re sc rib e
p ro c e d u re s fo r g iv in g n o tic e o f a n erro r,
w o u ld b e d e le te d fro m th e re g u la tio n
a n d th e su b sta n c e m o v e d to c o m m e n t
(b)(1)—
6.
(b)(2) W ritte n C o n firm a tio n
Q l l - 9 p ro v id e s th a t a fin a n c ia l
in s titu tio n d o e s n o t h a v e to h a v e referra l
p ro c e d u re s for fo rw a rd in g a w ritte n
c o n firm a tio n o f e rro r th a t is se n t to th e
w ro n g a d d re ss. P ro p o se d c o m m e n t
(b) (2)— fu rth e r p ro v id e s th a t
1
in s titu tio n s o p e ra tin g u n d e r th e 45c a le n d a r-d a y ru le n e e d n o t
p ro v is io n a lly c re d it th e c o n s u m e r’s
a c c o u n t w h e n th e w ritte n c o n firm a tio n
is d e la y e d b e y o n d 10 b u s in e s s d a y s
b e c a u s e it w a s se n t to th e w ro n g
a d d re ss.
(c) T im e L im its a n d E x te n t of
In v e stig a tio n
A s n o te d in § 205.4, m o st d is c lo s u re s
r e q u ire d b y R e g u la tio n E m u s t b e in
w ritin g a n d in a fo rm th e c o n s u m e r m a y
k e e p . P ro p o se d c o m m e n t (c)— p ro v id e s
1
th a t fin a n c ia l in s titu tio n s m a y give th e
n o tic e s re q u ire d b y § 205.11 e ith e r
o ra lly o r in w ritin g , u n le s s o th e rw ise
in d ic a te d in th e se c tio n . T h is e x c e p tio n
w o u ld n o t a p p ly to a c o n s u m e r’s re q u e st
fo r d o c u m e n ta tio n p u r s u a n t to p ro p o s e d
§ 2 0 5 .1 1 (a )(l)(v ii).
Q l l - 3 1 a rtic u la te s th e B o a rd ’s
c o n c e rn th a t c h a rg in g c o n s u m e rs for th e
/o t,9 r
10706
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
fin a n c ia l in s titu tio n ’s c o m p lia n c e w ith
th e re g u la tio n ’s e rro r re s o lu tio n
p ro c e d u re s m ig h t h a v e a c h illin g effect
o n th e goo d fa ith a s s e rtio n o f e rro rs. T h e
B oard b eliev e s th a t a s th e E FT A
sp e cific ally g ra n ts th e c o n s u m e r erro rre s o lu tio n rig h ts, in s titu tio n s m u s t
av o id a n y d e te rre n t to e x e rc isin g s u c h
rig h ts. T o clarify its p o s itio n , th e B o ard
p ro p o se s to a d d c o m m e n t (c)— to
3
e x p lic itly p ro h ib it in s titu tio n s from
c h a rg in g c o n s u m e rs for e rro r re so lu tio n .
T h e B o ard so lic its c o m m e n t o n th e
im p a c t o f su c h a p r o h ib itio n o n
in s titu tio n s a n d c o n s u m e rs.
C u rre n t § 205.11(d)(3) p ro v id e s th a t a
fin a n c ia l in s titu tio n m a y c o rre c t an
e rro r in th e a m o u n t o r m a n n e r alleg e d
b y th e c o n s u m e r w ith o u t c o m p ly in g
w ith th e in v e stig a tio n r e q u ire m e n ts o f
th is se ctio n if it c o m p lie s w ith a ll o th e r
re q u ire m e n ts o f § 205.11. T h e p ro v isio n
w o u ld b e d e le te d fro m th e re g u la tio n
a n d m o v e d to c o m m e n t (c)—
4.
F o o tn o te 12 to c u rre n t § 205.11(e)(2)
allo w s fin a n c ia l in s titu tio n s to p ro v id e
th e n o tic e o f c o rre c tio n o n th e p e rio d ic
s ta te m e n t th a t is m a ile d o r d e liv e re d
w ith in th e tim e lim its sp e c ifie d in th e
se ctio n . T h e fo o tn o te w o u ld b e d e le te d
from th e re g u la tio n a n d m o v e d to
c o m m e n t (c)—
5.
C u rre n t § 205.11(e)(1) p ro v id e s th a t if
a fin a n c ia l in s titu tio n d e te rm in e s a n
e rro r o c c u rre d , it m u s t c o rre c t th e e rro r
in c lu d in g , w h e re a p p lic a b le , th e
c re d itin g o f in te re st a n d th e re fu n d in g of
a n y fees o r c h a rg es im p o s e d . T h is
lan g u ag e w o u ld b e d e le te d fro m th e
re g u la tio n a n d c o m b in e d w ith th e
s u b s ta n c e o f Q l l - 1 9 in c o m m e n t (c)-6 .
T h e c o m m e n t w o u ld a lso c la rify th a t th e
re q u ire m e n t o n ly a p p lie s to fees
im p o s e d b y th e in s titu tio n v e rs u s th o se
im p o s e d b y th ir d parties.
S e c tio n 2 0 5 .1 2 — R e la tio n t o O th e r L a w s
New
Old
< a H .............
Q 6 -9 , Q 6 -1 0 , Q 6 -1 1 , Q 1 1 3 2 ,0 1 1 -3 3 .
Q 5 -9 , Q 5 -1 0 .
Q 1 2 -1 , new (compliance with
out Board determination).
New (current preemption of
Michigan law).
(a)-2 .............
( b M .............
(b)-2 .............
S e c tio n 2 0 5 .1 4 — E le c tr o n ic F u n d
T r a n s fe r S e r v ic e P r o v id e r N o t H o ld in g
C o n s u m e r ’s A c c o u n t
New
O H ..........
(a )-2 ......... ..
( b M .............
(b)(l H
(b)(2)—1 ........
(c)0H .......
Old
Q 1 4 -1 .Q 1 4 -2 .
Q 1 4 -3 .
New (formerly §205.14(a)(1).
Q 1 4 -4 .
Q 1 4 -6 .
Q 1 4 -7 .
T h e re g u la to ry p ro p o s a l h a s
c o n s o lid a te d th e re fe re n c e s to th e T ru th
in L e n d in g A ct a n d R e g u la tio n Z in
§ 205.12. T h e se c tio n w o u ld a lso
c o n ta in th e ru le s th e B o a rd a p p lie s in
d e te rm in in g th e p re e m p tio n o f
in c o n s is te n t sta te la w s o r in g ra n tin g a
sta te e x e m p tio n . T h e c o m m e n ta ry
p ro v isio n s h a v e b e e n c o n s o lid a te d in
th is se c tio n as w ell.
Q 1 4 -5 : P e rio d ic s ta te m e n t— iss u a n c e of
c a rd
S e c tio n 205.14 d e ta ils th e
re q u ire m e n ts for fin a n c ia l in s titu tio n s
th a t iss u e ac ce ss d e v ic e s a n d p ro v id e
E FT se rv ic e s to c o n s u m e rs e v e n th o u g h
th e c o n s u m e rs ’ a c c o u n ts are h e ld b y a
s e c o n d in s titu tio n .
(b) P re e m p tio n o f In c o n s is te n t S tate
L aw s
(b) C o m p lia n c e b y E le c tro n ic F u n d
T ra n sfe r S e rv ic e P ro v id e r
Proposed comment (b)-l incorporates
Q12-1, which provides that state law
may be preempted even if the Board has
not issued a determination. The
comment also notes that financial
institutions are not protected from
liability for failing to comply with state
law in the absence of a preemption
determination by the Board.
C u rre n t § 205.14(a)(1) p ro v id e s th a t
th e s e rv ic e -p ro v id in g in s titu tio n sh a ll
re im b u rse th e c o n s u m e r for
u n a u th o riz e d E FT s in e x c e s s o f th e
lim its se t by § 205.6. T h is p ro v isio n
w o u ld b e d e le te d fro m th e re g u la tio n
a n d m o v e d to c o m m e n t (b)—
1.
P ro p o se d c o m m e n t (b )-2 in c o rp o ra te s
in to th e c o m m e n ta ry a n o ffic ia l staff
in te rp re ta tio n p re e m p tin g c e rta in
p ro v is io n s o f M ic h ig a n ’s E FT sta tu te .
F u tu re p re e m p tio n d e te rm in a tio n s
w o u ld a lso b e in c lu d e d in th e
co m m e n ta ry .
S e c tio n 2 0 5 .1 3 — A d m in is tr a tiv e
E n fo r c e m e n t; R e c o r d R e te n tio n
New
Old
C o m m e n t D e le te d
S e c tio n 2 0 5 .1 5 — E le c tr o n ic F u n d
T r a n s fe r o f G o v e r n m e n t B e n e fits
P ro p o se d c o m m e n ts in te rp re tin g th e
re q u ire m e n ts o f th is se c tio n w ill be
p u b lis h e d at a la te r d a te .
Appendix A-—
Model Disclosure Clauses
and Forms
New
Old
Q 13-1 ..........
Appendix A -1 .
Text of Proposed Revisions
P ara g ra p h (c)(2)(i)
C o m m e n ts M o v e d
F o r th e re a so n s se t fo rth in th e
p re a m b le , th e B o ard p ro p o s e s to a m e n d
12 CFR p a rt 205 as fo llo w s:
C u rre n t § 205.11(c)(3) p ro v id e s
e x a m p le s o f w h e n a fin a n c ia l in s titu tio n
m u s t co m p ly w ith a ll re q u ire m e n ts of
§ 205.11 e x c e p t th e p ro v is io n a l c re d itin g
re q u ire m e n ts. W h ile th e e x a m p le s h a v e
b e e n re ta in e d in th e re g u la to ry p ro p o sa l,
th e lan g u ag e re q u irin g c o m p lia n c e w ith
o th e r re q u ire m e n ts o f th e se c tio n w o u ld
b e d e le te d a n d m o v e d to c o m m e n t
(c)(2)(i)—
1.
Q 1 3 -1 (see p ro p o s e d c o m m e n ta ry to
a p p e n d ix A)
PART 205— ELECTRONIC FUND
TRANSFERS (REGULATION E)
(c)(4) In v estig atio n
F o o tn o te 11 to c u rre n t § 205.11(d)(1)
p ro v id e s e x a m p le s o f w h a t d o e s a n d
d o e s n o t c o n s titu te a n a g re e m e n t for
p u rp o s e s o f th is sectio n . T h e
e x p la n a to ry lan g u ag e w o u ld b e d e le te d
from th e re g u la tio n a n d m o v e d to
c o m m e n t (c)(4)—
4.
(b)-1 .............
Q 1 3 -2 .
C u rre n t § 205.13 c o n ta in s in fo rm a tio n
a b o u t a d m in is tra tiv e e n fo rc e m e n t,
is s u a n c e o f sta ff in te rp re ta tio n s a n d
re c o rd re te n tio n . T h e re g u la to ry
p ro p o s a l m o v e d m u c h o f th e d e ta il
p e rta in in g to th e se to p ic s to th e
a p p e n d ic e s . W ith o n e e x c e p tio n , no
s u b s ta n tiv e ch a n g e w a s in te n d e d . A s
n o te d ab o v e, th e in fo rm a tio n d e sc rib in g
is s u a n c e o f sta ff in te rp re ta tio n s w o u ld
b e d e le te d from th e re g u la tio n ,
in c lu d in g an y re fe re n c e to u n o ffic ia l
sta ff in te rp re ta tio n s (w h ic h th e B oard n o
lo n g e r iss u e s in w ritin g ). In fo rm a tio n
a b o u t p ro c e d u re s for th e o ffic ia l
c o m m e n ta ry is set fo rth in a n e w
a p p e n d ix C.
1. T h e a u th o rity c ita tio n for p a r t 201;
w o u ld b e re v is e d to re a d a s follow s:
Authority: 15 U.S.C 1693.
2. In p a rt 205, S u p p le m e n t I w o u ld be
re v is e d to re a d as fo llo w s:
Supplement I to Part 205—Official Staff
Interpretations
Section 205.2—Definitions
(a) Access device
1.
Examples. The term access device
includes debit cards, personal identification
num bers (PINs), telephone transfer and
telephone bill paym ent codes, and other
means that may be used by a consum er to
initiate an electronic fund transfer to or from
/0 & ? ^
Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
a consum er accoun t The term does not
include magnetic tapes or other devices used
internally by a financial institution to initiate
electronic transfers.
(b)(1) A c c o u n t
1.
Consumer asset accounts. The term
consum er asset account includes:
• Club accounts, such as Christmas or
vacation clubs. In many cases, however,
ihese accounts are exempt from the
regulation under § 205.3(c)(5) because all
electronic transfers to or from the account
have been preauthorized by the consumer
and involve another account of the consumer
at the same institution.
• A retail repurchase agreement (repo)
which is a loan made to a financial
institution by a consumer that is
collateralized by government or governmentinsured securities.
The term "consumer asset account” does
not include:
• Profit-sharing and pension accounts
established under a trust agreement, which
Ere exem pt under § 205.2(b)(2).
• Escrow accounts, such as those
established to ensure paym ent of items such
as real estate taxes, insurance premiums, or
(om pletion of repairs or improvements.
• A ccounts for accumulating funds to
purchase U.S. savings bonds.
Paragraph (b)(2)
1. Bona fide trust agreements. The term
bona fide trust agreement is not defined by
the act or regulation. Therefore, financial
i nstitutions must look to state or other
{pplicable law for interpretation.
2. Custodial agreements. An account held
under a custodial agreement that qualifies as
a trust under the Internal Revenue Code,
such as an individual retirem ent account, is
considered to be held under a trust
Egreement for purposes of this part.
(d) Business Day
1.
Duration. A business day includes the
t ntire 24-hour period ending at midnight and
notice is effective even if given outside
normal business hours. The regulation does
not require, however, that telephone lines be
evailable on a 24-hour basis.
»
(f) Electronic Terminal
1. Point-of-sale (POS) payments initiated
by telephone. Because the term electronic
tsrm inal excludes a telephone operated by a
c onsumer, a financial institution need not
provide a term inal receipt when:
• A consumer uses a debit card at a public
telephone to pay for the call.
• A consumer initiates a transfer by the
t quivalent to a telephone, such as by home
tan k in g equipment or a facsimile machine.
2. POS terminals. A POS terminal that
c aptures data electronically, for debiting or
crediting to a consum er’s asset account, is an
€lectronic term inal for purposes of
Regulation E if a debit card is used to initiate
the transaction.
3. Teller-operated terminals. A terminal or
c>ther com puter equipm ent operated by an
employee of a financial institution is not an
e lectronic term inal for purposes of the
r sgulation. However, transfers initiated at
such term inals by means of the consum er’s
access device (using the consum er’s personal
identification number, for example) are
electronic fund transfers and are subject to
other requirements of the regulation. If the
access device is used only for identification
purposes or for determ ining the account
balance, the transfers are not electronic fund
transfers for purposes of the regulation.
(k) U nauthorized Electronic F u n d Transfer
1. Transfer b y in s titu tio n ’s em ployee. A
consum er has no liability for erroneous or
fraudulent transfers initiated by an employee
of a financial institution.
2. A uthority. If a consum er furnishes the
access device and grants authority to make
transfers to a person (such as a family
member or co-worker) w ho exceeds the
authority given, the consum er is fully liable
for the transfers unless the consum er has
notified the financial institution that
transfers by that person are no longer
authorized.
3. A ccess device obtained through robbery,
fra u d . An unauthorized electronic fund
transfer includes a transfer initiated by a
person who obtained the access device from
the consumer through fraud or robbery.
4. Forced initiation. An electronic fund
transfer at an automated teller m achine
(ATM) is an unauthorized transfer if the
consum er is induced by force to initiate the
transfer.
Section 205.3—Coverage
(a) General
1. Accounts covered. The requirem ents of
the regulation apply only to accounts for
w hich an agreement for electronic fund
transfer services to or from the account has
been entered into between:
• The consumer and the financial
institution (including accounts for which an
access device has been issued to the
consumer, for example);
• The consumer and a third party (for
preauthorized debits or credits, for example),
when the account-holding institution has
received notice of the agreement and the
fund transfers have begun.
The fact that membership in an automated
clearing house requires a participating
financial institution to accept electronic fund
transfers to accounts at the institution does
not make every account of that institution
subject to the regulation.
2. Foreign applicability. Regulation E
applies to all persons (including branches
and other offices of foreign banks located in
the United States) that offer electronic fund
transfer services to residents of any state
(including resident aliens). It covers any
account located in the United States through
which electronic fund transfer services are
offered to a U.S. resident. This is the case
w hether or not a particular transfer takes
place in the United States and whether or not
the financial institution is chartered or based
in the United States or a foreign country. The
regulation does not apply to a foreign branch
of a U.S. bank unless the electronic fund
transfer services are offered in connection
w ith an account held by the consum er in a
state as defined in § 205.(j).
10707
(b) E lectronic F und Transfer
1. F u n d transfers covered. The term
electronic fund transfer includes:
• A deposit made at an ATM or other
electronic term inal (including a deposit in
cash or by check) provided a specific
agreement exists between the financial
institution and the consum er for electronic
fund transfers to or from the account to
w hich the deposit is made.
• Any transfer sent via an automated
clearing house. For example, social security
benefits under the U.S. Treasury's directdeposit program are covered, even if the
listing of payees and paym ent am ounts
reaches the account-holding institution by
means of a com puter printout from a
correspondent bank.
• A preauthorized transfer credited or
debited to an account in accordance w ith
instructions contained on magnetic tape,
even if the financial institution holding the
account sends or receives a com posite check.
• A transfer resulting from a debit-card
transaction, even if no electronic term inal is
involved at the time of the transaction, if the
consum er’s asset account is subsequently
debited for the am ount of the transfer.
2. F u n d transfers n o t covered. The term
electronic fund transfer does not include:
• A paym ent that does not debit or credit
a consum er asset account, such as payroll
allotm ents to a creditor to repay a credit
extension that are deducted from salary
paym ents and not from consum er accounts,
or any paym ent made in currency by a
consum er to another person at an electronic
terminal.
• A preauthorized check drawn by the
financial institution on the consum er’s
account (such as an interest or other
recurring paym ent to the consum er or
another party), even if the check is computergenerated.
(c) E xclusions From Coverage
(c)(2) C heck G uarantee or A u th o riza tio n
Services
1.
M em o posting. Under a check guarantee
or check authorization service, debiting of
the consum er’s account occurs when the
check or draft is presented for payment.
These services are exempt from coverage,
even w hen a temporary hold on the account
is memo-posted electronically at the time of
authorization.
(c)(3) W ire T ran sfers
1. F edwire a n d ACH. If a financial
institution makes a fund transfer via an
autom ated clearing house (ACH) after
receiving funds via Fedwire or a sim ilar
network, the transfer by the ACH is covered
by the regulation even though the Fedwire or
network transfer is exempt.
2. Article 4A. Financial institutions that
offer telephone-initiated Fedwire payments
are subject to the requirem ents of the UCC
section 4A-202, w hich encourages that
Fedwire paym ent orders be verified pursuant
to a security procedure established by
agreement between the consum er and the
receiving bank. These transfers are not
subject to Regulation E and the agreement is
not considered a telephone plan if the service
is offered separately and apart from any
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10708
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telephone bill-payment or other prearranged
• A legend on a signature card, periodic
statement, or passbook that lim its the number
plan normally subject to Regulation E.
3.
S im ila r f u n d tra n sfer s y ste m s . Examplesof telephone-initiated transfers the consumer
of fund transfer systems sim ilar to Fedwire
can make from a savings account because of
include the Clearing House Interbank
Regulation D (12 CFR part 204) reserve
Payments System (CHIPS), Society for
requirements.
Worldwide Interbank Financial
• An agreement perm itting the consumer
Telecommunication (SWIFT), and Telex.
to approve by telephone the rollover of funds
at the maturity of an instrument.
(c)(4) S e c u ritie s a n d C o m m o d itie s T ran sfers
2.
E x a m p le s o f c o v e r e d tran sfers. When a
1. C overage. The securities exemption
w ritten plan or agreement has been entered
applies to securities and com modities that
into, a transfer initiated by a telephone call
may be sold by a registered broker-dealer or
from a consumer is covered even though:
futures commission merchant, even w hen the
• An employee of the financial institution
security or commodity itself is not regulated
completes the transfer manually, for
by the Securities and Exchange Commission
example, by means of a debit memo or
or the Commodity Futures Trading
deposit slip.
Commission.
• The consumer is required to make a
2. E x a m p le s o f e x e m p t a n d n o n e x e m p t
separate request for each transfer.
transfers. The exemption applies to a transfer
• The consumer uses the plan
involving:
infrequently.
• A transfer initiated by a telephone order
• The consumer initiates the transfer via a
to a stockbroker to buy or sell securities or
facsimile machine.
to exercise a margin call.
The exemption does not apply to a transfer (c)(7) S m a ll In stitu tio n s
involving:
1.
C overage. This exemption is lim ited to
• A debit card that accesses a money
preauthorized transfers; institutions that offer
market mutual fund and that the consumer
electronic fund transfer services other than
uses for purchasing goods or services or
preauthorized transfers m ust com ply with
obtaining cash.
the applicable sections of the regulation as to
• A payment of interest or dividends into
such services. The preauthorized transfers
the consum er’s account, for example, from a
remain subject, however, to sections 913,
brokerage firm or from a Federal Reserve
915, and 916 of the act and § 205.10(e) and
Bank (for government securities).
are therefore exempt from UCC Article 4A.
(c)(5) A u to m a tic T ran sfers b y A ccountH o ld in g In stitu tio n
S ectio n 205 .4 — G en eral D isc lo su re
R eq u irem en ts; J o in tly O ffe re d S e rvices
1. A u to m a tic tra n sfers e x e m p te d . The
e x e m p tio n a p p lie s to:
(a) Form o f D isclo su res
• Electronic ddbits or credits to consumer
accounts for check charges, stop-payment
charges. NSF charges, overdraft charges,
provisional credits, error adjustm ents, and
sim ilar items that are initiated automatically
on the occurrence of certain events.
• Debits to consumer accounts for group
insurance available only through the
financial institution and payable only by
means of an aggregate payment from the
institution to the insurer.
• Electronic fund transfers between a thrift
institution and its paired commercial bank in
the state of Rhode Island, which are^deemed
under state law to be intra-institutional.
• Automatic transfers between a
consum er’s accounts w ithin the same
financial institution, even if the account
holders on the two accounts are not identical.
2. A u to m a tic tra n sfers n o t e x e m p te d .
Transfers between accounts of the consumer
at affiliated institutions (such as between a
bank and its subsidiary or w ithin a holding
company) are not intra-institutional transfers,
and thus do not qualify for the exemption.
(c)(6) T e lep h o n e -In itia te d T ran sfers
1.
W ritten p la n o r a g reem en t. A transfer
that the consumer initiates by telephone is
covered only if the transfer is made under a
w ritten plan or agreement between the
consum er and the financial institution
making the transfer. The following do not, by
themselves, constitute a w ritten plan or
agreement:
• A hold-harmless agreement on a
signature card that protects the institution if
the consumer requests a transfer.
1. G eneral. Although no particular rules
govern such matters as type size, num ber of
pages, or the relative conspicuousness of
various terms, the disclosures m ust be in a
clear and readily understandable written
form that the consumer may retain. Numbers
or codes are considered readily
understandable if explained elsewhere on the
disclosure.
2. Foreign la n gu age d isc lo su re s.
Disclosures may be made in languages other
than English, provided they are available in
English upon request.
S ectio n 20 5 .5 — Issu a n c e o f A c c e s s D evices
1.
C overage. The provisions of this section
limit the circumstances under which a
financial institution may issue an access
device to a consumer. Making an additional
account accessible through an existing access
device is equivalent to issuing an access
device and is subject to the lim itations in this
section.
(a) S o lic ite d Issu an ce
P aragraph (a)(1)
1. Joint a ccount. For joint accounts, a
financial institution may issue an access
device to each account holder if the
requesting holder specifically authorizes the
issuance.
P aragraph (a)(2)
1. O ne-for-one rule. In issuing a renewal or
substitute access device, a financial
institution may not provide additional
devices. For example, only one new card and
PIN may replace a card and PIN previously
issued. If the replacement device permits
either additional or fewer types of electronic
fund transfer services, new disclosures or a
change-in-terms notice are required.
2.
R e n e w a l o r s u b stitu tio n b y a su cc e sso r
in stitu tio n . A successor institution is an
entity that replaced the original financial
institution (for example, through a corporate
merger or acquisition) or that has acquired
accounts or assumed the operation of an
electronic fund transfer system.
(b) U n so lic ite d Issu an ce
1. C o m p lia n ce. A financial institution may
issue an unsolicited access device (such as a
com bination of a debit card and PIN) if the
institution’s ATM system has been
programmed not to accept the access device
until after the consumer requests and the
institution validates the device. Merely
instructing a consumer not to use an
unsolicited debit card and PIN until after the
institution has satisfactorily verified the
consum er’s identity does not com ply with
the regulation.
2. PINS. A financial institution may
impose no liability on the consum er for
unauthorized transfers involving an
unsolicited access device until the device
becomes an "accepted access device” under
the regulation. A card-PIN combination can
be treated as an accepted access device once
the card and PIN have been used by the
consumer.
3. FunctiQns o f PIN. If an institution issues
a personal identification num ber at the
consum er’s request, the issuance may
constitute both a way of validating the debit
card and the means to identify the consumer
(required as a condition of imposing liability
for unauthorized transfers).
4. V erification o f id e n tity . A financial
institution may use other means, not just
those listed in the regulation, to verify the
consum er’s identity. However, if an
institution fails to correctly verify the
consum er’s identity, even if reasonable
means were used, and an imposter succeeds
in having the device validated, the consume is not liable for any unauthorized transfers
from the account.
S ectio n 20 5 .6 — L ia b ility o f C o n s u m e r f o r
U n a u th o r iz e d T ran sfers
(a) C o n d itio n s fo r L ia b ility
1. M e a n s o f id en tifica tio n . A financial
institution may use various means for
identifying the consumer to whom the access
device is issued including but not limited to
• Electronic or mechanical confirmation
(such as a PIN).
• Comparison of the consum er’s signature,
fingerprint, or photograph.
2. M u ltip le users. When more than one
access device is issued for an account, the
financial institution may, but need not,
provide a separate means to identify each
user of the account.
(b) L im ita tio n s on A m o u n t o f L ia b ility
1. A p p lic a tio n o f lia b ility p ro v isio n s. Thera
are three possible tiers of consum er liability
for unauthorized electronic fund transfers
depending on the situation. A consum er may
be liable for (1) up to $50; (2) up to $500; or
(3) an unlim ited amount. More than one tier
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Federal Register / Vol. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
may apply to a given situation because each
may apply in conjunction with the first two
corresponds to a different (sometimes
tiers of liability. If a periodic statement
overlapping) time period.
shows an unauthorized transfer, the
2.
Consumer negligence. Negligence by the consumer m ust notify the financial
consumer cannot be used as the basis for
institution w ithin 60 calendar days after the
imposing greater liability than is permissible
periodic statement was sent; otherwise, the
under Regulation E. Thus, consumer
consumer faces unlim ited liability for all
behavior that may constitute negligence
unauthorized transfers made after the 60-day
under state law, such as writing the PIN on
period. The consum er’s liability for
the ATM card or on a piece of paper kept
unauthorized transfers before the statement is
w ith the card, does not affect the consum er’s
sent and up to 60 days following is
liability for unauthorized transfers. The
determined based on the first two tiers of
extent of the consum er’s liability is
liability: up to $50 if the consumer notifies
determined solely by the consum er’s
the financial institution w ithin two business
promptness in reporting the loss or theft of
days of learning of the loss or theft of the
an access device. Similarly, no agreement
card and up to $500 if the consumer notifies
between the consum er and an institution
the institution after two business days of
may impose greater liability on the consumer learning of the loss or theft.
for an unauthorized transfer than the limits
2.
Transfers not involving access device.
provided in Regulation E.
The first two tiers of liability do not apply
to unauthorized transfers from a consum er’s
(b)( 1) Timely Notice Given
account that were m ade w ithout an access
1. $50 limit applies. The basic liability
device. If, however, the consumer fails to
limit is $50. For example, the consum er’s
report such unauthorized transfers w ithin 60
card is lost or stolen on Monday and the
calendar days of the financial institution’s
consumer learns of the loss or theft on
transmittal of the periodic statement, the
Wednesday. If the consumer notifies the
consumer may be held liable for any transfers
financial institution w ithin two business
occurring after the close of the 60 days and
days of learning of the loss or theft (by
before notice is given to the institution. For
midnight Friday), the consum er’s liability is
example, assume a consum er’s account has
limited to $50 or thfe am ount of the
been electronically debited for $200 w ithout
unauthorized transfers that occurred before
the consum er’s authorization and by means
notification, w hichever is less.
other than the consum er’s access device. If
2. Knowledge of loss or theft of access
device. The fact that a consumer has received the consumer notifies the institution w ithin
60 days of transm ittal of the periodic
a periodic statement that reflects
statement that shows the unauthorized
unauthorized transfers may be a factor in
transfer, the consum er has no liability. If,
determining whether the consumer had
however, in addition to the $200 transaction,
knowledge of the loss or theft, but cannot be
deemed to represent conclusive evidence that the consum er’s account is debited w ithout
authorization for $400 on the 61st day after
the consumer had such knowledge.
transmittal of the statement and the
(b)(2) Timely Notice Not Given
consumer fails to notify the institution of the
unauthorized transfers until the 62nd day,
1. $500 limit applies. The second tier of
liability is $500. For example, the consum er’s the.consumer is liable for the full $400.
card is stolen on Monday and the consumer
(b)(4) Extension of Time Limits
learns of the theft that same day. The
1.
Extenuating circumstances. Examples
consumer reports the theft on Friday. The
circumstances that require extension of the
$500 limit applies because the consumer
notification periods under this section
failed to notify the financial institution
include the consum er’s extended travel or
w ithin two business days of learning of the
hospitalization.
theft (which would have been by m idnight
Wednesday). How m uch the consumer is
(b)(5) Notice to Financial Institution
actually.liable for, however, depends on
1. Receipt of notice. A financial institution
when the unauthorized transfers take place.
is considered to have received notice for
In the example above, assume an
purposes of lim iting the consum er’s liability
unauthorized transfer for $100 was made on
if notice is given in a reasonable manner,
Tuesday, and another unauthorized transfer
even if the consumer uses an address or
for $600 occurred on Thursday. As the
telephone number other than the one
consumer is liable for the am ount of the loss
specified by the institution.
that occurred w ithin the first two business
2. Notice by third party. Notice to a
days (but no more than $50), plus the amount
financial institution by a person acting on the
of the unauthorized transfers that occurred
consum er’s behalf is considered valid under
after the first two business days and before
this section. For example, if a consumer is
the consumer gives notice, the consum er’s
total liability is $500 ($50 of the $100 transfer hospitalized and unable to report the loss or
theft of an access device, notice is considered
plus $450 of the $600 transfer in this
given when someone acting on the
example). But if $600 was taken on Tuesday
consumer’s behalf notifies the bank of the
and $100 was taken on Thursday, the
loss or theft.
consumer’s maximum liability would be
3. Content o f notice. Notice to a financial
$150.
institution is considered given w hen a
(b)(3) Periodic Statement; Timely Notice Not
consumer takes reasonable steps to provide
Given
the institution w ith the pertinent account
1. Unlimited liability applies. The standard information. Even w hen the consumer is
of unlim ited liability applies if unauthorized
unable to provide an account num ber or card
transfers appear on a periodic statement, and
num ber in reporting a lost or stolen access
10709
device or an unauthorized transfer, the notice
effectively limits the consum er’s liability if
the consumer otherwise identifies
sufficiently the account in question. For
example, the consum er may identify the
account by the nam e on the account and the
type of account in question.
' Section 205.7—Initial Disclosures
(a) Timing o f Disclosures
1. Early disclosures. Disclosures given
earlier than the regulation requires (for
example, w hen the consum er opens a
checking account) need not be repeated when
the consumer later signs u p for an electronic
fund transfer service if the electronic fund
transfer agreement is between the consum er
and a third party w ho will initiate
preauthorized transfers to or from the
consum er’s account, unless the term s and
conditions required to be disclosed differ
from those previously given. If, on the other
hand, the electronic fund transfer agreement
is directly between the consumer and the
account-holding institution, the disclosures
m ust be given in close proximity to the event
requiring disclosure, for example, signing up
for a service.
2. Lack of prenotification of direct deposit.
In some instances, before direct deposit of
government paym ents such as Social
Security takes place, the consumer and the
financial institution both m ust complete a
Form 1199A (or com parable form providing
notice to the institution) and the institution
can make disclosures at that time. If an
institution has not received advance notice
that direct deposits are to be made to a
consum er’s account, the institution m ust
provide the required disclosures as soon as
reasonably possible after the first direct
deposit is made, unless the institution has
previously given disclosures.
3. Addition of new accounts. If a consumer
opens a new account permitting electronic
fund transfers in a financial institution where
ofthe consumer already m aintains an account
that provides for electronic fund transfer
services, the institution need only disclose
terms and conditions that differ from those
previously given.
4. Addition of new electronic fund transfer
services. If an electronic fund transfer service
is added to a consum er’s account and is
subject to terms and conditions different
from those described in the initial
disclosures, disclosures pertaining to the
additional service m ust be given. The
disclosures m ust be provided either w hen the
consumer contracts for the new service or
before the first electronic fund transfer is
made using the new service.
5. Addition of service in interchange
systems. If a financial institution joins an
interchange or shared network system
(providing access to term inals operated by
other institutions in the system), new
disclosures are required for any additional
services not previously available to
consumers if the term s and conditions for the
additional services differ from those
previously disclosed.
6. Disclosures covering all electronic fund
transfer services offered. An institution may
provide disclosures covering all electronic
fund transfer services that it offers, even if
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Federal Register / Voi. 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
some consum ers have not arranged to use all
services.
(b) Content o f Disclosures
(bKl) Liability o f Consumer
1. No liability im posed by financial
institution. If a financial institution chooses
to impose zero liability for unauthorized
electronic fund transfers, it need not provide
liability disclosures. If the Institution later
decides to impose liability, however, it must
first provide the disclosures.
2. Preauthorized transfers. If the only
electronic fund transfers from an account are
preauthorized transfers, an institution must
disclose that liability could arise if the
consumer fails to report unauthorized
transfers reflected on a periodic statement in
order to impose liability on the consumer.
The institution m ust also disclose the
telephone num ber and address for reporting
unauthorized transfers.
3. Additional information. At the
institution’s option, the summary of the
consum er’s liability may include advice on
promptly reporting unauthorized transfers or
the loss or theft of the access device.
(b)(2) Telephone Number and Address
1. Disclosure of telephone numbers. An
institution may use the same or different
telephone numbers in the disclosures for the
purpose of:
• Reporting the loss or theft of an access
device or possible unauthorized transfers:
• Inquiring about the receipt of a
preauthorized credit;
• Stopping paym ent of a preauthorized
debit; and
• Giving notice of an error.
The telephone num ber need not be
incorporated into the text of the disclosure;
for example, the institution may instead
insert a reference to a telephone num ber that
is readily available to the consumer, such as
“Call your branch office. The num ber is
shown on your periodic statement.”
However, an institution must provide a
specific telephone num ber and address on or
with the disclosure statement for reporting a
lost or stolen access device or a possible
unauthorized transfer.
(b)(4) Types o f Transfers; Limitations
1. Security limitations. Information about
lim itations on the frequency and dollar
am ount of transfers generally must be
disclosed in detail, even if related to security
aspects of the system. If the confidentiality of
certain details is essential to the security of
an account or system, however, these details
may be w ithheld (but the fact that lim itations
exist m ust still be disclosed). For example, an
institution lim its cash ATM w ithdraw als to
$100 per day. The institution may disclose
that certain daily withdraw al limitations
apply and need not disclose that the
lim itations may not always be enforced (such
as during periods w hen its ATMs are “off
line”).
2. Restrictions on certain deposit accounts.
A lim itation on account activity that restricts
the consum er’s ability to make electronic
fund transfers m ust be disclosed even if the
restriction also applies to transfers made by
nonelectronic means. For example.
Regulation D restricts the number of
payments to third parties that may be made
from a money market deposit account; an
institution that does not execute EFTs in
excess of those lim its m ust disclose the
restriction as a lim itation on the frequency of
electronic fund transfers.
3.
Preauthorized transfers. Financial
institutions are not required to list
preauthorized transfers among the types of
transfers that a consum er can make.
(b)(5) Fees
1. Disclosure o f fees. A per-item fee for
electronic fund transfers m ust be disclosed
even if the same fee is imposed on
nonelectronic transfers. If a per-item fee is
imposed only under certain conditions, such
as when the transactions in the cycle exceed
a certain number, those conditions m ust be
disclosed. Item ization of the various fees may
be provided on the disclosure statement or
on an accom panying docum ent In the latter
case, the statement m ust refer to the
accompanying d o cum ent
2. Fees also applicable to non-electronic
fund transfer. An institution is required to
disclose all fees that are attributable to
electronic fund transfers or the right to make
them. Fees that are relevant to both electronic
and nonelectronic transfers (for example,
minim um balance fees, stop-payment fees or
account overdrafts) may, but need not, be
disclosed. An institution is not required to
disclose fees for inquiries at an ATM since
no transfer of funds is involved.
3. Interchange system fees. Fees paid by
the account-holding institution to the
operator of a shared or interchange ATM
system need not be disclosed, unless
imposed on the consum er by the account
holding institution. Fees for use of an ATM
that are debited directly to the consum er’s
account by an institution other than the
account-holding institution (for example, fees
included in the transfer amount) need not be
separately disclosed.
(b)(9) Confiden tiali ty
1. Information provided to third parties.
The institution m ust describe the
circumstances under w hich any information
relating to an account to or from which
electronic fund transfers are permitted, not
just inform ation concerning those electronic
transfers, will be made available to third
parties. The term “ third parties” includes
affiliates such as other subsidiaries of the
same holding company.
(b)( 10) Error Resolution
1. Substantially similar. The error
resolution notice m ust be substantially
sim ilar to the m odel form in appendix A. An
institution may delete inapplicable
provisions (for exam ple, the requirem ent for
w ritten confirm ation of an oral notification),
substitute substantive state law requirem ents
affording greater consum er protection than
Regulation E, or use different wording so
long as the substance of the notice remains
the same.
2. Exception from provisional crediting. If
a financial institution takes advantage of the
longer time periods for resolving errors under
§ 205.11(c)(3) (for transfers initiated outside
the United States, or resulting from POS
debit-card transactions), it must disclose
these longer time periods. Similarly, an
institution that relies on the exception from
provisional crediting in § 205.11(c)(2) for
accounts subject to Regulation T must
disclose accordingly.
Section 205.8—Change in Terms Notice;
Error Resolution Notice
(a) Change in Terms Notice
1. Form of notice. No specific form or
wording is required for a change in terms
notice. The notice may appear on a periodic
statement, or may be given by sending a copy
of a revised disclosure statement, provided
attention is directed to the change (for
example, in a cover letter referencing the
changed term).
2. Changes not requiring notice. The
following changes do not require disclosure:
• Closing some of an institution’s ATMs
• Cancellation of an access device
3. Limitations on transfers. When the
initial disclosures omit details essential to
the security of the account or system, a
subsequent increase in those lim itations need
not be disclosed if secrecy is still essential.
If, however, an institution had no limits
w hen the initial disclosures were given and
it now wishes to impose limits for the first
time, it m ust disclose at least the fact that
limits have been adopted. (See also
§ 205.7(b)(4) and the related commentary.)
4. Change in telephone number or address.
A change in terms notice is not required
w hen a financial institution changes the
telephone num ber or address used for
reporting possible unauthorized transfers, but
the change m ust be disclosed under § 205.6
as a condition of imposing liability on the
consumer for unauthorized transfers. (See
also § 205.6(a) and the related commentary.)
(a) (2) Prior Notice Exception
1. Notice of permanent change included in
periodic statement. If a change under this
paragraph is made permanent, the financial
institution may include the written notice to
the consum er on or w ith a periodic statement
sent w ithin 45 calendar days of the
perm anent change.
(b) Error Resolution Notice
1. Change between annual and periodic
notice. If an institution switches mam an
annual to a periodic notice, or vice versa, the
first notice under the new method must be
sent no later than 12 months after the last
notice under the old method.
Section 205.9—Receipts at Electronic
Terminals; Periodic Statements
(a) Receipts at Electronic Terminals
1. Receipts furnished only on request. The
regulation requires that a receipt be “made
available.” A financial institution may
program its electronic term inals to provide a
receipt only to consum ers who elect to
receive one.
2. Third party providing receipt. An
account-holding institution may make
term inal receipts available through third
parties such as m erchants or other financial
institutions.
3. Inclusion o f promotional material. A
financial institution may include
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promotional material on receipts if the
required information is set forth clearly (for
example, by separating it from the
promotional material). In addition, a
c onsumer m ust not be required to surrender
the receipt or that portion containing the
required disclosures in order to take
ed vantage of a promotion.
4. Transfer not completed. The receipt
requirem ent does not apply to a transfer that
is initiated but not completed, for example,
if the ATM is out of currency or the
consum er decides not to complete the
transfer.
5. Receipts not furnished due to
inadvertent error. If a receipt is not provided
to the consum er because of a bona fide
unintentional error, such as the terminal
running out of paper or the mechanism
jamming, no violation results if the financial
institution m aintains procedures reasonably
adapted to avoid such an error.
6. Individual transfers. If the consumer
makes m ultiple transfers at the same time,
the financial institution may docum ent them
on a single or on separate receipts.
(a)(1) Amount
1. Disclosure of transaction fee. The
required display of a fee am ount on or at the
terminal may be accomplished by displaying
the fee on the term inal screen before the
consumer has initiated the transfer if
displayed for a reasonable duration.
(a)(2) Date
1. Calendar date. The receipt must disclose
the calendar date on which the consumer
uses the electronic terminal. An accounting
or business date may be disclosed in addition
if the dates are clearly distinguished.
(a)(3) Type
1. Identifying transfer and account.
Examples identifying the type of transfer and
the type of the consum er’s account to or from
which funds are transferred include
“withdrawal from checking,” “transfer from
savings to checking,” or “ payment from
savings.”
2. Exception. Identification of an account
is not required w hen the consumer can
access only one asset account at a particular
time or terminal, even if the access device
can normally be used to access more than
one account. For example, the consumer may
be able to access only one account at
terminals operated by institutions other than
the account-holding institution, or to access
only one account w hen the terminal is off
line. If a consumer can use an access device
at a terminal to debit an asset account and
also to access a credit line, the exception is
still available.
3. Access to multiple accounts. If the
consumer can use an access device to make
transfers to or from different accounts of the
same type, the term inal receipt must specify
which account was accessed, such as
“withdrawal from checking I” or
“w ithdrawal from checking II.” If only one
account besides the primary checking
account can be debited, the receipt can
identify the account as “withdrawal from
other account.”
4. Generic descriptions. Generic
descriptions may be used for accounts that
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monthly. The statem ents m ust correspond to
are similar in function such as share draft or
NOW accounts and checking accounts. In a
periodic cycles that are reasonably equal, that
shared system, for example, when a credit
is, do not vary by more than four days from
union member initiates transfers to or from
the regular period. The requirem ent of
a share draft account at a term inal owned or
reasonably equal cycles does not apply w hen
operated by a bank, the receipt may identify
an institution changes cycles for operational
a withdrawal from the account as a
or other reasons, such as to establish a new
"w ithdraw al from checking.”
statem ent day or date.
5.
Point-of-sale transactions. There is no
2. Defining a cycle. Financial institutions
prescribed terminology for identifying a
m ust provide relevant information for the
transfer at a m erchant’s POS terminal. A
cycle or period since the last statement was
transfer may be identified, for example, as a
issued. For example, an institution regularly
purchase, a sale of goods or services, or a
issues quarterly periodic statements at the
payment to a third party. When a consumer
end of March, June, September and
obtains cash from a POS term inal in addition
December. If the consum er initiates an
to purchasing goods, or obtains cash only, the electronic fund transfer in February, an
docum entation need not differentiate the
interim statement w ould be provided. The
transaction from one involving the purchase
interim statement should provide relevant
of goods.
information for the period since the last
statement was issued, (the months of January
(a)(4) Identifica tion
and February in this example). The regularly
1. Unique identification. A number or code scheduled statement w ould provide
used by a financial institution to identify the
information from the date of the interim
consum er’s account or, the access device used statement.
to initiate the transfer need be unique only
3. Inactive accounts. A financial institution
w ithin that financial institution.
need not send statements to consumers
whose accounts are inactive as defined by the
(a)(5) Terminal Location
institution.
1. Location code. A code or term inal
4. Customer pickup. A financial institution
number identifying the terminal where the
may permit, but may not require, consumers
transfer is initiated may be given as part of
to call for their periodic statements.
a transaction code.
5. Periodic statements lim ited to electronic
2. Omission of city name. The city may be
fund transfer activity. A financial institution
omitted if the generally accepted nam e (such
that uses a passbook as the primary means for
as a branch name) contains the city name.
displaying account activity, but also allows
Paragraph (a)(5)(i)
the account to be debited electronically, may
comply w ith the periodic statement
1. Street address. The address should
requirem ent by providing a statement that
include num ber and street (or intersection);
reflects only the electronic fund transfers and
the number (or intersecting street) may be
omitted if the street alone uniquely identifies other required disclosures (such as charges,
account balances, and address and telephone
the terminal location.
num ber for inquiries). (See § 205.9(c)(l)(i) for
Paragraph (a)(5)(H)
the exception applicable to preauthorized
transfers for passbook accounts.)
1. Generally accepted name. Examples of
6. Codes and accompanying documents.
a generally accepted nam e for a specific
To meet the docum entation requirem ents for
location include a branch of the financial
periodic statements, a financial institution
institution, a shopping center, or an airport.
may:
Paragraph (a)(5)(iii)
• Include copies of term inal receipts to
reflect transfers initiated by the consumer at
1. Name o f owner or operator of terminal.
Examples of an owmer or operator of a
electronic terminals;
• Enclose posting meriios, deposit slips,
terminal are a financial institution or a retail
and other docum ents that, together w ith the
merchant.
statement, disclose all the required
(a) (6) Third Party Transfer
information;
1. Omission o f third-party name. The
• Use codes for names of third parties or
receipt need not disclose the third-party
term inal locations and explain the
name if the nam e is provided by the
information to w hich the codes relate on an
consumer in a form that is not m achine
accompanying document.
readable (for example, if the consumer
(b)( 1) Transaction Information
indicates the payee by depositing a paym ent
stub into the ATM). If, on the other hand, the
1. Information obtained from others. While
consumer keys in the identity of the payee,
financial institutions m ust maintain
the receipt m ust identify the payee by name
reasonable procedures to insure the integrity
of data obtained from another institution, a
or by using a code that is explained
elsewhere on the receipt.
merchant, or other third parties, independent
2. Receipt as proof o f payment.
verification of the data for each transfer is not
Documentation required under this
required for purposes of the periodic
regulation constitutes prima facie proof of a
statement disclosures.
payment to another person, except in the
Paragraph (b)(l)(i)
case of a term inal receipt docum enting a
1. Incorrect deposit amount. If the financial
deposit.
institution determines that the amount
(b) Periodic Statements
actually deposited at an ATM is different
1. Periodic cycles. Periodic statements may from the am ount entered by the consumer,
be sent on a cycle that is shorter than
the institution need not im m ediately notify
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Federal Register / VoL 59, No. 44 / Monday, March 7, 1994 / Proposed Rules
the consumer about the discrepancy. The
periodic statem ent reflecting the deposit may
either show the correct am ount of the
deposit, or the .am ount entered by the
consumer along w ith the institution’s
adjustment.
Paragraph (bX.lHiii)
1. Type o f transfer. There is no prescribed
terminology for describing the type of
transfer. It is sufficient to show the am ount
of the transfer in the debit or the credit
column If other information on the statement,
such as a term inal location or third-party
name, enables the consum er to identify the
type of transfer.
Paragraph (bX lX M
1. Nonproprietary terminal in network. An
institution need not reflect on the periodic
statement the street addresses, identification
codes, or term inal numbers for transfers
initiated in a shared or interchange system at
a terminal operated by an institution other
than the account-holding institution. The
statement must, however, specify the entity
which owns or operates the term inal, plus
the city and state.
Paragraph (bMlMv)
1. Recurring payments by government
agency. The third-party name for recurring
payments from federal, state or local
governments need not list the particular
agency. For exam ple, "U.S. gov’t" or ’’N.Y.
sal" will suffice.
2. Consumer as third-party payee. If a
consumer makes an electronic fund transfer
to another consum er, the financial institution
must identify the recipient by name (not just
by an account num ber, for example).
3. Terminal location/third party. A single
entry may be used to identify both the
terminal location and the name of the third
party to or from w hom funds are transferred.
For example, if a consum er purchases goods
from a merchant, the nam e of the party to
whom funds are transferred (the merchant)
and the location of the term inal where the
transfer is initiated w ill be satisfied by a
disclosure such as “XYZ Store, Anytown,
Ohio.”
4. Account-holding institution as third
party. Transfers to the account-holding
institution, by ATM for example, m ust show
the institution as the recipient, unless other
information on the statement, for example,
"loan payment from checking,” clearly
indicates that the paym ent was to the
account-holding institution.
5. Consistency in third-party identity. The
periodic statem ent m ust disclose a thirdparty name as it appeared on the receipt,
whether it was, for example, the “ dba”
(doing business as) nam e of the third party
or the parent corporation’s name.
6. Third-party identity on deposits at
electronic terminal. A financial institution
need not identify third parties whose names
appear on checks, drafts, or sim ilar paper
instrum ents deposited to the consum er’s
account at an electronic terminal.
(b)(3) Fees
1. Disclosure o f fees. The fees disclosed
may include tees for electronic fund transfers
and for other non-electronic services and
both fixed fees and per-item fees; they may
be given as a total or may be item ized in p u t
or in full.
2. Fees in Interchange system. An account
holding institution m ust disclose any fees it
imposes on the consum er for electronic fond
transfer services, including fees for ATM
transactions in an interchange or shared
ATM system. Fees for use of an ATM
imposed on the consum er by an institution
other than the account-holding institution
and included in the am ount of the transfer
by the term inal-operating institution need
not be separately disclosed on the periodic
statement.
3. Finance charges. The requirem ent to
disclose any fees assessed against the account
does not include a finance charge imposed
on the account during the statement period.
(b)(4) Account Balances
1. Opening and closing balances. The
opening and closing balances in the
consum er's account m ust reflect both
electronic fund transfers and other account
activity.
(b)(5) Address and Telephone Number for
Inquiries
(b) (6) Telephone Number for Preauthorized
Transfers
1. Telephone number. A single telephone
number, preceded by the “direct inquiries
to” language, will satisfy the requirements of
§ 205.9(b)(5) and (6).
(c) Exceptions to the Periodic Statement
Requirements for Certain Accounts
1. Transfers between accounts. The
regulation provides an exception from the
periodic statement requirem ent for certain
intra-institutional transfers between a
consum er’s accounts. The financial
institution m ust still com ply w ith the
applicable periodic statement requirements
for any other electronic transfers to or from
the account. For example, a Regulation E
statement must be provided quarterly for an
account that also receives payroll deposits
electronically, or for any m onth in which an
account is also accessed by a withdrawal at
an ATM.
(d) Documentation for Foreign-Initiated
Transfers
1. Foreign-initiated transfers. An
institution m ust make a good faith effort to
provide all required information for foreign
initiated transfers. For example, even though
the institution may not be able to provide a
specific term inal location, it should identify
the country and city in which the transfer
was initiated.
Section 205.10—Preauthorized Transfers
(a) Preauthorized Transfers to Consumer's
Account
(a)(1) Notice by Financial Institution
1. Content. No specific language is required
in the notice regarding receipt of a
preauthorized transfer. Identifying the
deposit is sufficient; however, simply
providing the current account balance is not.
2. Notice o f cred it The financial institution
may use separate m ethods of notice for
different types or series of preauthorized
transfers. The institution need not offer
consumers a choice of notice methods.
3. Positive notice. A periodic statement
sent w ithin tw o business days of the
scheduled transfer, showing the transfer, can
serve as notice of receipt.
4. Negative notice. With a negative-notice
system, a financial institution m ust provide
notice if paym ent is not received by the close
of the second business day. If preauthorized
transfers cease, the institution should send
negative notices following at least three
separate m issed payments; or it may notify
the consum er earlier that it believes the
transfers have stopped and that it will no
longer send negative notices. The absence of
a deposit entry w ill not serve as negative
notice for purposes of a negative-notice
system.
5. Telephone notice. If a financial
institution uses the telephone notice option,
it should be able in most instances to verify
during a consum er’s initial telephone inquiry
w hether a transfer was received. The
institution m ust respond w ithin two business
days to any inquiry not answered
immediately.
6. Phone number for passbook accounts.
The financial institution may use any
reasonable means necessary to provide the
telephone num ber to consumers with
passbook accounts that can only be accessed
by preauthorized credits and that do not
receive periodic statements. For example, it
may print the telephone number in the
passbook, or include the number with the
annual error resolution notice.
7. Telephone line availability. To satisfy
the readily-available standard, the financial
institution m ust provide enough telephone
lines so that consum ers get a reasonably
prompt answer. The institution need only
provide telephone service during normal
business hours. W ithin its primary service
area, an institution m ust provide a local or
toll-free telephone number. It need not
provide a toll-free num ber or accept collect
long-distance calls from outside the area
where it norm ally conducts business.
(b) Written Authorization for Preauthorized
Transfers From Consumer’s Account
1. Preexisting authorizations. The financial
institution need not require a new
authorization before changing from paperbased to electronic debiting merely because
the existing authorization does not specify
that debiting is to occur electronically or
specifies that the debiting is to occur by
paper means. A new authorization also need
not be obtained w hen a successor institution
begins collecting payments. For example,
w hen an institution acquires the servicing
rights for a mortgage loan, it may rely on the
original preauthorized transfer authorization.
2. Authorization obtained by third party.
The account-holding financial institution
does not violate this regulation when a thirdparty payee fails to obtain the authorization
in writing or to give a copy to the consumer,
rather, it is the third-party payee who is in
violation of the regulation.
3. Written authorization for preauthorized
transfers. The requirem ent that preauthorized
electronic fond transfers be authorized by the
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F ederal Register / Vol. 59^ No. 44 / M onday, March 7, 1994 / Proposed Rules
consumer “only in writing” cannot be met by
a payee’s signing a w ritten authorization on
the consum er’s behalf with only an oral
authorization from the consumer. A tape
recording of a telephone conversation w ith a
consumer w ho agrees to preauthorized debits
also does not constitute written authorization
for purposes of this provision.
4. Use o f a confirmation form. A financial
institution or designated payee may comply
with the requirem ents of this section in
various ways. For example, a payee may
provide the consum er with two copies of a
form to perm it preauthorized transfers from
the consum er’s account and require the
consumer to sign and return one, while
retaining the second copy.
5. Similarly authenticated. An example of
a consum er’s authorization that is not in the
form of a signed writing but is instead
“similarly authenticated” is a consum er’s
authorization via a home computer. For a
home banking system to satisfy the
requirements of this section, there m ust be
some means to identify the consumer (such
as a security code), and the consumer m ust
have the ability to obtain a printed copy of
the authorization (such as by printing it on
the consum er’s printer or by the payee’s
making a copy for the consumer).
(c) Consumer’s Right To Stop Payment
1. Stop-payment order. The financial
institution m ust honor an oral stop-payment
order m ade at least three business days
before a scheduled debit. If the debit item is
resubmitted, the institution must continue to
honor the stop-paym ent order, for example,
by suspending all subsequent payments to
the payee-originator until the consumer
notifies the institution that payments should
resume.
2. Revocation o f authorization. Once the
financial institution has been notified that
the consum er’s authorization is no longer
valid, it m ust block all future paym ents for
the particular debit transm itted by the
designated payee-originator. The institution
may not wait for the payee-originator to
terminate the automatic debits. The
institution may confirm that the consumer
has informed the payee-originator of the
revocation by requiring, for example, a copy
of the consum er’s revocation as written
confirmation to be provided w ithin fourteen
days of an oral notification. If the institution
does not receive the required written
confirmation w ithin the fourteen-day period,
it may pay subsequent debits to the account.
(d) Notice of Transfers Varying in Amount
(d)(1) Notice
1. Preexisting authorizations. A financial
institution holding the consum er’s account
does not violate this regulation if the
designated payee fails to provide notice of
varying amounts.
(d)(2) Range
1. Range. Financial institutions that elect
to provide the consum er w ith a specified
range of am ounts for debiting (in lieu of
providing the notice of transfers varying in
amount) m ust provide a range that could
plausibly be anticipated by the consumer.
For example, if the transfer is for payment of
a gas bill, an appropriate range might be
based on the highest bill in w inter and the
lowest bill in summer.
(e) Compulsory Use
(e)(1) Credit
1. Loan payments. Creditors may not
require repayment of loans by electronic
means. A creditor may offer a program w ith
a reduced annual percentage rate or other
cost-related incentive for an automatic
repayment feature, provided the program
w ith the automatic paym ent feature is not the
only loan program offered by the creditor for
the type of credit involved. Examples
include:
• Mortgages w ith graduated payments in
which a pledged savings account is
automatically debited during an initial
period to supplem ent the monthly payments
made by the borrower.
• Mortgage plans calling for preauthorized
biweekly paym ents that are debited
electronically to the consum er’s account and
produce a lower total finance charge.
2. Overdraft. The provision allowing
institutions to require the automatic
repayment of an overdraft credit plan applies
even if the overdraft extension is charged to
an open-end account that may be accessed by
the consumer in ways other than by
overdrafts.
(e)(2) Employment or Government Benefit
1. Payroll. Employers are subject to the
act’s prohibition against compulsory use of
electronic fund transfers as a condition of
employment. For example, a financial
institution (as an employer) may not require
its employees to receive their salary by direct
deposit to that same institution. An employer
may, however, require direct deposit of
salary by electronic means if employees are
given a choice of institutions that would
receive the direct deposit. Alternatively, an
employer may give employees the choice of
having their salary deposited at a particular
institution, or receiving their salary by check
or cash.
Section 205.11—Procedures for Resolving
Errors
(a) Definition o f Error
1. Terminal location. With regard to
deposits at an ATM, the consumer’s request
for the terminal location or other information
triggers the error resolution procedures. The
financial institution need only provide the
consumer w ith the ATM location if it has
captured that inform ation w ith regard to
deposits. If the consum er merely calls to
ascertain w hether a deposit made via ATM,
preauthorized transfer, or any other type of
electronic fund transfer was credited to the
account, w ithout asserting an error, the error
resolution procedures do not apply.
2. Loss or theft o f access device. A financial
institution is required to comply w ith the
error resolution procedures of this section
when a consum er reports the loss or theft of
an access device if the consumer also alleges
possible unauthorized use as a consequence
of the loss or theft.
3. Error asserted after account closed. The
financial institution m ust comply with the
10713
error resolution procedures when a consum er
properly asserts an error, even if the account
has been closed.
4.
Request for documentation or
information. Requests for docum entation or
other information m ust be treated as errors
unless it is clear that the request by the
consumer is only for duplicate copies for tax
or other record-keeping purposes.
(h) Notice o f Error From Consumer
(b)(1) Timing; Contents
1. Content o f error notice. The notice of
error is effective even if it does not contain
the consum er’s account number, so long as
the financial institution is able to identify the
account in question. For example, the
consumer could provide a social security
num ber or other unique means of
identification.
2. Requirement o f an affidavit. While a
financial institution may require the
consumer to sign an affidavit relating to a
notice of error, it may not delay initiating or
completing an investigation pending receipt
of the affidavit.
3. Statement held for consumer. When a
consumer has arranged for periodic
statements to be held until picked up, the
statement for a particular cycle is deemed to
have been transm itted on the date the
financial institution first makes the statement
available to the consumer.
4. Failure to provide statement. When a
financial institution fails to provide the
consum er w ith a periodic statement, a
request for a copy is governed, by this section
if the consum er gives notice w ithin 60 days
from the date on w hich the statement should
have been transm itted.
5. Discovery o f error by institution. The
error resolution procedures of this section
apply only w hen a notice of error is received
from the consumer. If the financial
institution itself discovers and corrects an
error, it need not comply with the
procedures.
6. Notice at particular phone number or
address. A financial institution may require
the consumer to give notice only at the
telephone num ber or address disclosed by
the institution, provided the institution
m aintains reasonable procedures to refer the
consumer to the specified telephone number
or address if the consum er attempts to give
notice to the institution in a different
manner.
(b) (2) Written Confirmation
1. Written confirmation-of-error notice. If
the consum er sends a written confirmation of
error to the wrong address, the institution
must process the confirmation through
normal procedures. But the institution need
not provisionally credit the consum er’s
account if the w ritten confirmation is
delayed beyond 10 business days because it
was sent to the wrong address.
(c) Time Limits and Extent of Investigation
1. Notice to consumer. Unless otherwise
indicated in this section, the financial
institution may provide the required notices
to the consum er either orally or in writing.
2. Written confirmation of oral notice. A
financial institution m ust begin its
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Federal Register / VoL 59, No- 44 / Monday, March 7, 1994 / Proposed Rules
investigation prom ptly upon receipt o f an
oral notice, ft may not delay until it has
received a w ritten confirmation.
3. No charge for error resolution. The
financial institution m ay not impose charges
for any aspect of the error-resolution process,
including charges for docum entation or
investigation.
4. Correction without investigation. A
financial institution may make, w ithout
investigation, a final correction to a
consum er’s account in the am ouni or m anner
alleged by the consumer to be in error, but
m ust oom piy w ith ell other applicable
requirem ents o f § 205.11.
5. Correction notice. A financial institution
may include the notice o f correction on a
periodic statem ent that is m ailed or delivered
w ithin the 10-business-day or 45-calendarday time lim its and that d e a rly identifies die
correction to the consum er’s acco u n t
W hether such a mailing w ill be prom pt
enough to satisfy the requirem ents of this
section m ust be determ ined by the
institution, taking into account the sperific
facts involved.
6. Correction o f an error. If the financial
institution determ ines an error occurred,
w ithin either the 10-day or 45-day period, it
shall correct the error (subject to the liability
provisions o f $ 205.6 (a) and (b)) including,
where applicable, the crediting o f interest
and the refunding o f any fees imposed by the
institution. In a com bined credit/electronic
fund transfer transaction, for example, the
institution m ust refund any finance charges
incurred as a result of the error. The
institution need not refund fees that w ould
have been im posed w hether or not the error
occurred.
7. Extent o f required investigation. A
financial institution com plies w ith its duty to
investigate, correct, and report its
determ ination regarding an error described in
§ 205.11(a)(lXviij by transm itting the
requested information, clarification, or
docum entation w ithin the tim e lim its set
forth in paragraph (c) of this section. If the
institution has provisionally credited the
consum er's account in accordance w ith
paragraph (cX2) o f this section, it may debit
the am ount upon transm itting the requested
information, clarification, o r docum entation.
Paragraph (cX2Hi)
1. Compliance with all requirements.
Financial Institutions exem pted from
provisionally crediting a consum er’s account
under § 205.11(c)(2)(iJ (A) and (B) m ust still
com ply w ith all other requirem ents of the
section.
(cX3) Extension o f Time Periods
1. POS deb it card transactions. The
extended deadlines for investigating errors
resulting from POS debit card transactions
include all debit card transactions, including
those far cash only, a t m erchants’ point-ofsale term inals. The deadlines do not apply to
transactions at an ATM, however, even
though the ATM m ay be in a m erchant
location. POS debit card transactions also
include m*U and telephone orders.
(c)(4) Investigation
1. Third parties. When inform ation o r
docum entation requested by the consum er is
in the possession o f a third party w ith whom
the financial institution does not have an
agreement, the institution satisfies the error
resolution requirem ent by so advising the
consum er w ithin the specified time frame.
2. Scope o f investigation. W hen an alleged
error involves a paym ent to a third party
under the financial institution’s telephone
bill-paym ent plan, a review of the
institution's ow n records is sufficient,
assum ing no agreement exists between the
institution and the third party concerning the
bill-paym ent service.
3. POS transfers. W hen a consum er alleges
an error involving a transfer to a merchant
via a POS term inal, the institution must
verify the information previously transm itted
in executing the transfer. For example, the
financial institution may request a copy of
the sales receipt to verify that the am ount of
the transfer correctly corresponds to the
am ount of the consum er’s purchase.
4. Agreem ent A financial institution does
not have an agreement for purposes of
§ 205.11(c)(4)(ii) solely because it participates
in transactions occurring under the federal
recurring paym ents programs, or that are
cleared through an ACH or similar
arrangement for the clearing and settlement
of fund transfers generally, or because it
agrees to be bound by the rules of such an
arrangement. But an agreement that a third
party w ill honor an access device is an
agreement for purposes of this paragraph.
(d) Procedures if Financial Institution
Determines No Error or Different Error
Occurred
1. Error different from that alleged. When
a financial institution determines that an
error occurred in a m anner or am ount
different from that described by the
consumer, It m ust comply w ith the
requirem ents of both paragraphs (c) and (d)
of this section, as rele v an t The institution
may give the notice of correction and the
explanation separately or in a combined
form.
(d)(1) Written Explanation
1. Request for documentation. When a
consum er requests copies of documents, the
financial institution m ust provide the copies
in an understandable form. If an institution
relied on magnetic tape it m ust translate the
applicable data into readable form, for
example, by printing it an d explaining any
codes.
(d)(2) Debiting Provisional Credit
1. Alternative procedure for debiting of
credited funds. The financial institution may
com ply w ith the requirem ents of this section
by notifying the consum er that the
consum er’s account will be debited five
business days from the transm ittal of the
notification, specifying the calendar date on
w hich the debiting will occur.
2. Fees far overdrafts. The financial
institution m ay not impose fees for items it
is required to honor under this section. It
may. however, impose any normal
transaction or item fee that is unrelated to an
overdraft resulting from the debiting. If the
account is still overdraw n after five business
days, the Institution may impose the fees or
finance charges to w hich it is entitled, if any,
under an overdraft credit plan.
(e) R eassertion o f Error
1. W ithdraw al o f error ; right to rea ssert
The financial institution has no further error
resolution responsibilities if the consumer
voluntarily w ithdraw s the notice. A
consum er w ho has w ithdraw n an allegation
of error has the right to reassert the allegation
unless the financial institution had already
com plied w ith all of the error resolution
requirem ents before the allegation was
w ithdraw n. The consum er m ust do so,
however, w ithin the original 60-day period.
Section 205.12—R elation to Other Laws
(a) R elation to T ruth in L ending
1. D eterm ining a p plicable regulation. For
transactions involving access devices that
also constitute credit cards, the applicability
of Regulation E versus Regulation Z depends
on the nature o f the transaction. For example,
if the transaction is purely an extension of
credit, and does not include a debit to a
checking account (or other consum er asset
account), th e liability lim itations and error
resolution requirem ents of Regulation Z
apply. If the transaction only debits a
checking account (with no credit extended),
the com parable provisions o f Regulation E
apply. Finally, if the transaction debits a
checking account but also draws on an
overdraft line of credit, the Regulation E
provisions apply, as well as 12 CFR 226.13(d)
and (g) of Regulation Z. As a result, a
consum er m ight be liable for up to $50 under
Regulation Z and, in addition, for $50, $500,
or an unlim ited am ount under Regulation E.
2. Issu a n ce rules. For access devices that
also constitute credit cards, the issuance
rules o f Regulation E apply if the only credit
feature is a preexisting credit line attached to
the asset account to cover overdrafts (or to
m aintain a specified m inim um balance).
Regulation Z rules apply if there is another
type of credit feature, for example, one
perm itting direct extensions of credit that do
not involve the asset account.
(b) P reem ption o f In co n sisten t State Laws
1. S p ecific determ inations. The regulation
prescribes standards for determining w hether
state laws th at govern electronic fund
transfers are preem pted by the act and the
regulation. A state law that is inconsistent
may be preem pted even if the Board has not
issued a determ ination. However, nothing in
§ 205.12(b) provides a financial institution
w ith im m unity for violations of state law if
the institution chooses not to make state
disclosures and the Board later determines
that the state law is not preempted.
2. P reem ption determ ination. Effective
March 30,1981, the Board has determ ined
that certain provisions in the 6tate law of
Michigan are preem pted by the federal law:
• Section 5(4)—Definition of unauthorized
use. This provision is preem pted to the
extent that it relates to the section of state
law governing consum er liability for
unauthorized use o f an access device.
• Section 14—Consum er liability for
unauthorized use o f an account. This
provision is inconsistent w ith § 205.6 and is
less protective o f the consum er than the
!01o?f
Federal Register / Vol. 59, No. 44 / M onday, M arch 7, 1994 / Proposed Rules
federal law. The state law places liability on
the consum er for the unauthorized use of an
account in cases involving the consum er’s
negligence. Under the federal law, a
consum er’s liability for unauthorized use is
not related to the consum er's negligence and
depends instead on the consum er’s
promptness in reporting the loss or theft of
the access device.
• Section 15—Error resolution. This
provision is preem pted because it is
inconsistent w ith § 205.11 and is less
protective of the consumer than the federal
law. The state law allows financial
institutions up to 70 days to resolve errors,
whereas the federal law generally requires
errors to be resolved in 45 days.
• Sections 17 and 18—Receipts and
periodic statements. These provisions are
preem pted because they are inconsistent
w ith § 205.9. The provisions require a
different disclosure of information than does
the federal law. The receipt provision is also
preem pted because it allows the consumer to
be charged for receiving a receipt if a
m achine cannot furnish one at the time of a
transfer.
Section 205.13—Administrative
Enforcement; Record Retention
(b) Record Retention
1. Requirements. To evidence compliance,
a financial institution should be able to
establish that its procedures reasonably
ensure the consum er’s receipt of required
disclosures and documentation.
Section 205.14—Electronic Fund Transfer
Service Provider Not Holding Consumer’s
Account
(a) Electronic Fund Transfer Service
Providers Subject to Regulation
1. Applicability. This section applies only
w hen a service provider issues an access
device (a debit card or a code, for example)
to a consum er w ith which the consumer can
initiate transfers to or from the consum er’s
account at a financial institution and the two
entities have no agreement regarding this
electronic fund transfer service. If the service
provider does not issue an access device to
the consumer, it does not qualify for the
treatment accorded by this section. For
example, this section does not apply to an
institution that initiates preauthorized
payroll deposits on behalf of an employer to
the consum er’s account at another
institution. By contrast, this section does
apply to an institution that issues a code for
initiating telephone transfers from a
consum er’s account at another institution
(provided the account-holding institution
does not have an agreement w ith the other
institution regarding the service). This is the
case even if the consum er has accounts at
both institutions.
2. ACH agreements. An ACH agreement
under w hich members agree to honor each
other’s electronic fund transfer cards
constitutes an “ agreement” for purposes of
this section.
(b) Compliance by Electronic Fund Transfer
Service Provider
1. Liability. The service provider is liable
for unauthorized electronic fund transfers
that exceed the consum er’s liability lim its in
§205.6.
(b)( 1) Disclosures and Documentation
1. Periodic statements from electronic fund
transfer service provider. A service provider
that meets the conditions set forth in the
regulation does not have to issue periodic
statements. A service provider that does not
meet the condition need only include
information on periodic statements sent to
the consum er about transfers initiated with
the access device it has issued.
(b) (2) Error Resolution
1. Error resolution. W hen a consumer
notifies the service provider of an error, the
electronic fund transfer service provider
m ust investigate and resolve the error as set
forth in the regulation. If an error occurred,
any fees or charges imposed as a result of the
error, either by the service provider or by the
account-holding institution (for example,
overdraft or dishonor fees) m ust be
reim bursed to the consumer by the service
provider.
(c) Compliance by Account-Holding
Institution
Paragraph (c)(1)
1. Periodic statements from account
holding institution. The periodic statement
provided by the account-holding institution
need only contain the information required
by § 205.9(c)(1).
10715
A ppendix A—Model Disclosure Clauses and
Forms
1. Review of forms. Neither the Board nor
its staff w ill review or approve disclosure
forms or statem ents for financial institutions.
However, the Board has issued model clauses
for institutions to use in designing their
disclosures. If an institution uses these
clauses accurately to reflect its service, the
institution is protected from liability for
failure to make disclosures in proper form.
2. Use o f the forms. The appendix contains
model disclosure clauses for optional use by
financial institutions to facilitate Compliance
w ith the disclosure requirements of
§§ 205.5(b)(2), and (b)(3), 205.6(a), 205.7, and
205.14(b)(l)(ii). Section 915(d)(2) of the
statute provides that use of these clauses in
conjunction w ith other requirements of the
regulation w ill protect a financial institution
from liability under sections 915 and 916 of
the act to the extent that the clauses
accurately reflect the institution’s electronic
fund transfer services.
3. Altering the clauses. Financial
institutions may use clauses of their own
design in conjunction w ith the Board’s model
clauses. The inapplicable words or portions
of phrases in parentheses should be deleted.
The underscored catchlines are not part of
the clauses and need not be used. Financial
institutions may make alterations,
substitutions, or additions in the clauses 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. Model Clauses A-(2) include
references to a telephone number and
address. W here two or more of these clauses
are used in a disclosure, the telephone
num ber and address may be referenced and
need not be repeated.
Supplem ent II to Part 205
[Removed]
3. Supplem ent II to Part 205 is removed.
By order of the Board of Governors of the
Federal Reserve System. February 24,1994.
W illiam W. Wiles,
Secretary o f the Board.
(FR Doc. 94-4682 Filed 3-2-94; 12:38 pm]
BILUNQ CODE 6210-01-P
I0 b 9 ?
o
Board of Governors of the Federal Reserve System
REGULATION E
AMENDMENTS REGARDING ELECTRONIC TRANSFER (EBT) PROGRAMS
o
MANDATORY COMPLIANCE MARCH 1, 1997
FEDERAL RESERVE SYSTEM
SUPPLEMENTARY INFORMATION:
(1) Background
12 CFR Part 205
E F T A c t a n d R e g u la tio n E
[Regulation E; Docket No. R -0829]
Electronic Fund Transfers
Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
AGENCY:
SUMMARY: T h e B o a rd is p u b lis h in g a
fin al r u le to a m e n d R e g u la tio n E,
p u r s u a n t to its a u th o rity u n d e r se c tio n s
904(c) a n d (d) o f th e E le c tro n ic F u n d
T ra n sfe r A ct, to c o v e r e le c tro n ic b en e fit
tra n sfe r (EBT) p ro g ra m s e s ta b lis h e d by
fed e ra l, sta te , o r lo c a l g o v e rn m e n t
ag en cies. EBT p ro g ra m s in v o lv e th e
is s u a n c e o f a c c e ss c a rd s a n d p e rso n a l
id e n tific a tio n n u m b e rs to re c ip ie n ts of
g o v e rn m e n t b e n e fits so th a t th e y ca n
o b ta in th e ir b e n e fits th ro u g h a u to m a te d
te lle r m a c h in e s a n d p o in t-o f-sa le
te rm in a ls . T h e fin a l ru le a p p lie s
R e g u la tio n E to EBT p ro g ra m s b u t sets
fo rth c e rta in lim ite d m o d ific a tio n s
u n d e r a u th o rity g ra n te d to th e B o ard by
se c tio n 904(c) o f th e act. In p a rtic u la r,
p e rio d ic a c c o u n t sta te m e n ts a re n o t
re q u ire d if a c c o u n t b a la n c e in fo rm a tio n
a n d w ritte n a c c o u n t h is to rie s a re m a d e
a v a ila b le to b e n e fit re c ip ie n ts b y o th e r
sp e c ifie d m e an s. T h is ru le m a k in g
d ire c tly affects g o v e rn m e n t a g e n c ie s
th a t a d m in is te r EBT p ro g ra m s a n d
in d ire c tly affects d e p o s ito ry in s titu tio n s
a n d o th e r p riv a te -se c to r e n titie s.
DATES: E f f e c t i v e . d a t e : F e b ru a ry 2 8 ,1 9 9 4 .
C o m p l i a n c e d a t e . T o p ro v id e a d e q u a te
tim e to p re p a re fo r c o m p lia n c e , th e
B oard h a s d e la y e d m a n d a to ry
c o m p lia n c e u n til M a rc h 1 ,1 9 9 7 .
R e g u la tio n E im p le m e n ts th e
E le c tro n ic F u n d T ra n sfe r A c t (EFTA).
T h e a c t a n d re g u la tio n c o v e r an y
e le c tro n ic fu n d tra n sfe r in itia te d
th ro u g h a n a u to m a te d te lle r m a c h in e
(ATM ), p o in t-o f-sa le (PO S) te rm in a l,
a u to m a te d c le a rin g h o u s e , te le p h o n e
b ill-p a y m e n t sy ste m , o r h o m e b a n k in g
p ro g ra m a n d p ro v id e ru le s th a t g o v ern
th e s e a n d o th e r e le c tro n ic tra n sfe rs. T h e
re g u la tio n se ts ru le s for th e iss u a n c e o f
A TM c a rd s a n d o th e r ac ce ss d ev ice s;
d is c lo s u re o f te rm s a n d c o n d itio n s o f an
E FT se rv ic e ; d o c u m e n ta tio n of
e le c tro n ic fu n d tra n sfe rs b y m e a n s o f
te rm in a l re c e ip ts a n d a c c o u n t
s ta te m e n ts ; lim ita tio n s o n c o n s u m e r
lia b ility for u n a u th o riz e d tran sfe rs;
p ro c e d u re s for e rro r re so lu tio n ; a n d
c e rta in rig h ts re la te d to p re a u th o riz e d
tra n sfe rs.
T h e E FT A is n o t lim ite d to tra d itio n a l
fin a n c ia l in s titu tio n s h o ld in g
c o n s u m e rs ’ a c c o u n ts. F o r E FT se rv ic es
m a d e a v a ila b le b y e n titie s o th e r th a n an
a c c o u n t-h o ld in g fin a n c ia l in s titu tio n ,
th e act d ire c ts th e B o ard to a ssu re , by
re g u la tio n , th a t th e p ro v isio n s o f th e act
a re m a d e a p p lic a b le . T h e re g u la tio n also
a p p lie s to e n titie s th a t iss u e ac ce ss
d e v ic e s a n d e n te r in to a g re e m e n ts w ith
c o n s u m e rs to p ro v id e E FT se rv ic es.
G o v e r n m e n t P ro g ra m s I n v o lv in g
E le c tr o n ic D e liv e r y o f B e n e fits
T h e fed e ra l g o v e rn m e n t, in
c o n ju n c tio n w ith sta te a n d lo cal
a g e n c ie s, is w o rk in g to e x p a n d
e le c tro n ic d e liv e ry o f g o v e rn m e n t
b e n e fits b o th for d ire c t fe d e ra l b e n e fit
FOR FURTHER INFORMATION CONTACT: Jane p ro g ra m s a n d for fe d e ra lly fu n d e d
Jensen Gell or Mary Jane Seebach, Staff p ro g ra m s th a t a re sta te a d m in is te re d . A n
Attorneys, or John C. Wood, Senior
e le c tro n ic b e n e fit tra n sfe r (EBT) sy stem
Attorney, Division of Consumer and
fu n c tio n s m u c h lik e a p riv a te -se c to r
Community Affairs, at (202) 4 5 2 -2 4 1 2
E FT p ro g ra m . B e n efit re c ip ie n ts rec eiv e
or (202) 4 5 2 -3 6 6 7 . For the hearing
p la s tic m a g n e tic -strip e c a rd s a n d
p e rso n a l id e n tific a tio n n u m b e rs (PINs)
impaired only, contact Dorothea
Thompson, Telecommunications Device a n d a c c e ss b e n e fits th ro u g h e le c tro n ic
te rm in a ls . F o r c a sh b e n e fits s u c h as A id
for the Deaf (TDD), at (202) 4 5 2 -3 5 4 4 .
to F a m ilie s w ith D e p e n d e n t C h ild re n
(AFDC) o r S u p p le m e n ta l S e c u rity
In c o m e (SSI), th e p ro g ra m s m a y u se
e x istin g p riv a te -se c to r A T M n e tw o rk s as
w e ll as P O S te rm in a ls to d is b u rs e
b e n e fits. F o r fo o d sta m p p u rc h a s e s , th e
p ro g ra m s u s e P O S te rm in a ls in grocery
sto res. In so m e c a se s th e P O S
e q u ip m e n t is d e d ic a te d s o le ly to th e
EBT p ro g ra m , w h ile in o th e rs it also is
u s e d for p riv a te -se c to r tra n sa c tio n s.
F o r m a n y sta te a n d lo c al a g e n cies,
EBT m a y p ro v id e a w ay to in c re a se
o p e ra tio n a l effic ie n c y , to re d u c e co sts,
a n d to im p ro v e se rv ic e to b e n e fit
re c ip ie n ts . F e d e ra l le g isla tio n th a t to o k
effect A p ril 1 ,1 9 9 2 , p ro v id e d n e w
im p e tu s for th e u se o f EBT, a u th o riz in g
th e sta te s to u se e le c tro n ic d e liv e ry o f
food sta m p b e n e fits in p la c e o f p a p e r
c o u p o n s . S ta te s p re v io u s ly c o u ld seek
a p p ro v a l to u se EBT for fo o d sta m p
b e n e fits o n ly o n a d e m o n s tra tio n basis.
C u rre n tly , a b o u t 30 sta te s h a v e EBT
p ro g ra m s in d iffe re n t sta g es o f o p e ra tio n
o r d e v e lo p m e n t.
In N o v e m b e r 1 993, th e C lin to n
a d m in is tra tio n e s ta b lis h e d a F ed era l
E le c tro n ic B e n e fits T a sk F o rce. T h e
g ro u p ’s a s sig n e d ta sk is to d e v e lo p a n d
im p le m e n t a n a tio n w id e sy ste m for th e
e le c tro n ic d e liv e ry o f b e n e fits from
g o v e rn m e n t p ro g ra m s, p u rs u a n t to' a
re c o m m e n d a tio n from th e N a tio n al
P e rfo rm a n c e R eview . In D ecem ber,, th e
EBT T a sk F o rc e w ro te to th e F ed eral
R eserv e B o ard , e x p re ssin g th e federal
a g e n c ie s ’ c o m m itm e n t to p ro v id in g
c o n s u m e r p ro te c tio n for EBT re c ip ie n ts,
a n d n o tin g at th e sa m e tim e th e n e e d for
p ro g ra m in te g rity a n d a c c o u n ta b ility for
p u b lic fu n d s. T h e EBT T ask F orce asked
th a t th e B o ard p ro v id e a th re e -y e ar
d e la y in th e effec tiv e d a te if th e B oard
s h o u ld u ltim a te ly d e c id e to a p p ly
R e g u la tio n E to EBT p ro g ra m s. T h e EBT
T a sk F o rc e sta te d th a t th is d e la y w as
n e c e s sa ry for im p le m e n tin g EBT in
a c c o rd a n c e w ith R e g u la tio n E; am o n g
o th e r th in g s , th e a g e n c ie s n e e d e d th e
tim e to c o lle c t a n d e v a lu a te c o m p arativ e
lo ss d a ta a t EBT te st sites, d a ta th a t th ey
c o u ld th e n u se as th e b a sis for seek in g
o
P R IN T E D IN N E W Y O R K , F R O M F E D E R A L R E G IST E R , V O L . 5 9 , N O . 4 4 , pp . 1 0 6 7 8 -8 3
[Enc. Cir. No. 10698]
/0
le g isla tiv e a u th o riz a tio n a n d fu n d in g to
p ay for re p la c in g b e n e fits lost d u e to
u n a u th o riz e d tran sfe rs.
(2) D isc u ssio n
B oard A u th o rity
T h e F e d e ra l R eserv e B oard h a s a
b ro a d m a n d a te u n d e r th e EFTA to
d e te rm in e coverag e w h e n e le c tro n ic
s e rv ic e s are o ffered by o th e r th a n
tra d itio n a l fin a n c ia l in s titu tio n s .
S ectio n 904(d) p ro v id e s th a t in th e
e v e n t E FT se rv ic es are m a d e a v a ila b le to
c o n s u m e rs b y a p e rso n o th e r th a n a
fin a n c ia l in s titu tio n h o ld in g a
c o n s u m e r ’s a c c o u n t, th e B o ard sh a ll
e n s u re th a t th e a c t’s p ro v isio n s are
m a d e a p p lic a b le to su c h p e rso n s a n d
se n d e e s.
T h e leg isla tiv e h isto ry o f th e EFTA
p ro v id e s g u id a n c e o n th e B o a rd ’s
a u th o rity to d e te rm in e if p a rtic u la r
se rv ic e s s h o u ld be co v e red by th e act,
b a s e d o n w h e th e r tra n sfe rs are in itia te d
e le c tro n ic a lly , w h e th e r c u rre n t la w s
p ro v id e a d e q u a te c o n s u m e r sa fe g u ard s,
a n d w h e th e r co v e rag e is n e c e ssa ry to
ac h ie v e th e a c t’s b a s ic o b jectiv es. A
S e n a te B an k in g C o m m itte e re p o rt n o te d
th a t th e sta tu to ry d e le g a tio n o f a u th o rity
to th e B oard e n a b le s th e B o ard to
e x a m in e n e w se rv ic e s o n a case-b y -case
b asis, th e re b y c o n trib u tin g s u b s ta n tia lly
to th e a c t’s o v era ll effe c tiv e n e ss. T h e
C o n g ress c o n te m p la te d th a t, as n o o n e
c o u ld fo resee EFT d e v e lo p m e n ts in th e
fu tu re , re g u la tio n s w o u ld k e e p p ac e
w ith n e w se rv ic e s a n d a s su re th a t th e
a c t's b a s ic p ro te c tio n s c o n tin u e to
a p p ly . S ee S. Rep. N o. 915; S. R ep No.
1273, 9 5 th C ong., 2d S ess. 2 5 -2 6 (1978).
In F e b ru a ry 1993 th e B o ard p u b lis h e d
a p ro p o sa l to a m e n d R e g u la tio n E to
co v e r EBT p ro g ra m s, w ith c e rta in
m o d ific a tio n s. 58 FR 8714, F e b ru a ry 17,
1993. T h e B o ard b e lie v e s th a t a n u m b e r
o f facto rs s u p p o rt R e g u la tio n E coverage
o f EBT p ro g ram s. EB T re c ip ie n ts u se th e
sam e k in d s o f a c c e ss d e v ic e s a n d
e le c tro n ic te rm in a ls in c o n d u c tin g
tra n sa c tio n s as d o c o n s u m e rs o f E FT
se rv ic es in g en e ra l. In d e e d , in EBT
sy stem s th a t p ig g y b a c k o n e x istin g E FT
n e tw o rk s, th e te rm in a ls u s e d a re o n e
a n d th e sam e. T h e tra n s a c tio n s
th e m se lv e s, s u c h as c a sh w ith d ra w a ls
a n d p u rc h a s e s , are a lso sim ila r.
T o o b ta in b e n e fits, re c ip ie n ts in se rt a
m a g n e tic -strip e c a rd in to a te rm in a l th a t
re a d s th e e n c o d e d in fo rm a tio n , a n d
e n te r a PIN to v erify th e ir id e n tity . T h e
te rm in a l c b m m u n ic a te s w ith a d a ta b a se
to a s c e rta in th a t a re c ip ie n t is e lig ib le
for b e n e fits, th a t th e c a rd h a s n o t b e e n
re p o rte d lo st o r sto le n , a n d th a t b e n e fits
are a v a ila b le in a n a m o u n t s u ffic ie n t to
co v er th e re q u e s te d tra n sa c tio n . In c a sh
b e n e fit p ro g ra m s, th e re c ip ie n t re c e iv e s
a c a sh d is b u rs e m e n t; in th e ca se o f food
sta m p b e n e fits, th e re c ip ie n t’s a llo tm e n t
is c h a rg e d a n d th e m e rc h a n t’s a c c o u n t
c re d ite d for th e a m o u n t o f th e food
p u rc h a se . F ro m a re c ip ie n t’s v ie w p o in t,
a n EBT sy stem fu n c tio n s m u c h th e sa m e
as if th e re c ip ie n t h a d an o rd in a ry
c h e c k in g a c c o u n t w ith d ire c t d e p o s its o f
g o v e rn m e n t b e n e fits a n d w ith A T M a n d
PO S se rv ic e a v a ila b le to a c c e ss th e
b en e fits.
T h e B o ard b e lie v e s th a t th e stro n g
s im ila rity o f EBT sy ste m s a n d o th e r EFT
se rv ic es, th e a c t’s le g isla tiv e h isto ry ,
a n d th e la n g u ag e o f th e EFTA a n d
R e g u la tio n E s u p p o r t cov erag e o f EBT
p ro g ra m s u n d e r th e ac t a n d re g u la tio n .
T h erefo re, th e B o a rd h a s d e te rm in e d
th a t EBT p ro g ra m s m u st c o m p ly w ith
th e re q u ire m e n ts o f R e g u la tio n E as
m o d ifie d b y th is fin a l ru le , p u r s u a n t to
its a u th o rity u n d e r 904(c) a n d (d) o f th e
EFTA.
T h e B o a rd ’s a c tio n , a m e n d in g th e
re g u la tio n , s u p e rs e d e s a n in te rp re ta tio n
in th e O fficial S ta ff C o m m en tary to
R e g u la tio n E (12 CFR p a rt 205, su p p . II).
T h e c o m m e n ta ry sta te d th a t an
e le c tro n ic p a y m e n t o f g o v e rn m e n t
b e n e fits w a s n o t a c re d it o r d e b it to a
“ c o n s u m e r a sse t a c c o u n t” b e c a u se th e
a c c o u n t w a s e s ta b lis h e d b y a
g o v e rn m e n t ag e n cy ra th e r th a n th e
c o n s u m e r (th e re c ip ie n t). T h e B e ard h a s
re e x a m in e d th a t in te rp re ta tio n , a n d h a s
c o n c lu d e d th a t a su ffic ie n t b a s is d o es
n o t e x ist for e x c lu d in g th e se a c c o u n ts
from R e g u la tio n E ’s coverage.
T h e a c t d e fin e s th e te rm “ a c c o u n t” to
m e a n “ a d e m a n d d e p o s it, sa v in g s
d e p o s it, o r o th e r a sse t a c c o u n t * * * as
d e s c rib e d in re g u la tio n s o f th e B oard,
e s ta b lish e d p rim a rily for p e rso n a l,
fam ily, o r h o u s e h o ld p u rp o se s * * * ”
R e g u la tio n E u se s su b sta n tia lly th e sa m e
w o rd in g , a n d re fe rs to " o th e r c o n s u m e r
asset a c c o u n t.” T h e referen c e to
“ c o n s u m e r” a sse t a c c o u n ts
d is tin g u is h e s th e m from b u sin e ssp u rp o s e a c c o u n ts, w h ic h a re n o t su b je c t
to th e re g u la tio n .
T h e E F T A ’s co v e rag e is n o t lim ite d to
tra d itio n a l d e p o s ito ry in s titu tio n s , b u t
m a y e x te n d to a n y p e rs o n (in c lu d in g a
g o v e rn m e n t ag en cy ) “ * * * w h o iss u e s
an ac ce ss d e v ic e a n d ag rees w ith a
c o n s u m e r to p ro v id e e le c tro n ic fu n d
tra n sfe r se rv ic e s .” In th e ca se o f EBT
p ro g ra m s, th e B o a rd ’s a c tio n w ill affect
p rim a rily g o v e rn m e n t a g e n c ie s th a t
a d m in is te r EBT p ro g ra m s a n d is s u e EBT
c a rd s to b e n e fit r e c ip ie n ts for a c c e ssin g
b e n e fits, o r th a t a rra n g e for s u c h
se rv ic e s to b e p ro v id e d . T h e re v is e d ru le
w ill affect o n ly in d ire c tly m o st
d ep o sito ry ' in s titu tio n s a n d o th e r
p riv a te -se c to r e n titie s.
2
6
? f
B o a rd ’s P ro p o sa l
W h ile th e B o ard p ro p o s e d g en e ral
co v e rag e o f EBT u n d e r th e E FT A , th e
p ro p o sa l p u b lis h e d in F e b ru ary 1993
m o d ifie d c e rta in d o c u m e n ta tio n
re q u ire m e n ts, re c o g n iz in g d iffe re n c e s
b e tw e e n EBT a n d E FT sy stem s. A
p e rio d ic s ta te m e n t w o u ld n o t b e
re q u ire d if in fo rm a tio n a b o u t a c c o u n t
b a la n c e s a n d a c c o u n t h is to rie s w e re
o th e rw ise m a d e a v a ila b le to c o n s u m e rs.
In a d d itio n , m o d ific a tio n s w ere
p ro p o se d in th e ru le s on th e is s u a n c e o f
ac ce ss d e v ic e s, in itia l d is c lo s u re s , a n d
th e n o tic e s o n e rro r re s o lu tio n
p ro c e d u re s, to ta ilo r th e r e q u ire m e n ts to
EBT p ro g ra m s.
T h e B o ard re c e iv e d a p p ro x im a te ly
175 c o m m e n t le tte rs o n its p ro p o s a l
from a b ro a d ra n g e o f c o m m e n te rs.
A b o u t 125 c o m m e n te rs— in c lu d in g sta te
a n d lo cal a g e n c ie s th a t p ro v id e b e n e fits,
fed eral a g e n cies, fin a n c ia l in s titu tio n s ,
a n d a b a n k tra d e a s s o c ia tio n — o p p o s e d
th e B o a rd ’s p ro p o sa l. M a n y o f th e m
re q u e ste d an e x e m p tio n for EBT
p ro g ra m s from th e R e g u la tio n E lia b ility
a n d e rro r re s o lu tio n ru le s. T h e y a s s e rte d
th a t fu ll a p p lic a tio n o f R e g u la tio n E
w o u ld in c re a se th e c o sts o f d e liv e rin g
b e n e fits to th e p o in t th a t o ffering EB T
m ig h t n o t b e e c o n o m ic a lly feasib le,
b e c a u se EBT p ro g ra m s m a y b e o n ly
m a rg in a lly co st-e ffe ctiv e e v e n w ith o u t
fac to rin g in R e g u la tio n E c o m p lia n c e
co sts. T h e y e x p re s s e d th e v ie w th a t th e
e x p e c te d a d v a n ta g e s o f EBT m ig h t n o t
b e re a liz e d if R e g u la tio n E w ere to
a p p ly , a n d th a t its a p p lic a tio n w o u ld
h in d e r th e in tro d u c tio n o r e x p a n s io n o f
EBT p ro g ram s.
In p la c e o f th e B o a rd ’s p ro p o s a l, th e
m a jo rity o f th e c o m m e n te rs s u p p o r te d
re c o m m e n d a tio n s g iv e n to th e B o a rd in
M ay 1992 by a n in te ra g e n c y s te e rin g
c o m m itte e e s ta b lis h e d w ith in th e
fed eral g o v e rn m e n t to c o o rd in a te EBT
efforts am o n g p ro g ra m ag e n cies.
A g en c ies re p re s e n te d o n th a t g ro u p
in c lu d e d th e T re a s u ry D e p a rtm e n t’s
F in a n c ia l M a n a g e m e n t S erv ice, th e
A g ric u ltu re D e p a rtm e n t’s F o o d a n d
N u tritio n S erv ice , th e H e a lth a n d
H u m a n S e rv ic e s D e p a rtm e n t’s S o cia l
S e c u rity A d m in is tra tio n a n d
A d m in is tra tio n for C h ild re n a n d
F a m ilie s, th e O ffice o f M a n a g e m e n t a n d
B u d g et, a n d o th e r fe d e ra l a g e n c ie s th a t
h a v e a n in te re st in p la n n in g for EBT
sy stem s. T h e ste e rin g c o m m itte e ’s
p ro p o sa l p rim a rily d iffe re d from th e
B o a rd ’s p ro p o sa l in th a t b e n e fit
re c ip ie n ts w o u ld b e lia b le for
u n a u th o riz e d tra n sfe rs su b je ct to ce rta in
c o n d itio n s , a n d th e e rro r re s o lu tio n
re q u ire m e n ts w o u ld n o t a p p ly if an
ag en cy m a in ta in e d “ e ffic ie n t, fair, a n d
/0 £ > 9 ?
tim e ly p r o c e d u re s ” for re so lv in g e rro rs
a n d d isp u te s, in c lu d in g a n a p p e a ls
process.
A n tic ip a tin g p u b lic o p p o s itio n to
R eg u latio n E co v erag e, th e B o ard in th e
p ro p o sa l in d ic a te d th a t c o m m e n te rs
s h o u ld offer e x p la n a tio n s o f w h y
m o d ific a tio n s in th e re g u la to ry
re q u ire m e n ts w e re n e e d e d , to g e th e r
w ith sp e cific s s u c h as d a ta o n co sts.
A p p ro x im a te ly 35 c o m m e n te rs in c lu d e d
e s tim a te s o f th e a d d itio n a l c o st th e y
b e lie v e d w o u ld be im p o s e d by
R eg u latio n E. In so m e ca se s th e
estim a tes w ere q u ite d e ta ile d . A few
estim a te s w ere b a s e d o n a g e n cy
e x p e rie n c e w ith th e re p la c e m e n t o f lost
or sto len c a rd s in EB T p ro g ra m s. M ost
o f th e co st e s tim a te s w e re b a s e d o n loss
a n d frau d e x p e rie n c e u n d e r e x istin g
p a p e r-b a se d b e n e fit p ro g ra m s (su c h as
m a ile d AFDC c h e c k s a n d m a ile d food
co u p o n s). N a tio n w id e , o n e g ro u p
e s tim a te d th e p ro je c te d c o sts d u e to
R e g u la tio n E, in w o rst-c a se sc e n a rio s, to
b e b e tw e e n $164 m illio n a n d $98 6
m illio n a n n u a lly .
M an y c o m m e n te rs su g g e sted th a t
p riv a te -se c to r fin a n c ia l in s titu tio n s
differ from g o v e rn m e n t a g e n c ie s in w ay s
th a t re la te to h o w c o m p lia n c e c o s ts ca n
b e b o rn e. F o r e x a m p le , fin a n c ia l
in s titu tio n s c a n c o n tro l th e ir c o sts by
se le c tin g th e c u s to m e rs to w h o m th e y
a re w illin g to offer E FT se rv ic e s, w h ile
p ro g ram ag en cies m u s t a c c e p t a ll w h o
q u alify for th e b e n e fit p ro g ra m . If a
c u s to m e r o f a fin a n c ia l in s titu tio n is
s u s p e c te d o f en g ag in g in fra u d , th e
in s titu tio n ca n te rm in a te th e a c c o u n t
re la tio n s h ip . In a lik e s itu a tio n , an
ag en cy c o u ld s h ift a re c ip ie n t from EBT
b a c k to th e p a p e r-b a se d sy ste m , b u t
c o m m e n te rs b e lie v e it m a y n o t b e
feasib le to o p e ra te d u a l sy stem s.
S im ila rly , c o m m e n te rs.n o te d , p riv atese cto r in s titu tio n s h a n d le lo sses re la te d
to th e R eg u latio n E c u s to m e r-lia b ility
lim ita tio n s b y s p re a d in g th e lo sse s over
th e ir e n tire c u s to m e r b a se in th e form of
in c re a s e d fees o r r e d u c e d in te re s t p aid .
A g en c ies c a n n o t d o so , a n d th u s lo sses
w o u ld h a v e to b e p a id o u t o f ta x
re v e n u e s , or, w h e re p e rm itte d , by
re d u c in g b e n e fits. If n e ith e r m e th o d is
av a ila b le , th e n th e EBT p ro g ra m w o u ld
b e e lim in a te d o r c u t b ack .
A p p ro x im a te ly 35 c o m m e n te rs
s u p p o r te d th e B o a rd ’s p ro p o sa l. T h is
g ro u p in c lu d e d ad v o c a c y g ro u p s for
b e n e fit re c ip ie n ts , fin a n c ia l in s titu tio n s ,
a b a n k tr a d e a s so c ia tio n , a n d
in d iv id u a ls . T h e s e c o m m e n te rs agreed
w ith th e p re m is e th a t th e sa m e ru le s
s h o u ld a p p ly to b o th EBT re c ip ie n ts an d
E FT u s e rs in th e g e n e ra l p u b lic , a n d th a t
b o th g o v e rn m e n t a n d p riv a te -se c to r
o rg a n iz a tio n s o fferin g E F T se rv ic e s
p riv a te -se c to r e m p lo y e rs, h a v e in sta lle d
A T M s th ro u g h w h ic h sa la ry a n d o th e r
p a y m e n ts c a n b e m a d e in a m a n n e r
sim ila r to EBT sy stem s. S u c h sy stem s
re m a in fu lly c o v e re d by R e g u latio n E.
In b rin g in g EBT a c c o u n ts w ith in th e
sc o p e o f th e E F T A ’s d e fin itio n of
“ a c c o u n t,” th e B o ard d o e s n o t tak e a
p o s itio n a b o u t th e legal s ta tu s o f th e
fu n d s for a n y o th e r p u rp o se . F o r
e x a m p le , leg al o w n e rs h ip o f th e fu n d s
in EBT a c c o u n ts (by th e re c ip ie n t o r a
state, for in sta n c e ) is n o t affected by th is
ru le m a k in g .
S o m e c o m m e n te rs a sk e d for
c la rific a tio n o n w h e th e r th e B oard
v ie w e d s p e c ia liz e d ty p e s o f p ro g ram s,
su c h as M e d ic a id , or p ro g ra m s u sin g
d iffe re n t te c h n o lo g y (sp e c ifica lly , sm art
c a rd p ro g ra m s) as c o v e re d by th e EFTA
a n d R e g u la tio n E. T h e B oard b eliev e s
th a t w h e n a c o n s u m e r c a n a c ce ss fu n d s
in an a c c o u n t u sin g e le c tro n ic m ean s,
R e g u la tio n E is a p p lic a b le . T h e B oard
F inal A c tio n on P ro p o sa l
b e lie v e s th a t M e d ic a id p ro g ra m s do n o t
A fter a re v ie w o f th e c o m m e n ts,
in v o lv e a n a c c o u n t w ith in th e m e a n in g
fu rth e r a n a ly sis, a n d a w e ig h in g of
o f R e g u la tio n E, giv en th a t b en e fits
p o lic y c o n s id e ra tio n s , th e B o ard h a s
u n d e r th e se p ro g ra m s are n o t m a d e
a d o p te d a fin al ru le p u r s u a n t to its
a v a ila b le to th e c o n s u m e r in te rm s o f a
a u th o rity u n d e r 904 (c) a n d (d) o f th e
d o lla r a m o u n t a v a ila b le to b e accessed
EFTA . T h e B o a rd ’s a c tio n re q u ire s EBT b y th e c o n s u m e r, as is th e ca se in EBT
p ro g ra m s to c o m p ly w ith th e
p ro g ra m s su c h as AFDC, SSI, a n d food
re q u ire m e n ts of R e g u la tio n E as
sta m p s.
m o d ifie d b y th is fin al ru le. T h e B oard
W ith reg ard to sm a rt c a rd sy stem s, th e
c o n tin u e s to b e lie v e th a t all c o n s u m e rs
B oard h a s is s u e d a p ro p o sa l to rev iew
u sin g E FT s e rv ic e s s h o u ld re c e iv e
R e g u la tio n E, also p u b lis h e d in to d a y ’s
su b s ta n tia lly th e sa m e p ro te c tio n u n d e r F e d e ra l R e g iste r, th a t s o lic its co m m e n t
th e EFTA a n d R e g u la tio n E, a b se n t a
on th e q u e s tio n o f c o v e rag e o f sm a rt
sh o w in g th a t c o m p lia n c e c o sts o u tw e ig h c a rd sy ste m s in g en e ral (b o th p u b lic an d
th e n e e d for c o n s u m e r p ro te c tio n s. T h e
p riv a te secto r). A n y d e te rm in a tio n m ad e
B oard re c o g n iz e s th a t b e n e fit p ro g ra m
on co v e rag e o f sm a rt c a rd s in th e rev iew
a g e n cies a re c o n c e rn e d a b o u t th e
c o u ld a p p ly to EBT sm a rt c a rd
o p e ra tio n a l a n d c o st im p a c ts o f
p ro g ra m s.
co v erag e, sp e c ific a lly in th e a re a s o f
(3) E x p la n a tio n o f N ew § 2 0 5 .1 5
lia b ility fo r u n a u th o riz e d tra n sfe rs a n d
e rro r re s o lu tio n , b u t b e lie v e s th a t th e
S ectio n 2 0 5 .1 5 — E lectro n ic F und
co st d a ta p re s e n te d to s u p p o rt
T ran sfer o f G o vern m en t B en efits
e x e m p tio n s in th e se are a s w e re n o t
A n e w s e c tio n is a d d e d to th e
d e fin itiv e .
re g u la tio n to sp e c ific a lly a d d re s s th e
T h e B o ard h a s p ro v id e d a d e la y e d
ru le s o n th e e le c tro n ic fu n d tra n sfe r of
im p le m e n ta tio n d ate, m a k in g
g o v e rn m e n t b e n e fits. A g en c ies are
c o m p lia n c e o p tio n a l u n til M a rc h 1,
1997, in k e e p in g w ith a re q u e st re c e iv e d g e n e ra lly re q u ire d to c o m p ly w ith all
in D ec em b e r 1993 from th e F e d e ra l EBT a p p lic a b le se c tio n s o f th e reg u la tio n .
S e c tio n 205.15 c o n ta in s th e m o d ifie d
T ask F orce. A s d is c u s s e d ab ove, th e
ru le s for EBT p ro g ra m s o n th e iss u a n c e
EBT T ask F o rc e, w h ic h re p re se n ts all
th e m a jo r a g e n c ie s w ith larg e in d iv id u a l o f a c c e ss d e v ic e s, p e rio d ic sta te m e n ts,
in itia l d is c lo s u re s , lia b ility for
b e n e fit p ro g ra m s, a sk e d for th e th ree u n a u th o riz e d u se , a n d e rro r re so lu tio n
y e a r d e la y so th a t a g e n cies c o u ld
n o tic e s.
d e v e lo p a n d im p le m e n t a n a tio n w id e
sy stem for d e liv e rin g m u ltip le -p ro g ra m
P a ra g ra p h (a)— G o v e rn m e n t A gency
b e n e fits in c o m p lia n c e w ith R e g u la tio n
S u b ject to R e g u la tio n
E.
P a ra g ra p h (a)(1)
T h e B o a rd ’s m o d ifie d ru le s for EBT
T h e a c t a n d re g u la tio n d e fin e
p ro g ra m s a re lim ite d to p ro g ra m s for
co v e rag e in te rm s o f “ fin a n c ial
d is b u rs in g w e lfa re a n d sim ila r
in s titu tio n .” C o verage a p p lie s to e n titie s
g o v e rn m e n t b e n e fits. S o m e o f th e
th a t p ro v id e E F T se rv ic e s to co n su m ers
m ilita ry se rv ic e s, as w e ll as c e rta in
s h o u ld b e su b je c t to th e sa m e ru le s.
S o m e c o m m e n te rs in th is g ro u p c a lle d
for e v e n g re a te r c o n s u m e r p ro te c tio n for
EBT r e c ip ie n ts th a n w o u ld b e p ro v id e d
b y e x is tin g R e g u la tio n E. F o r e x a m p le ,
o n e a d v o c a c y g ro u p arg u e d th a t th e
re g u la tio n s h o u ld p ro h ib it m a n d a to ry
EBT p ro g ra m s. O th e r c o m m e n te rs u rg ed
th e B o ard to re q u ire d is p u te d a m o u n ts
to b e p ro v is io n a lly c re d ite d to th e
c o n s u m e r ’s a c c o u n t w ith in o n e b u sin e ss
d ay (in ste a d o f 10 b u s in e s s d a y s for
A TM tra n s a c tio n s , o r 20 b u s in e s s d a y s
for P O S tra n s a c tio n s , as a llo w e d by
e x istin g R e g u la tio n E). A c o a litio n of
c o n s u m e r g ro u p s su g g e sted th a t th e
lim its o n lia b ility for u n a u th o riz e d
tra n s a c tio n s are to o h ig h in th e EBT
co n te x t, a n d th a t, for e x a m p le , th e $50
lia b ility th a t c a n b e im p o s e d e v e n if a
re c ip ie n t p ro m p tly re p o rts a lo st o r
sto le n d e b it c a rd s h o u ld b e r e d u c e d or
e lim in a te d .
3
/O W Z
w h e th e r th e s e e n titie s are b a n k s, o th e r
d e p o s ito ry in s titu tio n s , o r o th e r ty p e s of
o rg a n iz a tio n s en tire ly . T h e su b sta n c e of
p a ra g ra p h (a)(1), w h ic h d e fin e s w h e n a
g o v e rn m e n t ag en cy is a fin a n c ia l
in s titu tio n for p u rp o s e s o f th e act a n d
re g u la tio n , is u n c h a n g e d from th e
p ro p o sa l. E d ito ria l c h a n g e s h a v e b e e n
m a d e for clarity .
c o m m e n te rs s u p p o rte d th e B o a rd ’s
p ro p o s a l to e x e m p t g o v e rn m e n t
a g e n c ie s from th e re q u ire m e n t if th e
ag e n cy fu rn is h e s th e c o n s u m e r w ith
o th e r m e a n s o f a c c e ssin g a c c o u n t
in fo rm a tio n .
U n d e r th e p ro p o sa l, a g e n c ie s w e re to
p ro v id e b a la n c e in fo rm a tio n b y m e a n s
o f a n e le c tro n ic te rm in a l, b a la n c e
in q u iry te rm in a l, o r a re a d ily av a ila b le
te le p h o n e lin e , a n d to m a k e a v a ila b le a
w ritte n a c c o u n t h isto ry u p o n re q u e st.
T h e fin a l ru le c o n ta in s th e s e
a lte rn a tiv e s w ith m o d ific a tio n s th a t
r e s p o n d to th e co m m e n ts.
T o m a k e b a la n c e in fo rm a tio n re a d ily
a v a ila b le , th e p ro p o sa l a lso w o u ld h a v e
re q u ire d th a t th e te rm in a l re c e ip t sh o w
th e b a la n c e a v a ila b le to th e c o n s u m e r
afte r th e tra n sfe r. A n u m b e r o f
c o m m e n te rs s ta te d th a t th is re q u ire m e n t
w o u ld b e d iffic u lt for so m e EBT sy stem s
to im p le m e n t b e c a u s e e x istin g A T M
n e tw o rk s m ay n o t b e c a p a b le o f
p ro v id in g c u rre n t a c c o u n t b a la n c e s at
all tim e s. C o m m e n te rs su g g e sted th a t
g iv in g c o n s u m e rs a c c e ss to b a la n c e
in fo rm a tio n b y o th e r m e a n s (su ch as
te le p h o n e o r b a la n c e in q u iry te rm in a ls)
w o u ld a c h ie v e th e sa m e p u rp o se .
A c c o rd in g ly , th e fin a l ru le d o e s n o t
re q u ire th a t te rm in a l re c e ip ts in c lu d e
th e a c c o u n t b a la n c e as lo n g as a
c o n s u m e r ca n ac ce ss b a la n c e
in fo rm a tio n by th e o th e r m e a n s set forth
in p a ra g ra p h (c) o f th is se c tio n .
A n u m b e r o f c o m m e n te rs u rg ed th a t
a g e n c ie s s h o u ld n o t m a k e te le p h o n e
ac c e ss th e o n ly m e th o d b y w h ic h a
re c ip ie n t c a n o b ta in a n a c c o u n t b alan c e.
T a k in g th e se c o m m e n ts in to
c o n s id e ra tio n , th e B o ard h a s m o d ifie d
th e fin a l ru le. T h e fin al ru le re q u ire s, in
a d d itio n to a te le p h o n e lin e , at least o n e
a lte rn a tiv e m e th o d (su c h a s a b a la n c e
in q u iry te rm in a l) for ac ce ss to b a la n c e
in fo rm a tio n .
C o m m e n te rs su g g e sted th a t th e
te le p h o n e lin e b e to ll-free a n d a v a ila b le
o n a 2 4 -h o u r b asis. F o r E FT sy stem s
g e n e ra lly , th e B o ard in te rp re ts a re a d ily
c o n d itio n s a p p lic a b le to th e d ev ice.
R e g u latio n E re q u ire s fin a n c ia l
T h e B o a rd 's fin al ru le m a k es c le a r
a v a ila b le te le p h o n e lin e to m e a n a t least
in s titu tio n s to p ro v id e p e rio d ic
th a t in th e c a se o f EBT, an ag en cy m ay
a lo c al o r to ll-free lin e a v a ila b le d u rin g
sta te m e n ts for a n a c c o u n t to or from
s ta n d a rd b u s in e s s h o u rs. T h e B oard
w h ic h EFTs ca n b e m a d e. P e rio d ic
iss u e a n ac c e ss d e v ic e to a re c ip ie n t
b e lie v e s th a t th e sa m e in te rp re ta tio n is
w ith o u t a sp e c ific re q u e st. A re c ip ie n t
sta te m e n ts are a c e n tra l c o m p o n e n t of
o f g o v e rn m e n t b e n e fits is d e e m e d to
R e g u la tio n E ’s d is c lo s u re sc h e m e . B u t as a p p ro p ria te for EBT sy ste m s, a lth o u g h
h a v e re q u e s te d a n ac c e ss d e v ic e b y
long as o th e r m e a n s o f o b ta in in g
a n ag e n cy m a y o f c o u rse c h o o s e to
a p p ly in g for b e n e fits th a t th e ag en cy
a c c o u n t in fo rm a tio n are a v a ila b le to
p ro v id e re c ip ie n ts w ith a 2 4 -h o u r lin e.
d is b u rs e s o r w ill d is b u rs e b y m e a n s o f
b e n e fit re c ip ie n ts , th e B oard b e lie v e s
C o m m e n te rs re q u e s te d th a t th e B oard
EBT. T h e B o ard b e lie v e s th a t it is
th a t p e rio d ic sta te m e n ts a re n o t
p ro v id e c e rta in ty b y c la rify in g h o w a
u n lik e ly th a t a g o v e rn m e n t ag en cy
a b s o lu te ly n e c e ssa ry for EBT p ro g ra m s
c o n s u m e r m a y re q u e st a w ritte n ac c o u n t
w o u ld is s u e a n ac ce ss d e v ic e w ith o u t
d u e to th e lim ite d ty p e s o f tra n sa c tio n s
h is to ry a n d th e tim e p e rio d for
th e r e c ip ie n t’s b e in g m a d e aw a re th a t
in v o lv e d , p a rtic u la rly g iv e n th e e x p e n se
c o m p lia n c e . T h e fin a l ru le c la rifies th a t
th e w a y to ac ce ss b e n e fits is by u se o f
of ro u tin e ly m a ilin g m o n th ly s ta te m e n ts
a re q u e s t m a y b e e ith e r w ritte n o r oral,
th e d e v ic e a n d th a t to sa fe g u ard b e n e fits to a ll re c ip ie n ts. M o reo v e r, re q u irin g
th a t th e h isto ry s h o u ld c o v e r th e 60
th e d e v ic e m u s t b e p ro te c te d . M o reo v er, p e rio d ic s ta te m e n ts c o u ld im p e d e th e
c a le n d a r d a y s p re c e d in g th e re q u e st
g iv e n th a t in itia l d is c lo s u re s w o u ld be
effort to e lim in a te p a p e r a n d m o v e
d a te , a n d th a t th e h is to ry s h o u ld be
p ro v id e d d u rin g tra in in g , th e re c ip ie n t
to w a rd a fu lly e le c tro n ic sy stem . M ost
w ill b e in fo rm e d o f th e a c c o u n t’s te rm s
a n d c o n d itio n s.
T h e B o ard d o e s rec o g n ize , h o w e v e r,
c o m m e n te rs ’ c o n c e rn s a b o u t th e n e e d
for a g e n c ie s to v erify th e id e n tity o f th e
c o n s u m e r re c e iv in g th e d e v ic e b efo re it
is a c tiv a te d . A s in th e ca se o f th e p riv a te
se cto r, a n iss u in g ag en cy w ill h a v e to
v erify th e id e n tity o f th e c o n s u m e r by a
re a so n a b le m e a n s b efo re a d e v ic e is
P a ra g ra p h (a)(2)
a c tiv a te d . R e a so n a b le m e a n s in c lu d e
T h e te rm “ a c c o u n t,'’ w h ic h is d e fin e d m e th o d s o f id e n tific a tio n su c h as a
g e n e ra lly in § 205.2(b), is d e fin e d for
p h o to g ra p h o r s ig n a tu re c o m p a riso n .
p u rp o s e s o f § 205.15 to m e a n an a c c o u n t
S o m e c o m m e n te rs e x p re sse d c o n c e rn
e s ta b lis h e d by a g o v e rn m e n t ag en cy for
a b o u t th e s ta tu to ry p ro h ib itio n a g a in st
d is trib u tin g b e n e fits to a c o n s u m e r
th e c o m p u lso ry u se o f E FT a n d its
e le c tro n ic a lly , su c h as th ro u g h A T M s or im p lic a tio n s for EBT p ro g ra m s. S ectio n
PO S te rm in a ls , w h e th e r o r n o t th e
913 6 f th e EFTA p ro h ib its re q u irin g a
a c c o u n t is d ire c tly h e ld by th e ag ency
c o n s u m e r to e s ta b lish a n a c c o u n t at a
or a b a n k o r o th e r d e p o s ito ry in stitu tio n . p a rtic u la r in s titu tio n for re c e iv in g
F o r e x a m p le , a n “ a c c o u n t” u n d e r th is
e le c tro n ic fu n d tra n sfe rs a s a c o n d itio n
se c tio n w o u ld in c lu d e u se o f a d a ta b a se of e m p lo y m e n t o r re c e ip t o f g o v e rn m e n t
c o n ta in in g th e c o n s u m e r’s n a m e a n d
b en e fits. T h is p ro h ib itio n d o e s n o t
p re v e n t an a g e n cy from re q u irin g
re c o rd o f b e n e fit tra n sfe rs th a t is
ac c e sse d for v erific a tio n p u rp o s e s before b e n e fits to b e d e liv e re d e le c tro n ic a lly .
In EBT p ro g ra m s, a g e n c ie s d o n o t
a p a rtic u la r tra n sa c tio n is a p p ro v e d . For
re q u ire re c ip ie n ts to o p e n o r m a in ta in
p u rp o s e s o f th is se ctio n , g o v e rn m e n t
b a n k a c c o u n ts a t a p a rtic u la r in s titu tio n
b e n e fits in c lu d e c a sh b e n e fits su c h as
for th e e le c tro n ic re c e ip t o f g o v e rn m e n t
AFDC a n d SSI a n d n o n c a sh b e n e fits
b en e fits. T h is is th e c a se ev e n w h e n an
su c h as b e n e fits u n d e r th e food sta m p
ag en cy e n te rs in to an a rra n g e m e n t w ith
program ,
a sin g le fin a n c ia l in s titu tio n th a t th e n
P arag rap h (b)— Issu a n c e o f A cc ess
se rv e s as th e a g e n c y ’s fin a n c ia l
D evices
in te rm e d ia ry . C o n se q u e n tly , th e B o ard
U n d e r § 205.5, d eb it c a rd s, P IN s, an d
b e lie v e s th a t th e p ro h ib itio n ag a in st
o th e r ac ce ss d e v ic e s m ay n o t h e iss u e d
c o m p u lso ry u se is n o t an im p e d im e n t to
e x c e p t in re s p o n s e to a c o n s u m e r’s
m a n d a to ry EBT p ro g ram s. N e v e rth e le ss,
re q u e st o r a p p lic a tio n for a d e v ic e , o r to p u rs u a n t to its a u th o rity u n d e r se c tio n
re p la c e a d e v ic e p re v io u sly a c c e p te d by 904(c) o f th e EFTA , th e B o ard h a s
th e c o n s u m e r. F in a n c ia l in s titu tio n s are d e te rm in e d th a t a g o v e rn m e n t ag en cy
p e rm itte d to iss u e u n s o lic ite d ac ce ss
w ith a m a n d a to ry EBT p ro g ra m s h o u ld
d e v ic e s in lim ite d c irc u m sta n c e s u n d e r
e n su re th a t re c ip ie n ts o f c a sh b e n e fits
§ 205.5(b). T h e g en e ral p ro h ib itio n
h av e ac ce ss to o th e r e le c tro n ic o p tio n s
a g a in st u n s o lic ite d iss u a n c e is in te n d e d (for e x a m p le , d ire c t d e p o s it o f b e n e fits
to p ro te c t a c o n s u m e r ag a in st th e
to a n e x istin g b a n k a c c o u n t o r to an
iss u a n c e o f a n ac ce ss d e v ic e th a t c o u ld
a c c o u n t e s ta b lish e d by th e re c ip ie n t for
b e u se d to ac ce ss th e c o n s u m e r’s fu n d s
th a t p u rp o se).
w ith o u t th e c o n s u m e r ’s k n o w le d g e a n d
P arag rap h (c)— A lte rn a tiv e to P e rio d ic
a p p ro v a l or w ith o u t th e c o n s u m e r’s
S tate m e n t
b ein g in fo rm e d o f th e te rm s a n d
4
/0 6 9 f
p ro v id e d p ro m p tly u p o n re q u e st. In
a d d itio n , c o m m e n te rs a s k e d for
c la rific a tio n a b o u t w h e th e r a n ag ency
c o u ld ch arg e for w ritte n a c c o u n t
h is to rie s o r o th e r d is c lo s u re s re q u ire d
b y th e reg u la tio n . T h e B o a rd b e lie v e s
th a t im p o s in g fees in s u c h in sta n c e s
w o u ld b e c o n tra ry to p u b lic p o licy .
T h e B oard h a d so lic ite d c o m m e n t on
w h e th e r m o re c o m p le x EBT sy ste m s
d e v e lo p e d in th e fu tu re (for e x a m p le ,
sy ste m s a llo w in g th ird -p a rty p ay m en ts)
m ay n e c e s sita te p e rio d ic sta te m e n ts or
o th e r d o c u m e n ta tio n , a n d w h e th e r th e
B oard s h o u ld a d d re s s th is iss u e at
p re se n t. S ev eral c o m m e n te rs
en c o u ra g e d th e B o a rd n o t to a d d re ss th e
iss u e a t th is tim e , b u t to d e la y a
d e c is io n u n til p e rfo rm a n c e u n d e r th e
fin al r u le c a n b e asse sse d . A cc o rd in g ly ,
th e B o ard h as d e fe rre d ta k in g a p o sitio n
at th is tim e.
P a rag rap h (d)— M o d ifie d R e q u ire m e n ts
P a rag rap h (d)(1)— In itia l D isc lo su re s
S ectio n 205.7 re q u ire s th a t w ritte n
d is c lo s u re s o f th e te rm s a n d c o n d itio n s
o f a n E FT se rv ic e b e g iv e n a t o r before
th e c o m m e n c e m e n t o f th e se rv ic e. T h re e
d is c lo s u re s h a v e b e e n m o d ifie d for EBT
p ro g ra m s. U n d e r p a ra g ra p h (d )(l)(i),
g o v e rn m e n t a g e n cie s m u s t d isc lo se th e
m e a n s b y w h ic h th e c o n s u m e r m ay
o b ta in a c c o u n t b a la n c e in fo rm a tio n ,
in c lu d in g th e te le p h o n e n u m b e r for th a t
p u rp o s e . T h e d is c lo s u re s w ill e x p la in
th e w ay s in w h ic h b a la n c e in fo rm a tio n
w ill b e m a d e av aila b le . (See m o d e l
d is c lo s u re form A (12) b e lo w .) U n d e r
p a ra g ra p h (d )(l)(ii), a g e n c ie s m u st
d is c lo s e th a t th e c o n s u m e r h a s th e rig h t
to re c e iv e a w ritte n a c c o u n t h isto ry ,
u p o n re q u e st, a n d m u st p ro v id e a
te le p h o n e n u m b e r for o b ta in in g th e
a c c o u n t h isto ry . T h is d is c lo s u re
s u b s titu te s for th e d is c lo s u re o f a
su m m a ry o f th e c o n s u m e r ’s rig h t to a
p e rio d ic sta te m e n t u n d e r § 205.7(a)(6) of
th e reg u la tio n . U n d e r p a ra g ra p h
(d )(l)(iii), ag e n cies m u st p ro v id e an
e rro r re s o lu tio n n o tic e su b sta n tia lly
s im ila r to m o d e l d is c lo s u re form A(13)
ra th e r th a n th e n o tic e c u rre n tly
c o n ta in e d in § 205.7(a)(10).
P arag rap h (d)(2)— A n n u a l E rro r
R e so lu tio n N o tice
S ectio n 205.8(a) o f th e re g u la tio n
re q u ire s th a t fin a n c ia l in s titu tio n s
p ro v id e a n o tic e in a d v a n c e o f c e rta in
a d v e rse c h a n g es to te rm s th a t w e re
d isc lo se d in th e in itia l d is c lo s u re s . No
m o d ific a tio n h a s b e e n m a d e for EBT
p ro g ram s. C o n se q u e n tly , a g e n c ie s w ill
h a v e to p ro v id e a n o tic e for c e rta in
c h a n g e s in te rm s, s u c h as in tra n s a c tio n
lim ita tio n s. O th e r c h a n g e s, su c h as a
d e c re a s e in th e a m o u n t o f a c o n s u m e r’s
b e n e fits, c o n tin u e to b e g o v e rn e d o n ly
b y th e a g e n c ie s’ p ro g ra m ru le s.
S e c tio n 205.8(b) o f th e re g u la tio n
re q u ire s fin a n c ia l in s titu tio n s to p ro v id e
p e rio d ic e rro r re s o lu tio n n o tic e s to
c o n s u m e rs, e ith e r a n n u a lly o r w ith e a c h
m o n th ly a c c o u n t sta te m e n t. In
s u b s titu tio n for th e s e n o tic e s , p a ra g ra p h
(d)(2) re q u ire s a g e n c ie s to p ro v id e a n
e rro r re s o lu tio n n o tic e su b s ta n tia lly
s im ila r to m o d e l d is c lo s u re fo rm A (13).
T h e n o tic e is to b e p ro v id e d a n n u a lly .
n a tio n w id e sy ste m for d e liv e rin g
g o v e rn m e n t b e n e fits e le c tro n ic a lly , it
s h o u ld b e p o ssib le for th e a g e n cies to
im p le m e n t co st-e ffe ctiv e p ro c e d u re s
th a t w ill h e lp m in im iz e th e risk o f
fra u d u le n t c la im s a n d p o te n tia l ab u s e of
EBT sy stem s.
T h e B o ard n o te s in p a rtic u la r th a t
R e g u la tio n E d o e s n o t m a n d a te an
a u to m a tic re p la c e m e n t w h e n a claim o f
lo st o r sto le n fu n d s is m a d e. In th e case
o f EBT as in th e p riv a te se cto r, th e
ag e n cy w o u ld in v e stig a te th e claim ,
c o n s id e r th e a v a ila b le e v id e n c e , an d
e x e rc ise ju d g m e n t in m a k in g a
P a ra g ra p h (d)(3)— L im ita tio n s o n
d e te rm in a tio n a b o u t w h e th e r th e
L ia b ility
tra n s fe r w a s u n a u th o riz e d o r w a s m a d e
b y th e re c ip ie n t o r b y so m e o n e to w h o m
S e c tio n 20 5 .6 o f th e re g u la tio n lim its
th e re c ip ie n t gave ac ce ss. T h e B oard
a c o n s u m e r’s lia b ility for u n a u th o riz e d
d o e s n o t u n d e re s tim a te th e d iffic u ltie s
tra n sfe rs. If th e c o n s u m e r n o tifie s th e
th a t th e s e in v e stig a tio n s m a y p o se for
a c c o u n t-h o ld in g in s titu tio n w ith in tw o
EB T p ro g ra m a g e n cies. B u t th e B oard
b u s in e s s d a y s a fte r le a rn in g o f th e loss
a lso b e lie v e s th a t p ra c tic a l w a y s ca n be
o r th e ft o f a d e b it c a rd , th e c o n s u m e r ’s
fo u n d , w ith in th e sc o p e o f R e g u la tio n E,
lia b ility is lim ite d to $5 0 . If n o tific a tio n th a t w ill e n a b le EBT a d m in is tra to rs to
is n o t m a d e u n til a fte r tw o b u s in e s s
c o n tro l p o te n tia l losses.
d ay s, lia b ility c a n rise a n o th e r $ 4 5 0 for
T h e o p e ra tio n a l p ro c e d u re s
tra n sfe rs m a d e a fte r tw o b u s in e s s d ay s,
d e v e lo p e d to m in im iz e risk w ill n e e d to
for a to ta l o f $500. If th e c o n s u m e r d o e s a d d re s s so m e a s p e c ts o f EBT th a t are
n o t n o tify th e in s titu tio n u n til m o re
d iffe re n t from th e c o m m e rc ia l se ttin g —
th a n 60 d a y s afte r a p e rio d ic sta te m e n t
s u c h as th e fact th a t p ro g ra m ag e n cies,
is se n t sh o w in g a n u n a u th o riz e d
u n lik e p riv a te s e c to r in s titu tio n s , m ay
tra n sfe r, th e c o n s u m e r’s lia b ility is
n o t b e a b le in c a se s o f s u s p e c te d frau d
u n lim ite d for u n a u th o riz e d tra n sfe rs
o r a b u s e sim p ly to te rm in a te th e ir
o c c u rrin g afte r th e 6 0 th d a y a n d before
re la tio n s h ip w ith th e re c ip ie n t. S om e o f
n o tific a tio n .
th e m e a su re s th a t fed e ra l a g e n c ie s h av e
in q u ire d a b o u t, w h ic h m a y b e
T h e B o ard b e lie v e s th a t th e EFT A
c o m p a tib le w ith th e s p e c ia l
g e n e ra lly m a n d a te s th e sa m e d eg re e o f
re q u ire m e n ts o f EBT, re la te to a s p e c ts o f
p ro te c tio n for b e n e fit r e c ip ie n ts as for
th e re la tio n s h ip th a t are n o t a d d re s s e d
th e g e n e ra l p u b lic . T h e B o ard so lic ite d
b y R e g u la tio n E. T h u s th e ir
c o m m e n t o n p o te n tia l c o s ts a s so c ia te d
w ith im p le m e n tin g th e lia b ility ru le s for im p le m e n ta tio n w o u ld n o t c o n flic t w ith
re g u la to ry re q u ire m e n ts. S o m e o f th e se
EBT p ro g ra m s a n d w h y s u c h
im p le m e n ta tio n w o u ld p re s e n t a g re a te r in c lu d e p u ttin g re c ip ie n ts o n re s tric te d
is s u a n c e sy ste m s— re q u irin g , for
b u r d e n for g o v e rn m e n t a g e n c ie s th a n
in s ta n c e , th a t th e re c ip ie n t c a ll in
th a t e x p e rie n c e d b y fin a n c ia l
a d v a n c e for a u th o riz a tio n b e fo re each
in s titu tio n s . C o m m e n te rs s u b m itte d
a c c e ss to b e n e fits, o r re s tric tin g th e sites
d a ta o n th e e x p e c te d c o st im p a c t o f
at w h ic h th e re c ip ie n t c o u ld o b ta in
R e g u la tio n E o n EBT p ro g ra m s,
b e n e fits, o r c re d itin g th e r e c ip ie n t’s
s p e c ific a lly o n c o sts re la te d to th e
b e n e fits in w e e k ly in c re m e n ts ra th e r
lim ita tio n s o n c o n s u m e r lia b ility for
th a n th e fu ll m o n th ly a m o u n ts. O r th e
u n a u th o riz e d tra n sfe rs a n d e rro r
ag e n c y c o u ld a p p o in t a re p re s e n ta tiv e
re s o lu tio n re q u ire m e n ts; as d is c u s s e d
e a rlie r, h o w e v e r, th e B o ard b e lie v e s th e p a y e e , o r p la c e th e re c ip ie n t o n a
b a c k u p p a p e r-b a se d b e n e fit p a y m e n t
d a ta a re n o t d efin itiv e . U n d e r th e fin al
ru le , th e re fo re , th e lim its o n lia b ility for sy ste m . Im p o sin g th e s e o r o th e r
lim ita tio n s m a y n o t b e d e s ira b le from
u n a u th o riz e d u se , th e e rro r re s o lu tio n
re q u ire m e n ts, a n d m o st o th e r p ro v isio n s e ith e r a n a g e n c y ’s o r th e r e c ip ie n ts ’
p e rs p e c tiv e e x c e p t in c irc u m sc rib e d
o f R e g u la tio n E w o u ld a p p ly to EBT.
situ a tio n s. B ut if fo u n d to b e costT h e B o ard re c o g n iz e s tn e c o n c e rn s
effectiv e, s u c h m e a su re s re p re s e n t som e
a b o u t th e p o te n tia l co st im p a c t o f
p o ssib le a p p ro a c h e s for d e a lin g w ith
co v erag e, e s p e c ia lly in reg a rd to
re c ip ie n ts w h o sh o w th e m s e lv e s to be
u n a u th o riz e d u s e b e c a u se o f th e
irre s p o n s ib le in th e ir u se o f th e EBT
p o te n tia l for a b u s e th ro u g h fra u d u le n t
sy stem .
cla im s. T h e B o ard b e lie v e s, h o w e v e r,
In reg a rd to re c u rrin g claim 's for th e
th a t th ro u g h th e le a d e rs h ip o f th e
re p la c e m e n t o f b en e fits, EBT ag en cies
F e d e ra l E le c tro n ic B e n efits T a sk F orce,
m a y n o t e s ta b lis h a p re s u m p tio n th at,
w h ic h h a s th e g oal o f d e v e lo p in g a
5
Ib t f jt
b e c a u se a re c ip ie n t h a s file d a cla im in
th e p a st, th e re c ip ie n t’s a s se rtio n o f a
s e c o n d c la im o f u n a u th o riz e d
w ith d ra w a ls c a n b e a u to m a tic a lly
reje cte d . O n th e o th e r h a n d , d e p e n d in g
o n th e c irc u m sta n c e s, it w o u ld n o t be
u n re a s o n a b le for th e ag en cy , in m a k in g
its d e te rm in a tio n a b o u t th e v a lid ity o f a
claim , to g ive w e ig h t to th e fact th a t a
p a rtic u la r re c ip ie n t w ith in a c e rta in
p e rio d o f tim e h a s p re v io u sly file d a
c la im , o r m u ltip le cla im s, o f s to le n
fu n d s. T h e B oard b e lie v e s th a t th e se are
ju st so m e o f th e a re a s in w h ic h th e
F e d e ra l EBT T ask F o rce c a n b e h e lp fu l
in se ttin g o p e ra tin g g u id e lin e s a n d
p ro c e d u re s.
R e g u la tio n E p ro v id e s th a t a
c o n s u m e r m ay b e a r u n lim ite d lia b ility
for failin g to re p o rt w ith in 60 d a y s a n y
u n a u th o riz e d tra n sfe rs th a t a p p e a r o n a
p e rio d ic sta te m e n t. B ecau se EBT
re c ip ie n ts w ill n o t rec eiv e p e rio d ic
sta te m e n ts , u n d e r th e B o a rd ’s p ro p o sa l
th e 60 d a y s w o u ld h a v e ru n from th e
tra n s m itta l o f a w ritte n a c c o u n t h isto ry
p ro v id e d u p o n th e c o n s u m e r’s re q u e st.
T h e fin al ru le d iffe rs so m e w h a t in th a t
th e 6 0 -d ay p e rio d also c a n b e trig g e re d
w h e n th e c o n s u m e r o b ta in s b a la n c e
in fo rm a tio n via a te rm in a l o r te le p h o n e
o r o n a te rm in a l re c e ip t.
P a ra g ra p h (d)(4)— E rro r R e so lu tio n
S e c tio n 205.11 o f R e g u la tio n E sets
c e rta in tim e lim its w ith in w h ic h a
c o n s u m e r m u s t file a n o tic e o f an
alleg e d erro r. U n d e r th e B o a rd ’s
p ro p o sa l for EBT, g o v e rn m e n t ag e n cies
w ere to c o m p ly w ith th e e rro r re so lu tio n
p ro c e d u re s in § 205.11 in re s p o n s e to an
o ral o r w ritte n n o tic e o f e rro r fro m th e
c o n s u m e r re c e iv e d n o la te r th a n 60 d ays
afte r th e c o n s u m e r o b ta in e d a te rm in a l
re c e ip t o r a w ritte n a c c o u n t h is to ry on
w h ic h th e alleg e d e rro r w a s reflec te d .
T h e fin al ru le d iffe rs so m e w h a t, in th a t
e rro r re s o lu tio n p ro c e d u re s c a n b e
trig g ered b y a n y in fo rm a tio n p ro v id e d
to th e c o n s u m e r u n d e r p a ra g ra p h (c).
List of Subjects in 12 CFR Part 205
C o n s u m e r p ro te c tio n , E le c tro n ic fu n d
tra n sfe rs, F e d e ra l R eserv e S y stem ,
R e p o rtin g a n d re c o rd k e e p in g
re q u ire m e n ts.
F o r th e re a so n s se t fo rth in th e
p re a m b le , th e B o ard a m e n d s 12 CFR
p a rt 205 as follo w s:
PART 205—ELECTRONIC FUND
TRANSFERS (REGULATION E)1
1. T h e a u th o rity c ita tio n for p a rt 205
is rev ise d to re a d as fo llo w s:
Authority: 15 U.S.C. 1693.
2. S ectio n 205 .1 5 is a d d e d to rea d as
follow s:
s u m m a ry o f th e c o n s u m e r ’s rig h t to
re c e iv e a w ritte n a c c o u n t h is to ry u p o n
re q u e st, iir s u b s titu tio n for th e p e rio d ic
(a) G o vern m en t a g e n c y su b ject to
s ta te m e n t d is c lo s u re re q u ire d by
regu lation . (1) A g o v e rn m e n t ag en cy is
§ 205.7(a)(6), a n d a te le p h o n e n u m b e r
d e e m e d to b e a fin a n c ia l in s titu tio n for
th a t c a n b e u se d to re q u e s t an a c c o u n t
p u rp o s e s o f th e ac t a n d re g u la tio n if
d ire c tly o r in d ire c tly it iss u e s an ac ce ss h isto ry . T h is d is c lo s u re m a y be m a d e by
p ro v id in g a n o tic e s u b s ta n tia lly s im ila r
d e v ic e to a c o n s u m e r for u s e in
in itia tin g a n e le c tro n ic fu n d tra n sfe r o f to th e n o tic e c o n ta in e d in se c tio n A(12)
o f a p p e n d ix A o f th is p a rt.
g o v e rn m e n t b e n e fits from an ac c o u n t.
(iii)
E rror reso lu tio n n o tice. A n o tic e
T h e ag e n cy s h a ll c o m p ly w ith all
c o n c e rn in g e rro r re s o lu tio n th a t is
a p p lic a b le re q u ire m e n ts o f th e act a n d
s u b s ta n tia lly s im ila r to th e n o tic e
re g u la tio n , e x c e p t as p ro v id e d in th is
c o n ta in e d in se c tio n A (13) o f a p p e n d ix
se c tio n .
A o f th is p a rt, in s u b s titu tio n fo r th e
(2) F o r p u rp o s e s o f th is se c tio n , th e
n o tic e re q u ire d b y § 205.7(a)(10).
te rm a c c o u n t m e a n s an a c c o u n t
(2) A n n u a l error reso lu tio n n o tice.
e s ta b lis h e d by a g o v e rn m e n t a g e n cy for
T h e ag e n c y s h a ll p ro v id e a n a n n u a l
d is trib u tin g g o v e rn m e n t b e n e fits to a
n o tic e c o n c e rn in g e rro r re s o lu tio n th a t
c o n s u m e r e le c tro n ic a lly , s u c h as
is s u b s ta n tia lly s im ila r to th e n o tic e
th ro u g h a u to m a te d te lle r m a c h in e s or
c o n ta in e d in se c tio n A (13) o f a p p e n d ix
p o in t-o f-sa le te rm in a ls .
A o f th is p a rt, in s u b s titu tio n for th e
(b) Issu a n ce o f a c c e ss d e v ic e s. F or
n o tic e re q u ire d b y § 205.8(b).
p u rp o s e s o f th is se c tio n , a c o n s u m e r is
(3) L im ita tio n s on lia b ility . F o r
d e e m e d to re q u e st a n ac c e ss d e v ic e
p u rp o s e s of § 205.6(b) (2) a n d (3), in
w h e n th e c o n s u m e r a p p lie s for
reg a rd to a c o n s u m e r ’s re p o rtin g w ith in
g o v e rn m e n t b e n e fits th a t th e ag en cy
60 d a y s a n y u n a u th o riz e d tra n s fe r th a t
d is b u rs e s o r w ifi d is b u rs e b y m e a n s o f
a p p e a rs o n a p e rio d ic s ta te m e n t, th e 60a n e le c tro n ic fu n d tra n sfe r. T h e ag ency
d ay p e rio d s h a ll b e g in w ith th e
sh a ll v erify th e id e n tity o f th e c o n s u m e r
tra n s m itta l o f a w ritte n a c c o u n t h isto ry
re c e iv in g th e d e v ic e b y re a so n a b le
o r o th e r a c c o u n t in fo rm a tio n p ro v id e d
m e a n s b efo re th e d e v ic e is a c tiv a te d .
to th e c o n s u m e r u n d e r p a ra g ra p h (c) o f
(c) A lte rn a tiv e to p e r io d ic sta tem en t.
th is se c tio n .
A g o v e rn m e n t ag e n cy n e e d n o t fu rn is h
(4) E rror reso lu tio n . T h e ag e n cy s h a ll
th e p e rio d ic sta te m e n t re q u ire d by
c o m p ly w ith th e r e q u ire m e n ts o f
§ 205.9(b) if th e a g e n cy m a k e s av a ila b le
§ 205.11 in re s p o n s e to a n o ra l o r
to th e c o n su m e r:
w T itten n o tic e o f a n e rro r from th e
(1) T h e c o n s u m e r’s a c c o u n t b alan c e,
c o n s u m e r th a t is re c e iv e d n o la te r th a n
th ro u g h a re a d ily a v a ila b le te le p h o n e
60 d a y s a fte r th e c o n s u m e r o b ta in s th e
lin e a n d a t a te rm in a l (w h ic h m ay
w ritte n a c c o u n t h is to ry o r o th e r a c c o u n t
in c lu d e p ro v id in g b a la n c e in fo rm a tio n
in fo rm a tio n , u n d e r p a ra g ra p h (c) o f th is
at a b a la n c e -in q u iry te rm in a l o r
se c tio n , in w h ic h th e e rro r is first
p ro v id in g it, ro u tin e ly o r u p o n req u e st,
re fle c te d .
o n a te rm in a l re c e ip t at th e tim e o f an
3.
A p p e n d ix A to p a rt 205 is re v ise d
e le c tro n ic fu n d tran sfe r); a n d
by a d d in g se c tio n s A (12) a n d A (13) to
(2) A w ritte n h isto ry o f th e
re a d as fo llo w s:
c o n s u m e r’s a c c o u n t tra n s a c tio n s for at
Appendix A to Part 205—Model
le ast 60 d a y s p re c e d in g th e d a te of a
Disclosure Clauses
re q u e st b y th e c o n s u m e r. T h e a c c o u n t
*
*
*
*
*
h isto ry s h a ll b e p ro v id e d p ro m p tly in
re s p o n s e to a n o ra l o r w ritte n req u e st.
Section A(12)—Disclosure by Government
(d) M o d ifie d req u irem en ts. A
Agencies of Information About Obtaining
Account Balances and Account Histories
g o v e rn m e n t ag en cy th a t d o e s n o t
fu rn is h p e rio d ic sta te m e n ts , p u rs u a n t to (§ 205.15(d)(1) (i) and (ii))
p a ra g ra p h (c) o f th is se c tio n , s h a ll
You may obtain information about the
c o m p ly w ith th e fo llo w in g
amount of benefits you have remaining by
calling (telephone number). That information
re q u ire m e n ts:
is also available (on the receipt you get when
(1) In itia l d isclo su res. T h e ag en cy
you make a transfer with your card at (an
sh a ll m o d ify th e d is c lo s u re s u n d e r
ATM)(a POS terminal)Uwhen you make a
§ 205.7(a) b y p ro v id in g :
(i) A c c o u n t b a la n c e in fo rm a tio n . T h e balance inquiry at an ATM)(when you make
a balance inquiry at specified locations].
m e a n s b y w h ic h th e c o n s u m e r m ay
You also have the right to receive a written
o b ta in in fo rm a tio n c o n c e rn in g th e
a c c o u n t b a la n c e , in c lu d in g a te le p h o n e summary of transactions for the 60 days
preceding your request by calling (telephone
n u m b e r. T h is d is c lo s u re m a y b e m a d e
number). (Optional: Or you may request the
b y p ro v id in g a n o tic e s u b s ta n tia lly
summary by contacting your caseworker.)
s im ila r to th e n o tic e c o n ta in e d in
se c tio n A (12) o f a p p e n d ix A o f th is p art. Section A(13)—Disclosure of Error
(ii) W ritten a c c o u n t h isto ry. A
Resolution Procedures for Government
§ 205.15 Electronic fund transfer of
government benefits.
■
/ o m
Agencies That Do Not Provide Periodic
Statements (§ 205.15(d)(l)(iii) and (d)(2))
you send us your complaint or question in
writing within 10 business days. We will
In Case of Errors or Questions About Your generally complete our investigation within
10 business days and correct any error
Electronic Transfers Telephone us at
promptly. In some cases, an investigation
(telephone number] or Write us at (address]
as soon as you can, if you think an error has may take longer, but you will have the use
of the funds in question after the 10 business
occurred in your (EBT](agency’s name for
program] account. We must hear from you no days. If we ask you to put your complaint or
later than 60 days after you learn of the error. question in writing and we do not receive it
within 10 business days, we may not credit
You will need to tell us:
your account during the investigation.
• Your name and (case] (file] number.
For errors involving transactions at point• Why you believe there is an error, and
of-sale terminals in food stores, the periods
the dollar amount involved.
referred to above are 20 business days instead
• Approximately when the error took
of 10 business days.
place.
If we decide that there was no error, we
If you tell us orally, we may require that
0
o
7
will send you a written explanation within
three business days after we finish our
investigation. You may ask for copies of the
documents that we used in our investigation.
If you need more information about our
error resolution procedures, call us at
(telephone number][the telephone number
shown above].
By order of the Board of Governors of the
Federal Reserve System, February 24,1994.
W illiam W. Wiles,
Secretary o f the Board.
(FR Doc. 94-4681 Filed 3-2-94; 12:38 pm]
BILUNG CODE 62tO -C 1-f>
@FedFRASER