Basic Reg E
What Act does Reg E implement?
Electronic Funds Transfer Act
Name 3 electronic type transactions that are NOT covered by Reg E.
Check guarantee or authorization
Domestic wire transfers
Telephone initiated transfers
Preauthorized transfer to or from an account at a small financial institution (is one that has $100 million or less in total assets
Security or commodity transfer meeting certain criteria (Regulated by SEC or CFTC, Purchased or sold through a broker-dealer regulated by the SEC or CFTC, held in a book-entry form by a FRB or federal agency)
Automatic transfer by agreement between the FI and the consumer are exempt include transfers (between a consumer's accounts with the same FI, Into a consumer's account and an accont of the FI, from a consumer's account to an account of the same FI, from a consumer's account to another account of the same family at the same institution)
The consumer gave their card or access device to another person (without being robbed or defrauded) and hasn't told the FI that this other person's transfers are no longer authorized.
Is the EFT authorized, unauthorized, or preauthorized.
Authorized.
What is overdraft protection?
OD protection allows a transaction to go through even when its associated account has insufficent funds.
What is an access device and when can it be issued?
An access device - like a debit or ATM card - can only be issued if a consumer requests the device or if the consumer is getting a replacement device via a renewal for for modification purposes (e.g. a new card is being sent because it now has a chip).
Name 2 Common Examples of Reg E Transactions
ATM - Deposit and withdraw funds
Debit Card - to make a purchase
Preauthorize - payments for a monthly bill
Pay bills by phone
Betty joins a new high-end health club. She pays cash for her initial visit, but authorizes the club to automatically deduct her $150 monthly dues from her account. Is ths EFT covered or not covered by the FI?
Covered. All direct withdrawals and direct deposits made from a consumer's account by outside parties are covered by Reg E.
The EFT debits or credits a consumer's account without the account owner's permission, and the account owner receives no benefit from the transfer.
Is the EFT authorized, unauthorized, or preauthorized?
Unauthorized.
What does an OD service under Reg E mean?
An overdraft service under Reg E means a service where an FI can charge a fee on a consumer's account for paying a transaction when the consumer does not have sufficient funds.
Andy gives his son Jerry his debit card and PIN and sends him to the mall for school shopping. As soon as Jerry leaves, Andy has second thoughts about giving his son the debit card. So, he calls the FI and tells them not to honor any transfers on the card. The next morning, Jerry is driving around with a wallet full of cash that he has withdrawn from his father's account. Who is liable for the withdrawals?
In this case, the FI is required to accept liability for the withdrawal and credit Andy's account with the amount of the transfer. Consumers have a right to stop EFTs before they occur. FIs are held liable if they fail to take the necessary steps to protect the consumer.
Name three factors that contribute to unauthorized Electronic Fund Transfers (EFTs)
Stolen debit or access cards
PINs written on debit or access cards
PINs written on notes in wallets
Electronic transaction or posting errors
FIs failing to take action when notified of stolen cards
Barney has been notified by his life insurance company that his quarterly premium is past due. This was to have been the first payment made to the life insurance company since he authorized a direct pay agreement with his FI. No ATM, debit, or payroll card is involved. Is this EFT covered or not covered by the FI?
Covered. Direct pay agreements, such as Barney's are considered EFTs, even though they do not involve an ATM, debit, or payroll card.
What type of EFT is it when consumers pays regular, recurring bills - such as insurance premiums and utility payments - automatically without writing a check or presenting a payment card?
Authorized, unauthorized, or preauthorized?
Preauthorized. A preauthorized transfer occurs when an institution allows a consumer to autorize in advance, a transfer offunds to recur at substantially regualr intervals.
For MCU - what does the Reg E Overdraft Regulation apply for od fees?
The Reg E OD regulation applies to OD fees for ATM and one-time debit/POS transactions ony.
NOT for checks and ACH transactions which will continue to be paid or not paid, based on the member's meeting the Courtesy Pay criteria.
A consumer's liability for unauthorized transfers involving an accepted access device can be limted to this amount if they report the loss within two business days.
The amount is $50.
Jenna uses a debit card to pay for milk and eggs at a neighborhood convenience store. What type of EFT is that transaction?
Point of Sale
Fred has left the country for deployment with the armed forces. He arranges for weekly deposits to be made to his wife's checking account from his savings account. Both of their accounts are at the same institution. Is this EFT covered or not covered by the FI?
Not covered. Fred's transfer are electronic but certain automatic transfers under agreement between the FI and the consumer - such as transfers to a family member's account within the same FI - are not subject to Reg E.
Karen gave her boyfriend Ryan her debit card and PIN to buy groceries and withdraw $100 in cash. Instead, Ryan spent $95 at the comic book store near Karen's apartment.
Is the EFT preauthorized, authorized, or unauthorized?
Authorized. This transfer is authorized because Karen gave the debit card and PIN to Ryan, and she did not tell her bank that Ryan was no longer authorized.
If members opt in, will we ALWAYS pay their ATM and debit card transactions?
No, just because someone opts in doesn't mean we HAVE TO allow the transaction that will OD their account. The qualifying criteria used by Courtesy Pay will still be in effect.
The term referring to a unique number used in combination with an access device, such as a debit card, to verify a consumer's identity for EFTs.
What is a Personal Identification Number (PIN).
Kristine writes a check that is run electronically and returned to him at an electronics store. Is that an electronic funds transfer (EFT)?
Yes.
Wilma hurriedly pays for her groeries with her last check. She completes the check incorrectly. The cashier informs her that they can use the information from the spoiled check to debit ther accout electronically. Wilma agrees and gives her the check from which she can obtain the necessary information. Is this EFT covered or not covered by the FI?
Covered. Elcectronic check conversions are cover by Reg E.
What is an acceptable way for the member to notify the CU of an error?
Phone
In person
All of the above
All of the above.
For MCU - If member Opts Out, will a debit card transaction be able to overdraw them?
Yes, accounts tht opt out could still become overdrawn due to the following scenarios -
x the transaction is approved in an offline mode
x the transaction posts for more than the amount authorized, such as a restaurant charge with a tip not included
xWithdrawals are made from the account after the approval hold comes off, but before the transaction is posted
(account can od, but the member cannot be charged an OD fee unless they have opted IN to Reg E ods).
What are three requirements for a receipt?
Amount
Fee
Date
Type of transfer
Type of account/or access device (last 4)
Terminal location (e.g. city and state, terminal id)
Name of any third party
Exemption of $15 or less