The Electronic Fund Transfer Act (EFTA) (15 U.S.C. 2011, the CFPB restated the Board’s implementing
1693 et seq.) of 1978 is intended to protect Regulation E at 12 CFR Part 1005 (76 Fed. Reg.
individual consumers engaging in electronic fund 81020) (December 27, 2011). In February 2012, the
transfers (EFTs) and remittance transfers. These CFPB added subpart B (Requirements for Remit-
services include tance Transfers) to Regulation E to implement the
• transfers through automated teller machines new remittance protections set forth in the Dodd−
(ATMs); Frank Act (77 Fed. Reg. 6194) (February 7, 2012),
effective on February 7, 2013.4 In July 2012, the
• point-of-sale (POS) terminals; CFPB amended the February 2012 rule to effect
• automated clearinghouse (ACH) systems; certain technical corrections primarily related to
formatting of the model forms in the rule. In August
• telephone bill-payment plans in which periodic or 2012, the CFPB again amended the February 2012
recurring transfers are contemplated; rule to modify the definition of ‘‘remittance transfer
• remote banking programs; and provider.’’ The August amendment also revised
several aspects of the rule regarding remittance
• remittance transfers.
transfers that are scheduled before the date of
The EFTA is implemented through Regulation E, transfer, including preauthorized remittance trans-
which includes official interpretations. fers (77 Fed. Reg. 50244) (August 20, 2012). In
In 2009, the Federal Reserve Board (Board) January 2013, the rule’s February 21, 2013,
amended Regulation E to prohibit institutions from effective date was delayed pending finalization of a
charging overdraft fees for ATM and one-time debit proposal to address three specific issues in the
card transactions, unless the consumer opts in or rule. In May 2013, the CFPB finalized the proposal,
affirmatively consents to the institution’s overdraft which modified the disclosure requirements for
services (74 Fed. Reg. 59033 (Nov. 17, 2009) and certain fees and foreign taxes, revised some
75 Fed. Reg. 31665 (June 4, 2010)). The Board aspects of the error resolution requirements, and
also amended Regulation E to restrict fees and established a new effective date of October 28,
expiration dates on gift cards and to require that 2013 (78 Fed. Reg. 30661) (May 22, 2013).
gift card terms be stated clearly (75 Fed. Reg. Information in this narrative is provided for
16580 (April 1, 2010)).1 subpart A and subpart B in the order listed below.
The Dodd−Frank Wall Street Reform and Con- Note that the order, particularly as it relates to
sumer Protection Act (Dodd−Frank Act) transferred subpart A, does not strictly follow the order of the
rulemaking authority under the EFTA from the regulatory text. For ease of use by the examiner,
Board of Governors of the Federal Reserve System however, the examination procedures and check-
to the Consumer Financial Protection Bureau list follow the order of the regulation.
(CFPB).2, 3 The Dodd−Frank Act also amended the
EFTA and created a new system of consumer Subpart A
protections for remittance transfers sent by con-
sumers in the United States to individuals and I. Scope and Key Definitions (12 CFR 1005.2,
businesses in foreign countries. In December 1005.3, 1005.17, 1005.20)
II. Disclosures (12 CFR 1005.4, 1005.7, 1005.8,
1. The Board also implemented a legislative extension of time
1005.16, 1005.17, 1005.20)
for complying with the gift card disclosure requirements until III. Electronic Transaction Overdraft Service Opt
January 31, 2011. 75 Fed. Reg. 50683 (August 17, 2010).
2. Dodd−Frank Act §§1002(12)(C), 1024(b)-(c), and 1025(b)- In (12 CFR 1005.17)
(c); 12 U.S.C. §§5481(12)(C), 5514(b)-(c), and 5515(b)-(c).
Section 1029 of the Dodd−Frank Act generally excludes from this IV. Issuance of Access Devices (12 CFR 1005.5,
transfer of authority, subject to certain exceptions, any rulemaking 1005.18)
authority over a motor vehicle dealer that is predominantly
engaged in the sale and servicing of motor vehicles, the leasing V. Consumer Liability and Error Resolution (12
and servicing of motor vehicles, or both. The transfer of authority CFR 1005.6, 1005.11)
also did not include section 920 of EFTA, which concerns debit
card interchange fees charged to merchants. Section 920 of EFTA VI. Receipts and Periodic Statements (12 CFR
is implemented by Board regulations at 12 CFR Part 235. Section
920 is not addressed here or in the accompanying examination 1005.9, 1005.18)
procedures and checklist.
3. The agency responsible for supervising and enforcing VII. Gift Cards (12 CFR 1005.20)
compliance with Regulation E will depend on the person subject
to the EFTA (e.g., for financial institutions, jurisdiction will depend 4. The amendment designated 12 CFR 1005.1 through 1005.20
on the size and charter of the institution). as subpart A.
VIII. Other Requirements (12 CFR 1005.10, Accepted access device is an access device
1005.14, 1005.15) that a consumer
IX. Relation to Other Laws (12 CFR 1005.12) • requests and receives, signs, or uses (or autho-
rizes another to use) to transfer money between
accounts or to obtain money, property, or
Subpart B services
Requirements for remittance transfers • requests to be validated even if it was issued on
an unsolicited basis
X. Remittance Transfer Definitions (12 CFR
1005.30) • receives as a renewal or substitute for an
accepted access device from either the financial
XI. Disclosures (12 CFR 1005.31)
institution that initially issued the device or a
XII. Estimates (12 CFR 1005.32) successor (12 CFR 1005.2(a)(2))
XIII. Procedures for Resolving Errors (12 CFR Account includes the following:
1005.33)
• checking, savings, or other consumer asset
XIV. Procedures for Cancellation and Refund of accounts held by a financial institution (directly or
Remittance Transfers (12 CFR 1005.34) indirectly), including certain club accounts, es-
XV. Acts of Agents (12 CFR 1005.35) tablished primarily for personal, family, or house-
hold purposes
XVI. Transfers Scheduled Before the Date of
Transfer (12 CFR 1005.36) • payroll card account, established through an
employer (directly or indirectly), to which EFTs of
the consumer’s wages, salary, or other employee
Sections Applicable to Both compensation (such as commissions), are made
Subpart A and Subpart B on a recurring basis. The payroll card account
can be operated or managed by the employer, a
XVII. Preemption third-party processor, a depository institution, or
XVIII. Administrative Enforcement and Record Re- any other person. All transactions involving the
tention (12 CFR 1005.13) transfer of funds to or from a payroll card account
are covered by the regulation (12 CFR 1005.2
XIX. Miscellaneous (EFTA provisions not reflected (b)(2) and Comment 2(b)-2).
in Regulation E)
An account does not include:
• an account held by a financial institution under a
SUBPART A bona fide trust agreement
I. Scope • an occasional or incidental credit balance in a
credit plan
Key Definitions—12 CFR 1005.2 • profit-sharing and pension accounts established
Access device is a card, code, or other means of under a bona fide trust agreement
access to a consumer’s account or a combination • escrow accounts such as for payments of real
of these used by the consumer to initiate EFTs. estate taxes, insurance premiums, or completion
Access devices include debit cards, personal of repairs
identification numbers (PINs), telephone transfer
• accounts for purchasing U.S. savings bonds (12
and telephone bill payment codes, and other
CFR 1005.2(b)(3) and Comment 2(b)-3)
means to initiate an EFT to or from a consumer
account (12 CFR 1005.2(a)(1) and 12 CFR Part A payroll card account does not include a card
1005, Supp. I, Comment 2(a)-1). used
Access devices do not include either of the • solely to disburse incentive-based payments
following: (other than commissions when they represent the
primary means through which a consumer is
• magnetic tape or other devices used internally by
paid) that are unlikely to be a consumer’s primary
a financial institution to initiate electronic trans-
source of salary or other compensation;
fers
• solely to make disbursements unrelated to com-
• a check or draft used to capture the MICR
pensation, such as petty cash reimbursements or
(Magnetic Ink Character Recognition) encoding
travel per diem payments; or
or routing, account, and serial numbers to initiate
a one-time ACH debit (Comments 2(a)-1 and • in isolated instances to which an employer
2(a)-2) typically does not make recurring payments
a brochure, that describes a service allowing a requirements do not apply to fees imposed by the
consumer to initiate transfers by telephone con- account-holding financial institution for returning
stitutes a written plan; or the check or EFT or paying the amount of an
• preauthorized transfers to or from accounts at overdraft (Comment 3(b)(3)-1).
financial institutions with assets of less than $100
II. Disclosures
million on the preceding December 31. Such
preauthorized transfers, however, remain subject Disclosures Generally—12 CFR 1005.4
to the compulsory use prohibition under Section
913 of the EFTA and 12 CFR 1005.10(e), as well Required disclosures must be clear and readily
as the civil and criminal liability provisions of understandable, in writing, and in a form the
Sections 915 and 916 of the EFTA. A small consumer may keep. The required disclosures may
financial institution that provides EFT services be provided to the consumer in electronic form, if
besides preauthorized transfers must comply the consumer affirmatively consents after receiving
with the requirements of subpart A for those other a notice that complies with the E-Sign Act (12 CFR
services (Comment 3(c)(7)-1). For example, a 1005.4(a)(1)).
small financial institution that offers ATM services Disclosures may be made in a language other
must comply with subpart A in regard to the than English, if the disclosures are made available
issuance of debit cards, terminal receipts, peri- in English upon the consumer’s request (12 CFR
odic statements, and other requirements. 1005.4(a)(2)).
A financial institution has the option of disclosing
Electronic Check Conversion (ECK) and additional information and combining disclosures
Collection of Returned-Item Fees required by other laws (for example, Truth in
Subpart A covers electronic check conversion Lending disclosures) with Regulation E disclosures
(ECK) transactions. In an ECK transaction, a (12 CFR 1005.4(b)).
consumer provides a check to a payee and A financial institution may combine required
information from the check is used to initiate a disclosures into a single statement if a consumer
one-time EFT from the consumer’s account. Al- holds two or more accounts at the financial
though transfers originated by checks are not institution. Thus, a single periodic statement or
covered by subpart A, an ECK is treated as an EFT error resolution notice is sufficient for multiple
and not a payment originated by check. Payees accounts. In addition, it is only necessary for a
must obtain the consumer’s authorization for each financial institution to provide one set of disclosures
ECK transaction. A consumer authorizes a one- for a joint account (12 CFR 1005.4(c)(l) and (2)).
time EFT for an ECK transaction when the con-
Two or more financial institutions that jointly
sumer receives notice that the transaction will or
provide EFT services may contract among them-
may be processed as an EFT and goes forward selves to meet the requirements that the regulation
with the underlying transaction5 (12 CFR 1005.3(b) imposes on any or all of them. When making initial
(2)(i) and (ii) and Comment 3(b)(2)-3). disclosures (see 12 CFR 1005.7) and disclosures
If a payee re-presents electronically a check of a change in terms or an error resolution notice
that has been returned unpaid, the transaction is (see 12 CFR 1005.8), a financial institution in a
not an EFT, and subpart A does not apply shared system only needs to make disclosures that
because the transaction originated by check are within its knowledge and apply to its relation-
(Comment 3(c)(1)-1). ship with the consumer for whom it holds an
account (12 CFR 1005.4(d)).
However, subpart A applies to a fee collected
electronically from a consumer’s account for a
check or EFT returned unpaid. A consumer autho- Initial Disclosure of Terms and
rizes a one-time EFT from the consumer’s account Conditions—12 CFR 1005.7
to pay the fee for the returned item or transfer if the
person collecting the fee provides notice to the Financial institutions must provide initial disclo-
consumer stating the amount of the fee and that the sures of the terms and conditions of EFT services
person may electronically collect the fee, and the before the first EFT is made or at the time the
consumer goes forward with the underlying trans- consumer contracts for an EFT service. They must
action6 (12 CFR 1005.3(b)(3)). These authorization give a summary of various consumer rights under
the regulation, including the consumer’s liability for
5. For POS transactions, the notice must be posted in a unauthorized EFTs, the types of EFTs the consumer
prominent and conspicuous location and a copy of the notice
must be provided to the consumer at the time of the transaction must either be provided to the consumer at the time of the
(12 CFR 1005.3(b)(2)(i) and (ii) and Comment 3(b)(2)-3). transaction or mailed to the consumer’s address as soon as
6. For POS transactions, the notice must be posted in a reasonably practicable after the person initiates the EFT to collect
prominent and conspicuous location and a copy of the notice the fee (12 CFR 1005.3(b)(3)).
may make, limits on the frequency or dollar amount, Addition of EFT services. A financial institution
fees charged by the financial institution, and the must make disclosures for any new EFT service
error-resolution procedures. Appendix A to Part added to a consumer’s account if the terms and
1005 provides model clauses that financial institu- conditions are different from those described in the
tions may use to provide the disclosures. initial disclosures. ECK transactions may be a new
type of transfer requiring new disclosures (See
Timing of disclosures. Financial institutions must
Appendix A-2 and Comment 7(c)-1).
make the required disclosures at the time a
consumer contracts for an electronic fund transfer Content of disclosures. 12 CFR 1005.7(b) re-
service or before the first electronic fund transfer is quires a financial institution to provide the following
made involving the consumer’s account (12 CFR disclosures as they apply:
1005.7(a)).
• Liability of consumers for unauthorized electronic
Disclosures given by a financial institution earlier fund transfers. The financial institution must
than the regulation requires (for example, when the include a summary of the consumer’s liability
consumer opens a checking account) need not be (under 12 CFR 1005.6, state law, or other
repeated when the consumer later authorizes an applicable law or agreement) for unauthorized
electronic check conversion or agrees with a third transfers (12 CFR 1005.7(b)(1)). A financial
party to initiate preauthorized transfers to or from institution does not need to provide the liability
the consumer’s account, unless the terms and disclosures if it imposes no liability. If it later
conditions differ from the previously disclosed decides to impose liability, it must first provide
term. This interpretation also applies to any notice the disclosures (Comment 7(b)(1)-1). The finan-
provided about one-time EFTs from a consumer’s cial institution can choose to include advice on
account initiated using information from the con- promptly reporting unauthorized transfers or the
sumer’s check. On the other hand, if an agreement loss or theft of the access device (Comment
for EFT services to be provided by an account- 7(b)(1)-3).
holding financial institution is directly between the
• Telephone number and address. A financial
consumer and the account-holding financial insti-
institution must provide a specific telephone
tution, disclosures must be given in close proximity
number and address, on or with the disclosure
to the event requiring disclosure, for example,
statement, for reporting a lost or stolen access
when the consumer contracts for a new service
device or a possible unauthorized transfer (Com-
(Comment 7(a)-1).
ment 7(b)(2)-2). Except for the telephone number
Where a consumer authorizes a third party to and address for reporting a lost or stolen access
debit or credit the consumer’s account, an account- device or a possible unauthorized transfer, the
holding financial institution that has not received disclosure may insert a reference to a telephone
advance notice of the transfer or transfers must number that is readily available to the consumer,
provide the required disclosures as soon as such as ‘‘Call your branch office. The number is
reasonably possible after the first debit or credit is shown on your periodic statement’’ (Comment
made, unless the financial institution has previously 7(b)(2)-2).
given the disclosures (Comment 7(a)-2).
• Business days. The financial institution’s busi-
If a consumer opens a new account permitting ness days (12 CFR 1005.7(b)(3)).
EFTs at a financial institution, and the consumer
• Types of transfers; limitations on frequency or
has already received subpart A disclosures for
dollar amount. Limitations on the frequency and
another account at that financial institution, the
dollar amount of transfers generally must be
financial institution need only disclose terms and
disclosed in detail (12 CFR 1005.7(b)(4)). If the
conditions that differ from those previously given
confidentiality of certain details is essential to the
(Comment 7(a)-3).
security of an account or system, these details
If a financial institution joins an interchange or may be withheld (but the fact that limitations exist
shared network system (which provides access to must still be disclosed).7 A limitation on account
terminals operated by other financial institutions), activity that restricts the consumer’s ability to
disclosures are required for additional EFT services make EFTs must be disclosed even if the
not previously available to consumers if the terms restriction also applies to transfers made by
and conditions differ from those previously dis-
closed (Comment 7(a)-4).
A financial institution may provide disclosures 7. For example, if a financial institution limits cash ATM
covering all EFT services that it offers, even if some withdrawals to $100 per day, the financial institution may disclose
that daily withdrawal limitations apply and need not disclose that
consumers have not arranged to use all services the limitations may not always be in force (such as during periods
(Comment 7(a)-5). when its ATMs are off-line) (Comment 7(b)(4)-1).
non-electronic means.8 Financial institutions are parties, not just information concerning those
not required to list preauthorized transfers among EFTs. Third parties include other subsidiaries of
the types of transfers that a consumer can make the same holding company (Comment 7(b)(9)-1).
(Comment 7(b)(4)-3). Financial institutions must
• Error resolution. The error-resolution notice must
disclose the fact that one-time EFTs initiated
be substantially similar to Model Form A-3 in
using information from a consumer’s check are
Appendix A of Part 1005. A financial institution
among the types of transfers that a consumer can
may use different wording so long as the
make (See Appendix A-2 and Comment 7(b)(4)-
substance of the notice remains the same, may
4).
delete inapplicable provisions (for example, the
• Fees. A financial institution must disclose all fees requirement for written confirmation of an oral
for EFTs or for the right to make EFTs (12 CFR notification), and may substitute substantive state
1005.7(b)(5)). Other fees, for example, minimum- law requirements affording greater consumer
balance fees, stop-payment fees, account over- protection than Regulation E (Comment 7(b)(10)-
drafts, or ATM inquiry fees, may, but need not, be 1). To take advantage of the longer time periods
disclosed under Regulation E (see Regulation for resolving errors under 12 CFR 1005.11(c)(3)
DD, 12 CFR Part 1030) and (Comment 7(b)(5)-1). (for new accounts as defined in Regulation CC,
A per-item fee for EFTs must be disclosed even if transfers initiated outside the United States, or
the same fee is imposed on non-electronic transfers resulting from POS debit card transac-
transfers. If a per-item fee is imposed only under tions), a financial institution must have disclosed
certain conditions, such as when the transactions these longer time periods. Similarly, a financial
in the cycle exceed a certain number, those institution relying on the exception from provi-
conditions must be disclosed. Itemization of the sional crediting in 12 CFR 1005.11(c)(2) for
various fees may be on the disclosure statement accounts relating to extensions of credit by
or on an accompanying document referenced in securities brokers and dealers (Regulation T, 12
the statement (Comment 7(b)(5)-2). CFR Part 220) must disclose accordingly (Com-
A financial institution must disclose that net- ment 7(b)(10)-2).
works used to complete the EFT as well as an • ATM fees. A notice that a fee may be imposed by
ATM operator, may charge a fee for an EFT or for an automated teller machine operator as defined
balance inquiries (12 CFR 1005.7(b)(11)). in §1005.16(a), when the consumer initiates an
• Documentation. A summary of the consumer’s electronic fund transfer or makes a balance
right to receipts and periodic statements, as inquiry, and by any network used to complete the
provided in 12 CFR 1005.9, and notices regard- transaction.
ing preauthorized transfers as provided in 12
CFR 1005.10(a) and 1005.10(d) (12 CFR 1005.7
(b)(6)). Change in Terms; Error Resolution
• Stop payment. A summary of the consumer’s
Notice—12 CFR 1005.8
right to stop payment of a preauthorized elec- If a financial institution contemplates a change in
tronic fund transfer and the procedure for placing terms, it must mail or deliver a written or electronic
a stop-payment order, as provided in 12 CFR notice to the consumer at least 21 days before the
1005.10(c) and 12 CFR 1005.7(b)(7). effective date of any change in a term or condition
• Liability of institution. A summary of the financial required to be disclosed under 12 CFR 1005.7(b) if
institution’s liability to the consumer under Sec- the change would result in any of the following:
tion 910 of the EFTA for failure to make or to stop • increased fees or charges;
certain transfers (12 CFR 1005.7(b)(8)).
• increased liability for the consumer;
• Confidentiality. The circumstances under which,
in the ordinary course of business, the financial • fewer types of available EFTs; or
institution may provide information concerning • stricter limitations on the frequency or dollar
the consumer’s account to third parties (12 CFR amounts of transfers (12 CFR 1005.8(a)(1)).
1005.7(b)(9)). A financial institution must de-
scribe the circumstances under which any infor- If an immediate change in terms or conditions is
mation relating to an account to or from which necessary to maintain or restore the security of an
EFTs are permitted will be made available to third EFT system or account, the financial institution
does not need to give prior notice. However, if the
8. For example, Regulation D (12 CFR 1004) restricts the
change is to be permanent, the financial institution
number of payments to third parties that may be made from a must provide notice in writing of the change to the
money market deposit account; a financial institution that does not consumer on or with the next regularly scheduled
execute fund transfers in excess of those limits must disclose the
restriction as a limitation on the frequency of EFTs (Comment periodic statement or within 30 days, unless
7(b)(4)-2). disclosures would jeopardize the security of the
imposed, which must be provided on or with the unpaid. Some institutions also impose a fee for
card, code, or other device; and each day the account remains overdrawn. For
debit card overdrafts, the[a0]dollar amount of the
• a toll-free telephone number and, if one is
fee and multiple assessments can exceed the
maintained, a website, that a consumer may use
dollar amount of the overdrafts.
to obtain fee information, which must be included
on the card, code, or other device. In 2005, the agencies10 issued guidance con-
cerning the marketing, disclosure, and implemen-
Amendments to Regulation E were issued on
tation of overdraft programs. The guidance also
August 11, 2010. The amendments implemented
covers safety and soundness considerations, and
legislation that modified the effective date of certain
establishes a number of best practices financial
disclosure and card expiration requirements in the
institutions should incorporate into their overdraft
gift card provisions of the Credit Card Accountabil-
programs. The 2009 revisions to Regulation E
ity Responsibility and Disclosure Act of 2009 for
supersede portions of the guidance related to ATM
cards produced prior to April 1, 2010.
and one-time debit card overdraft transactions.
The disclosures and card expiration require- However, in addition to the revised Regulation E
ments are requirements, institutions should incorporate their
1. disclosures required to be made prior to pur- agency’s overdraft guidance into their overdraft
chase (see 12 CFR 1005.20(c)(3)); protection programs.
2. disclosures that must be stated on the certificate 12 CFR 1005.17 was added in the 2009 revision
or card regarding the fees and expiration dates to Regulation E.11 It provides consumers with a
(see 12 CFR 1005.20(d)(2), (e)(1) & (e)(3)); and choice to opt into their institution’s overdraft
protection program and be charged a fee for
3. disclosures that may be provided on or with the overdrafts for ATM and one-time debit card trans-
certificate or card (see 12 CFR 1005.20(f)). actions. It also requires disclosure of the fees and
Gift cards must comply with all other provisions terms associated with the institution’s overdraft
of the gift card rule. service. Before an institution may assess overdraft
fees, the consumer must opt in, or affirmatively
Issuers must make the following disclosures on
consent, to the overdraft service for ATM and
in-store signs, messages during customer service
one-time debit card transactions, and the con-
calls, websites, and general advertising:
sumer has an ongoing right to revoke consent.
• the funds underlying the gift card do not expire; Institutions may not require an opt in for ATM and
• consumers have the right to receive a free one-time debit transactions as a condition to the
replacement card, along with the packaging and payment of overdrafts for checks and other trans-
materials that typically accompany the gift card; actions. The account terms, conditions and fea-
and tures must be the same for consumers who opt in
and for those who do not.
• the issuer will charge dormancy, inactivity, or
service fees only if the fee is permitted by the gift Opt-in requirement for overdraft services. The
card rule. financial institution may assess a fee for paying an
ATM or one-time debit card transaction pursuant to
The issuer was required to make the disclosures an overdraft service only if it has met the following
via customer service call center and website until requirements:
January 31, 2013. See 12 CFR 1005.20(h).
• the financial institution has provided the con-
III. Electronic Transaction Overdraft sumer with a written (or, if the consumer agrees,
electronic) notice, segregated from all other
Services Opt-In—12 CFR 1005.17 information, describing the overdraft service;
In recent years overdraft protection services have • the financial institution has provided a reason-
been extended to cover overdrafts resulting from able opportunity for the consumer to affirmatively
non-check transactions, including ATM withdraw- consent (opt in) to the overdraft service for ATM
als, debit card transactions at point of sale, online
transactions, preauthorized transfers, and ACH 10. The Office of the Comptroller of the Currency, the Board of
transactions. Generally, institutions charge a flat Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, and the National Credit Union Administra-
fee each time an overdraft is paid, although some tion, collectively issued joint guidance concerning a service
institutions have a tiered fee structure and charge offered by insured depository institutions commonly referred to as
‘‘bounced-check protection’’ or ‘‘overdraft protection.’’ This credit
higher fees based on the amount of the negative service is sometimes offered on both consumer and small
balance at the end of the day or as the number of business transaction accounts as an alternative to traditional
overdrafts increases. Institutions commonly charge means of covering overdrafts. Joint Guidance on Overdraft
Protection Programs (February 18, 2005).
the same amount for paying check and ACH 11. 74 Fed. Reg. 59033, Nov. 17, 2009; 75 Fed. Reg. 31665,
overdrafts as they would if they returned the item June 4, 2010.
and one-time debit card transactions; based on the date on which the check, ACH, or
other type of transaction is paid into overdraft
• the financial institution has obtained the consum-
(Comment 17(b)-9).
er’s affirmative consent (opt in) for ATM and
one-time debit card transactions; and Contents and format of notice. The notice
describing the overdraft service must be substan-
• the financial institution has mailed or delivered
tially similar to Model Form A-9. The notice must
written (or, if the consumer agrees, electronic)
include all of the following items and may not
confirmation of the consent, including a state-
contain any other information not expressly speci-
ment informing the consumer of the right to
fied or otherwise permitted:
revoke consent. An institution complies if it
adopts reasonable procedures to ensure that it • a brief description of the overdraft service and
assesses overdraft fees only for transactions the types of transactions for which the financial
paid after mailing or delivering the confirmation to institution may charge a fee;
the consumer (12 CFR 1005.17(b)(1); Comment • the dollar amount of any fee that may be charged
17(b)-7). for an ATM or one-time debit card transaction,
Fee prohibitions. As a general rule, an institution including any daily or other overdraft fees;12
may not charge overdraft fees for paying an ATM or • the maximum number of fees that may be
one-time debit card transaction unless the con- charged per day, or, if applicable, that there is no
sumer has opted in. The fee prohibition also limit;
applies to an institution that has a policy and • an explanation of the right to affirmatively consent
practice of not paying an ATM or one-time debit to the overdraft service, including the methods by
card overdraft when it reasonably believes at the which the consumer may consent;13 and
time of the authorization request that the consumer
does not have sufficient funds available to pay the • the availability of a line of credit or a service that
transaction, although the institution does not have transfers funds from another account to cover
to comply with the notice and opt-in requirements overdrafts, if the financial institution offers those
(Comment17(b)-1(iv)). alternatives14 (12 CFR 1005.17(d)(1) through
(d)(5)).
Lack of consent does not prohibit the financial
institution from paying ATM or one-time debit card The financial institution also may (but is not
overdrafts. However, the financial institution may required to) include the following information, to the
charge a fee only if the consumer has consented to extent applicable:
the institution’s overdraft service for ATM and • disclosure of the right to opt into, or out of, the
one-time debit card transactions (Comment 17(b)- payment of overdrafts for other types of transac-
2). Conversely, the financial institution is not tions (e.g., checks, ACH transactions, or auto-
required to pay an ATM or one-time debit card matic bill payments) and a means for the
overdraft even if the consumer has consented to consumer to exercise such choices;
pay a fee (Comment 17(b)-3).
• disclosure of the financial institution’s returned
For a consumer who has not opted in, if a fee or item fee, as well as the fact that merchants may
charge is based on the amount of the outstanding charge additional fees; and
negative balance, an institution may not charge a
• disclosure of the right to revoke consent (12 CFR
fee for a negative balance that is solely attributable
1005.17(d)(6)).
to an ATM or one-time debit card transaction.
However, an institution may assess a fee if the Reasonable opportunity to consent. The financial
negative balance is attributable in whole or in part
to a check, ACH transaction or other type of 12. If the amount of the fee may vary based on the number of
transaction not subject to the prohibition on assess- times the consumer has overdrawn the account, the amount of the
ing overdraft fees (Comment 17(b)-8). overdraft, or other factors, the financial institution must disclose
the maximum fee.
For a consumer who has not opted in, the 13. Institutions may tailor the response portion of Model Form
A-9 to the methods offered. For example, a tear-off portion of
institution may not assess daily or sustained Model Form A-9 is not necessary if consumers may only opt in by
negative balance, overdraft, or similar fees for a telephone or electronically (Comment 17(d)-3).
negative balance, based solely on ATM or one-time 14. If the institution offers both a line of credit subject to
Regulation Z (12 CFR Part 1026) and a service that transfers funds
debit card transactions. However, if the negative from another account of the consumer held at the institution to
balance is attributable in part to a check, ACH cover overdrafts, the institution must state in its opt-in notice that
both alternative plans are offered. If the institution offers one, but
transaction, or other type of transaction not subject not the other, it must state in its opt-in notice the alternative plan
to the prohibition on assessing overdraft fees, the that it offers. If the institution does not offer either plan, it should
institution may charge a daily or sustained over- omit the reference to the alternative plans (Comment 17(d)-5). If
the financial institution offers additional alternatives for paying
draft or similar fee, even if the consumer has not overdrafts, it may (but is not required to) disclose those
opted in. The date the fee may be charged is alternatives (12 CFR 1005.17(d)(5)).
institution must provide a reasonable opportunity to financial institution may not condition the payment
consent. Reasonable methods of consent include of other types of overdraft transactions on the
mail, if the financial institution provides a form for consumer’s affirmative consent, and the financial
the consumer to fill out and mail; telephone, if the institution may not decline to pay other types of
financial institution provides a readily available overdraft transactions because the consumer has
telephone line that the consumer may call; elec- not affirmatively consented to the payment of ATM
tronic means, if the financial institution provides a and one-time debit card overdrafts (12 CFR
form that can be accessed and processed at its 1005.17(b)(2)). In other words, the financial institu-
website, where the consumer may click on a box to tion may not use different criteria for paying other
consent and click on a button to affirm consent; or types of overdraft transactions for consumers who
in person, if the financial institution provides a form have consented and for consumers who have not
for the consumer to complete and present at a consented (Comment 17(b)(2)-1).
branch or office (Comment 17(b)-4). The financial Same account terms, conditions, and features. In
institution may provide the opportunity to consent addition, the financial institution must provide to
and require the consumer to make a choice as a consumers who do not affirmatively consent the
step to opening an account (Comment 17(b)-5). same account terms, conditions, and features
Affirmative consent is necessary. An important (except the payment of ATM and one-time debit
feature of the opt in is that the consumer’s overdrafts) that are available to consumers who do
affirmative consent is necessary before the institu- affirmatively consent (12 CFR 1005.17(b)(3)). That
tion may charge overdraft fees for paying an ATM requirement includes, but is not limited to
or one-time debit card transaction (12 CFR 1005.17 • interest rates paid;
(b)(iii)). The consent must be separate from other
• fees assessed;
consents or acknowledgments (including a con-
sent to receive disclosures electronically). Check • the type of ATM or debit card provided to the
boxes are allowed, but the check box and the depositor;15
consumer’s signature may only apply to the • minimum balance requirements; and
consumer’s consent to opt in. Preprinted disclo-
sures about the overdraft service provided with a • online bill payment services (Comment
signature card or contract do not constitute affir- 17(b)(3)-1).
mative consent (Comment 17(b)-6). Joint accounts. Any one account holder may
Confirmation and consumer’s right to revoke. Not consent, or revoke consent, for payment of ATM or
only must the consumer affirmatively consent, but one-time debit card transactions from a joint
the institution must mail or deliver to the consumer account (12 CFR 1005.17(e)).
a written confirmation (or electronic, if the con- Continuing right to consent or revoke. A con-
sumer agrees) that the consumer has consented, sumer may consent to the payment of ATM and
along with a statement informing the consumer of one-time debit card overdrafts at any time. A
the right to revoke the consent at any time (12 CFR consumer may also revoke consent at any time.
1005.17(b)(iv) and Comment 17(b)-7). An institu- The financial institution must implement a revoca-
tion complies with the confirmation requirement if it tion as soon as reasonably practicable (12 CFR
has adopted reasonable procedures to ensure that 1005.17(f)). The financial institution need not waive
overdraft fees are assessed only on transactions overdraft fees assessed before it implements the
paid after the confirmation is mailed or delivered to consumer’s revocation (Comment 17(f)-1).
the consumer (Comment 17(b)-7)).
Duration of consent. Consent remains effective
Assessing fees. For consumers who have not until the consumer revokes it, unless the financial
opted in, institutions are prohibited from charging institution terminates the overdraft service (12 CFR
overdraft fees for paying those transactions. This 1005.17(g)). The financial institution may terminate
prohibition applies to daily or sustained overdraft, the overdraft service, for example, if the consumer
negative balance, or similar fees. However, the rule makes excessive use of the service (Comment
does not prohibit an institution from assessing 17(g)-1).
these fees if the negative balance is attributable, in
whole or part, to a check, ACH or other transaction Effective date. The overdraft services rule be-
not subject to the fee prohibition. However, if the came effective on January 19, 2010, and compli-
negative balance is attributable in part to an ATM ance became mandatory on July 1, 2010. For
transaction, for example, and in part to a check, a accounts opened on or after July 1, 2010, the
fee may be assessed based on the date when the
check is paid into overdraft, not the date of the ATM 15. For example, the financial institution may not provide a
or one-time debit transaction. PIN-only debit card to consumers who do not opt in and a debit
card with both PIN and signature-debit features to consumers who
Conditioning payment of other overdrafts. The do opt in.
financial institution must obtain consent before consumer is deemed to request an access device
charging a fee for payment of any ATM or one-time for a payroll account when the consumer chooses
debit overdraft. However, for accounts opened to receive salary or other compensation through a
before July 1, 2010, the financial institution may not payroll card account (Comment 18(a)-1).
charge a fee for paying any ATM or one-time debit
EFT added to credit card. The EFTA and
overdraft on or after August 15, 2010, unless it has
Regulation E apply when the capability to initiate
obtained consent (See 12 CFR 1005.17(c)).
EFTs is added to an accepted credit card (as
IV. Issuance of Access Devices— defined under Regulation Z). The EFTA and
Regulation E also apply to the issuance of an
12 CFR 1005.5 and 1005.18 access device that permits credit extensions under
In general, a financial institution may issue an a preexisting agreement between the consumer
access device to a consumer only in the following and a financial institution to extend credit only to
cases: cover overdrafts (or to maintain a specified mini-
mum balance). The Truth in Lending Act and
• the consumer requested it in writing or orally.16 Regulation Z govern the addition of a credit feature
• it is a renewal of, or a substitute for, an accepted to an accepted access device, and except as
access device (as defined in 12 CFR 1005.2(a)). discussed above, the issuance of a credit card that
See 12 CFR 1005.5(a). is also an access device. For information on the
relationship of Regulation E to other laws, including
Only one renewal or substitute device may
Truth in Lending, see 12 CFR 1005.12.
replace a previously issued device. A financial
institution may provide additional devices at the
time it issues the renewal or substitute access V. Consumer Liability and Error
device provided the institution complies with the Resolution
requirements for issuing unsolicited access de-
vices for the additional devices (Comments 5(a) Liability of Consumers for Unauthorized
(2)-1 and 5(b)-5). Transfers—12 CFR 1005.6
A financial institution may issue an unsolicited
A consumer may be liable for an unauthorized EFT
access device only if the access device meets all
(defined in 12 CFR 1005.2(m)) depending on when
of the following criteria. The access device is
the consumer notifies the financial institution and
• not validated—that is, it cannot be used to initiate whether an access device was used to conduct the
an EFT. transaction. Under the EFTA, there is no bright-line
• accompanied by the explanation that it is not time limit within which consumers must report
validated and how the consumer may dispose of unauthorized EFTs (71 Fed. Reg. 1638, 1653 (Jan.
it if the consumer does not wish to validate it. 10, 2006)).
– the financial institution’s business days identify each consumer of a multiple-user account
(Comment 6(a)-2).
• any access device used to affect the EFT was an
accepted access device (as defined in 12 CFR The limitations on the amount of consumer
1005.2(a)). liability for unauthorized EFTs, the time limits within
which consumers must report unauthorized EFTs,
• the financial institution has provided a means to
and the liability for failing to adhere to those time
identify the consumer to whom the access device
limits, are listed in the chart below. The financial
was issued (12 CFR 1005.6(a)).
institution may impose less consumer liability than
12 CFR 1005.6 allows, but does not require, the is provided by 12 CFR 1005.6 based on state law or
financial institution to provide a separate means to the deposit agreement (12 CFR 1005.6(b)(6)).
Knowledge of loss or theft. The fact that a • If the unauthorized use of a combined access
consumer has received a periodic statement device−credit card involves only an EFT, for
reflecting an unauthorized transaction is a factor, example, debit card purchases or cash withdraw-
but not conclusive evidence, in determining whether als at an ATM from a checking account, only the
the consumer had knowledge of a loss or theft of error resolution provisions of 12 CFR 1005.6 and
the access device (Comment 6(b)(1)-2). 1005.11 will apply.
Timing of notice. If a consumer’s delay in • If a combined access device−credit card is
notifying a financial institution was due to extenu- stolen and unauthorized transactions are made
ating circumstances, such as extended travel or by using the card as both a debit card and a
hospitalization, the time periods for notification credit card, 12 CFR 1005.6 and 1005.11 will
specified above must be extended to a reasonable apply to the unauthorized transactions in which
time (12 CFR 1005.6(b)(4); Comment 6(b)(4)-1). the card was used as a debit card, and
Regulation Z will apply to the unauthorized
Notice to the financial institution. A consumer transactions in which the card was used as a
gives notice to a financial institution about unau- credit card.
thorized use when the consumer takes reasonable
steps to provide the financial institution with the Procedures for Resolving Errors—
pertinent information, whether or not a particular 12 CFR 1005.11
employee actually receives the information (12 CFR
1005.6(b)(5)(i)). Even if the consumer is unable to This section defines the term error and describes
provide the account number or the card number, the steps the consumer must take when asserting
the notice effectively limits the consumer’s liability if an error in order to receive the protection of the
the consumer sufficiently identifies the account in EFTA and 12 CFR 1005.11, and the procedures
question, for example, by giving the name on the that a financial institution must follow to resolve an
account and the type of account (Comment alleged error under this section.
6(b)(5)-3). At the consumer’s option, notice may be An error includes any of the following:
given in person, by telephone, or in writing (12 CFR
1005.6(b)(5)(ii)). Notice in writing is considered • an unauthorized EFT
given at the time the consumer mails the notice or • an incorrect EFT to or from the consumer’s
delivers the notice for transmission by any other account
usual means to the financial institution. Notice may
• the omission from a periodic statement of an EFT
also be considered given when the financial
to or from the consumer’s account that should
institution becomes aware of circumstances lead-
have been included
ing to the reasonable belief that an unauthorized
transfer has been or may be made (12 CFR • a computational or bookkeeping error made by
1005.6(b)(5)(iii)). the financial institution relating to an EFT
Relation of error resolution to Truth in Lending. • the consumer’s receipt of an incorrect amount of
The liability and error resolution provisions in 12 money from an electronic terminal
CFR 1005.6 and 1005.11 apply to an extension of • an EFT not identified in accordance with the
credit that occurs under an agreement between the requirements of 12 CFR 1005.9 or 1005.10(a)
consumer and a financial institution to extend credit
when the consumer’s account is overdrawn, to • a consumer’s request for any documentation
maintain a specified minimum balance in the required by 12 CFR 1005.9 or 1005.10(a) or for
consumer’s account, or under an overdraft service additional information or clarification concerning
(12 CFR 1005.12(a)(1)(ii)). As provided in 12 CFR an EFT (12 CFR 1005.11(a)(1))
1005.12 and related commentary, for transactions The term error does not include:
involving access devices that also function as
• a routine inquiry about the balance in the
credit cards, the liability and error resolution
consumer’s account or a request for duplicate
provisions in 12 CFR 1005.6 and 1005.11 or
copies of documentation or other information that
Regulation Z will apply depending on the nature of
is made only for tax or other record-keeping
the transaction:
purposes (12 CFR 1005.11(a)(2)(i), (ii), and (iii))
• If the unauthorized use of a combined access
• the fact that a financial institution does not make
device−credit card solely involves an extension
a terminal receipt available for a transfer of $15 or
of credit, other than an extension of credit
less in accordance with 12 CFR 1005.9(e)
described under 12 CFR 1005.12(a)(1)(iii), and
(Comment 11(a)-6)
does not involve an EFT, for example, when the
card is used to draw cash advances directly from A financial institution must comply with the error
a credit line, only the error resolution provisions of resolution procedures in 12 CFR 1005.11 with
Regulation Z will apply. respect to any oral or written notice of error from the
consumer that institution need only review its own records if the
• the financial institution receives not later than 60 alleged error concerns a transfer to or from a third
days after sending a periodic statement or other party, and there is no agreement between the
documentation first reflecting the alleged error financial institution and the third party for the type of
EFT involved (12 CFR 1005.11(c)(4)). However, the
(see 12 CFR 1005.14 and 1005.18)
financial institution may not limit its investigation
• enables the financial institution to identify the solely to the payment instructions where other
consumer’s name and account number information within the financial institution’s records
• indicates why the consumer believes the error pertaining to a particular account may help to
exists and, to the extent possible, the type, date, resolve a consumer’s claim (Comment 11(c)(4)-5).
and amount of the error (12 CFR 1005.11(b)(1)) If, after investigating the alleged error, the
A financial institution may require a consumer to financial institution determines that an error has
give written confirmation of an error within 10 occurred, it must promptly (within one business
business days of giving oral notice. The financial day after such determination) correct the error,
institution must provide the address where confir- including the crediting of interest if applicable. The
mation must be sent (12 CFR 1005.11(b)(2)). financial institution must provide within three busi-
ness days of the completed investigation an oral or
Error resolution procedures. After receiving a written report of the correction to the consumer
notice of error, the financial institution must do all of and, as applicable, notify the consumer that the
the following:
provisional credit has been made final (12 CFR
• promptly investigate the oral or written allegation 1005.11(c)(2)(iii) and (iv)).
of error;
If the financial institution determines that no error
• complete its investigation within 10 business occurred or that an error occurred in a different
days (12 CFR 1005.11(c)(1)); manner or amount from that described by the
• report the results of its investigation within three consumer, the financial institution must mail or
business days after completing its investigation; deliver a written explanation of its findings within
three business days after concluding its investiga-
• correct the error within one business day after tion. The explanation must include a notice of the
determining that an error has occurred. consumer’s rights to request the documents upon
The financial institution may take up to 45 which the financial institution relied in making its
calendar days (12 CFR 1005.11(c)(2)) to complete determination (12 CFR 1005.11(d)).
its investigation provided it
Upon debiting a provisionally credited amount,
• provisionally credits the funds (including interest, the financial institution must notify the consumer of
where applicable) to the consumer’s account the date and amount of the debit and of the fact that
within the 10 business-day period the financial institution will honor (without charge)
• advises the consumer within two business days checks, drafts, or similar paper instruments pay-
of the provisional crediting able to third parties and preauthorized debits for
five business days after transmittal of the notice.
• gives the consumer full use of the funds during The financial institution need honor only items that it
the investigation would have paid if the provisionally credited funds
A financial institution need not provisionally had not been debited. Upon request from the
credit the account to take up to 45 calendar days to consumer, the financial institution must promptly
complete its investigation if the consumer fails to mail or deliver to the consumer copies of docu-
provide the required written confirmation of an oral ments upon which it relied in making its determina-
notice of error, or if the notice of error involves an tion (12 CFR 1005.11(d)(2)).
account subject to the margin requirements or If a notice involves an error that occurred within
other aspects of Regulation T (Securities Credit by 30 days after the first deposit to the account was
Brokers and Dealers, 12 CFR Part 220) (12 CFR made, the time periods are extended from 10 and
1005.11(c)(2)(i)(B)). 45 days, to 20 and 90 days, respectively. If the
However, where an error involves an unauthor- notice of error involves a transaction that was not
ized EFT, the financial institution must comply with initiated in a state or resulted from a point-of-sale
the requirements of the provisions relating to debit card transaction, the 45-day period is ex-
unauthorized EFTs before holding the consumer tended to 90 days (12 CFR 1005.11(c)(3)).
liable, even if the consumer does not provide a If a financial institution has fully complied with the
notice of error within the time limits in 12 CFR investigation requirements, it generally does not
1005.11(b) (Comment 11(b)(1)-7). need to reinvestigate if a consumer later reasserts
When investigating a claim of error, the financial the same error. However, it must investigate a claim
of error asserted by a consumer following receipt of the name of the party is provided by the
information provided pursuant to 12 CFR 1005.11 consumer in a manner the terminal cannot
(a)(1)(vii) and 12 CFR 1005.11(e). duplicate on the receipt, such as on a payment
stub (12 CFR 1005.9(a)(6) and Comment
9(a)(6)-1).
VI. Receipts and Periodic Statements
Receipts are not required for EFTs of $15 or less
Documentation of Transfers—12 CFR (12 CFR 1005.9(e)).
1005.9 Periodic statements. Periodic statements must
be sent for each monthly cycle in which an EFT has
Electronic terminal receipts. Receipts must be
occurred, and at least quarterly if no EFT has
made available at the time a consumer initiates an
EFT at an electronic terminal (12 CFR 1005.9(a)). occurred (12 CFR 1005.9(b)). For each EFT made
Financial institutions may provide receipts only to during the cycle, the statement must include, as
consumers who request one (Comment 9(a)-1). applicable:
The receipt must include, as applicable: • amount of the transfer—if a charge was imposed
• Amount of the transfer—a charge for making the at an electronic terminal by the owner or operator
transfer may be included in the amount, provided of the terminal, that charge may be included in
the charge is disclosed on the receipt and on a the amount
sign posted on or at the terminal. • date the transfer was posted to the account
• Date—the date the consumer initiates the trans- • type of transfer(s) and type of account(s) to or
fer. from which funds were transferred
• Type of transfer and type of account— • for each transfer (except deposits of cash, or a
descriptions such as ‘‘withdrawal from checking’’ check, draft or similar paper instrument to the
or ‘‘transfer from savings to checking’’ are consumer’s account) initiated at an electronic
appropriate. This is true even if the accounts are terminal, the terminal location as required for the
only similar in function to a checking account receipt under 12 CFR 1005.9(a)(5)
(such as a share draft or NOW account) or a
• name of any third-party payee or payor
savings account (such as a share account). If the
access device used can only access one • account number(s)
account, the type of account may be omitted • total amount of any fees and charges, other than
(Comments 9(a)(3)-1; 9(3)-2; 9(3)-4; and 9(3)-5). a finance charge as defined by Regulation Z,
• Number or code identifying the consumer’s assessed during the period for making EFTs, the
account(s) or the access device used to initiate right to make EFTs, or for account maintenance
the transfer—the number and code need not • balance in the account at the beginning and
exceed four digits or letters. close of the statement period
• Location of the terminal—The location of the • address and telephone number to be used by the
terminal where the transfer is initiated or an consumer for inquiries or notice of errors. If the
identification, such as a code or terminal number. financial institution has elected to send the
If the location is disclosed, except in limited abbreviated error notice with every periodic
circumstances where all terminals are located in statement, the address and telephone number
the same city or state, the receipt must include may appear on that document.
the city and state or foreign country and one of
the following: • if the financial institution has provided a tele-
phone number which the consumer can use to
– street address of the terminal; find out whether or not a preauthorized transfer
– generally accepted name for the location of the has taken place, that telephone number
terminal (such as an airport, shopping center,
or branch of a financial institution); or
Exceptions to the periodic statement
– name of the entity (if other than the financial requirement for certain accounts
institution providing the statement) at whose • Passbook accounts. Where a consumer’s pass-
place of business the terminal is located, such book may not be accessed by an EFT other than
as a store, and the city, state, or foreign preauthorized transfers to the account, a periodic
country (12 CFR 1005.9(a)(5)). statement need not be sent, provided that the
• Third party—Name of any third party to or from financial institution updates the consumer’s pass-
whom funds are transferred—a code may be book or provides the required information on a
used to identify the party if the code is explained separate document at the consumer’s request.
on the receipt. This requirement does not apply if To update the passbook, the amount and date of
each EFT made since the passbook was last consumer electronically accesses the account
presented must be listed (12 CFR 1005.9(c)(1)
• a written history of the account transactions
(i)). For other accounts that may be accessed
provided promptly in response to an oral or
only by preauthorized transfers to the account,
written request and covering at least 60 days
the financial institution must send a periodic
preceding the date the financial institution re-
statement at least quarterly (12 CFR 1005.9(c)(1)
ceives the consumer’s request (12 CFR 1005.18
(ii)).
(b)(1))
• Transfers between accounts. If a transfer occurs
The history of account transactions must include
between two accounts of the consumer at the
the same type of information required on periodic
same financial institution, the transfer need only
be documented for one of the two accounts (12 statements under 12 CFR 1005.9(b) (12 CFR
CFR 1005.9(c)(2)). A preauthorized transfer be- 1005.18(b)(2)).
tween two accounts of the consumer at the same Requirements to comply with Regulation E. If a
financial institution is subject to the 12 CFR financial institution provides an alternative to peri-
1005.9(c)(1) rule on preauthorized transfers and odic statements under 12 CFR 1005.18(b), it must
not the 12 CFR 1005.9(c)(2) rule on intra- comply with the following:
institutional transfers (12 CFR 1005.9(c)(3)).
• Modify the initial disclosures under 12 CFR
• Documentation for foreign-initiated transfers. If 1005.7(b) by disclosing:
an EFT is initiated outside the United States, the
financial institution need not provide a receipt or – a telephone number that the consumer may
a periodic statement reflecting the transfer if it call to obtain the account balance; the means
treats an inquiry for clarification or documentation by which the consumer can obtain an elec-
as a notice of error (12 CFR 1005.9(d)). tronic account history, such as the address of
an Internet website; and a summary of the
consumer’s right to receive a written account
Alternatives to Periodic Statements for history upon request (in place of the summary
Financial Institutions Offering Payroll Card of the right to receive a periodic statement
Accounts—12 CFR 1005.18 required by 12 CFR 1005.7(b)(6)), including a
telephone number to call to request a history.
This section provides an alternative to providing The disclosure required by 12 CFR 1005.18(c)
periodic statements for payroll card accounts if
(1)(i) may be made by providing a notice
financial institutions make the account information
substantially similar to the notice contained in
available to consumers by specific means. In
paragraph A-7(a) in Appendix A of Part 1005.
addition, this section clarifies how financial institu-
tions that do not provide periodic statements for – a notice concerning error resolution that is
payroll card accounts can comply with the subpart substantially similar to the notice contained in
A requirements relating to initial disclosures, the paragraph A-7(b) in Appendix A, in place of
annual error resolution notice, liability limits, and the notice required by 12 CFR 1005.7(b)(10)
the error resolution procedures. • Provide an annual error resolution notice that is
Typically, employers and third-party service substantially similar to the notice contained in
providers do not meet the definition of a ‘‘financial paragraph (b) to A-7—Model Clauses for Finan-
institution’’ subject to the regulation because they cial Institutions Offering Payroll Card Accounts in
neither (i) hold payroll card accounts nor (ii) issue Appendix A of Part 1005, in place of the notice
payroll cards and agree with consumers to provide required by 12 CFR 1005.8(b). Alternatively, a
EFT services in connection with payroll card financial institution may include on or with each
accounts. However, to the extent an employer or a electronic and written history provided in accor-
service provider undertakes either of these func- dance with 12 CFR 1005.18(b)(1), a notice
tions, it would be deemed a financial institution substantially similar to the abbreviated notice for
under the regulation (Comment 18(a)-2). periodic statements contained in paragraph
A-3(b) in Appendix A, modified as necessary to
Alternative to Periodic Statements. A financial
reflect the error-resolution provisions set forth in
institution does not need to furnish periodic state-
this section.
ments required by 12 CFR 1005.9(b) if the financial
institution makes available to the consumer the • Limits on consumer liability.
following: – For purposes of 12 CFR 1005.6(b)(3), the
• the account balance, through a readily available 60-day period for reporting any unauthorized
telephone line transfer begins on the earlier of:
• an electronic history of account transactions • the date the consumer electronically ac-
covering at least 60 days preceding the date the cesses the consumer’s account under 12
CFR 1005.18(b)(1)(ii), provided that the elec- also the exclusions from the gift card definitions,
tronic history made available to the con- described above.
sumer reflects the transfer; or
Restrictions on dormancy, inactivity, or service
• the date the financial institution sends a fees—12 CFR 1005.20(d). No person may impose
written history of the consumer’s account a dormancy, inactivity, or service fee with respect
transactions requested by the consumer to a gift certificate, store gift card, or general-use
under 12 CFR 1005.18(b)(1)(iii) in which the prepaid card, unless three conditions are satisfied:
unauthorized transfer is first reflected.
1. There has been no activity with respect to the
– A financial institution may limit the consumer’s certificate or card within the one-year period
liability for an unauthorized transfer as pro- prior to the imposition of the fee;
vided under 12 CFR 1005.6(b)(3) for transfers
reported by the consumer within 120 days after 2. Only one such fee is assessed in a given
the transfer was credited or debited to the calendar month; and
consumer’s account. 3. Disclosures regarding dormancy, inactivity, or
• Comply with error resolution requirements. service fees are clearly and conspicuously
stated on the certificate or card, and the person
– An error notice is considered timely, and the issuing or selling the certificate or card has
financial institution must comply with the re- provided these disclosures to the purchaser
quirements of 12 CFR 1005.11, if the financial before the certificate or card is purchased. See
institution receives notice from the consumer the disclosure section, above, for additional
no later than the earlier of:
information.
• 60 days after the date the consumer elec-
Expiration date restrictions—12 CFR 1005.20(e).
tronically accesses the consumer’s account
A gift certificate, store gift card, or general-use
under 12 CFR 1005.18(b)(1)(ii), provided
prepaid card may not be sold or issued unless the
that the electronic history made available to
expiration date of the funds underlying the certifi-
the consumer reflects the alleged error; or
cate or card is no less than five years after the date
• 60 days after the date the financial institution of issuance (in the case of a gift certificate) or five
sends a written history of the consumer’s years after the date of last load of funds (in the case
account transactions requested by the con- of a store gift card or general-use prepaid card). In
sumer under 12 CFR 1005.18(b)(1)(iii) in addition, information regarding whether funds un-
which the alleged error is first reflected. derlying a certificate or card may expire must be
– Alternatively, a financial institution complies clearly and conspicuously stated on the certificate
with the error resolution requirements in 12 or card and disclosed prior to purchase.
CFR 1005.11 if it investigates any oral or written No person may sell or issue a certificate or card
notice of an error from the consumer that is with an expiration date unless the person has
received by the financial institution within 120 established policies and procedures to provide
days after the transfer allegedly in error was consumers with a reasonable opportunity to pur-
credited or debited to the consumer’s account. chase a certificate or card that has an expiration
date that is at least five years from the date of
VII. Gift Cards—12 CFR 1005.20 purchase. A person who has established policies
and procedures to prevent the sale of a certificate
A gift card is a type of prepaid card that is
or card with less than five years from the date of
designed to be purchased by one consumer and
purchase satisfies this requirement.
given to another consumer as a present or
expression of appreciation or recognition. When A certificate or card generally must include a
provided in the form of a plastic card, a user of a disclosure alerting consumers to the difference
gift card is able to access and spend the value between the certificate or card expiration date and
associated with the device by swiping the card at a the funds expiration date, if any, and that the
POS terminal, much as a person would use a debit consumer may contact the issuer for a replacement
card. card. This disclosure must be stated with equal
prominence and in close proximity to the certificate
Scope of the gift card rule. The rule is generally
or card expiration date. Non-reloadable certificates
limited to gift certificates, store gift cards, or
or cards that bear an expiration date on the
general-use prepaid cards sold or issued to
certificate or card that is at least seven years from
consumers primarily for personal, family, or house-
the date of manufacture need not include this
hold purposes. It generally does not apply to cards,
disclosure. See the disclosure section, above, for
codes, or other devices that are reloadable and not
additional information.
marketed or labeled as a gift card or gift certificate
and loyalty, award, and promotional gift cards. See To ensure that consumers are able to access the
underlying funds for the full five-year period, fees as of the day the funds are received (12 CFR
may not be imposed for replacing an expired 1005.10(a)(3)).
certificate or card if the underlying funds remain
Preauthorized transfers from a customer’s ac-
valid (unless the card has been lost or stolen). In
count. Preauthorized transfers from a consumer’s
lieu of sending a replacement certificate or card,
account may only be authorized by the consumer
issuers may remit, without charge, the remaining
in writing and signed or similarly authenticated by
balance of funds to the consumer.
the consumer (12 CFR 1005.10(b)). Signed, written
VIII. Other Requirements authorizations may be provided electronically,
subject to the E-Sign Act (Comment 10(b)-5). In all
Preauthorized Transfers—12 CFR cases, the party that obtains the authorization from
1005.10 the consumer must provide a copy to the con-
sumer. If a third-party payee fails to obtain an
A preauthorized transfer may be either a credit to, authorization in writing or fails to provide a copy to
or a debit from, an account. the consumer, the third-party payee and not the
Preauthorized transfers to a consumer’s account. financial institution has violated subpart A (Com-
When an account is scheduled to be credited by a ment 10(b)-2).
preauthorized EFT from the same payor at least Stop payments. Consumers have the right to
once every 60 days, the financial institution must stop payment of preauthorized transfers from
provide some form of notice to the consumer so accounts. The consumer must notify the financial
that the consumer can find out whether or not the institution orally or in writing at any time up to three
transfer occurred (12 CFR 1005.10(a)). The notice business days before the scheduled date of the
requirement will be satisfied if the payor provides transfer (12 CFR 1005.10(c)(1)). If the debit item is
notice to the consumer that the transfer has been resubmitted, the institution must continue to honor
initiated. If the payor does not provide notice, the the stop-payment order. (Comment 10(c)-1) The
financial institution must adopt one of three alter- financial institution may require written confirmation
native procedures for giving notice:
of an oral stop payment order to be made within 14
1. The financial institution may give the consumer days of the consumer’s oral notification. If the
oral or written notice within two business days financial institution requires a written confirmation,
after a preauthorized transfer occurs. it must inform the consumer at the time of the oral
2. The financial institution may give the consumer stop payment order that written confirmation is
oral or written notice, within two business days required and provide the address to which the
after the preauthorized transfer was scheduled confirmation should be sent. If the consumer fails to
to occur, that the transfer did not occur. provide written confirmation, the oral stop payment
order ceases to be binding after 14 days (12 CFR
3. The financial institution may establish a readily 1005.10(c)(2)).
available telephone line17 that the consumer
Notice of transfers varying in amount. If a
may call to find out whether a preauthorized
preauthorized transfer from a consumer’s account
transfer has occurred. If the financial institution
varies in amount from the previous transfer under
selects this option, the telephone number must
the same authorization or the preauthorized amount,
be disclosed on the initial disclosures and on
either the financial institution or the designated
each periodic statement.
payee must send to the consumer a written notice,
The financial institution need not use any specific at least 10 days before the scheduled transfer date,
language to give notice but may not simply provide of the amount and scheduled date of the transfer
the current account balance (Comment 10(a)(1)-1). (12 CFR 1005.10(d)(1)). The consumer may elect to
The financial institution may use different methods receive notice only when the amount varies by
of notice for different types of preauthorized more than an agreed amount or falls outside a
transfers and need not offer consumers a choice of specified range (12 CFR 1005.10(d)(2)). The range
notice methods (Comment 10(a)(1)-2). must be an acceptable range that the consumer
The financial institution that receives a preautho- could reasonably anticipate (Comment 10(d)(2)-1).
rized transfer must credit the consumer’s account The financial institution does not violate Regulation
E if the payee fails to provide sufficient notice
(Comment 10(d)-1).
17. The telephone line must be ‘‘readily available’’ so that
consumers calling to inquire about transfers are able to have their Compulsory use. The financial institution may not
calls answered reasonably promptly during normal business
hours. During the initial call in most cases and within two business
make it a condition for an extension of credit that
days after the initial call in all cases, the financial institution should repayment will be by means of preauthorized EFT,
be able to verify whether the transfer was received (Comment except for credit extended under an overdraft
10(a)(1)-5). Within its primary service area, a financial institution
must provide a local or toll-free telephone number (Comment credit plan or extended to maintain a specified
10(a)(1)-7). minimum balance in the consumer’s account (12
CFR 1005.10(e)(1)). The financial institution may credit to cover account overdrafts or to maintain
offer a reduced APR or other cost-related incentive a minimum account balance, or is an overdraft
for an automatic payment feature as long as the service.
creditor offers other loan programs for the type of The TILA governs all of the following:
credit involved (Comment 10(e)(1)-1).18
• the issuance of credit cards as defined in
Regulation Z;
Services Offered by Provider Not
• the addition of a credit feature to a debit card or
Holding consumer’s Account—12 CFR
other access device, other than an overdraft
1005.14 service; and
A person who provides EFT services to a consumer • the issuance of dual debit/credit cards, except
but does not hold the consumer’s account is a for access devices whose only credit feature is a
service provider subject to 12 CFR 1005.14 if the pre-existing agreement to cover account over-
person issues an access device that the consumer drafts or to maintain a minimum account balance,
can use to access the account and no agreement or is an overdraft service.
exists between the person and the account-holding
financial institution. Transfers initiated by a service
provider are often cleared through an automated SUBPART B—REQUIREMENTS FOR
clearinghouse (ACH). REMITTANCE TRANSFERS
The responsibilities of the service provider are
set forth in 12 CFR 1005.14(b)(l) and (2). The duties Subpart B provides new disclosures, error resolu-
of the account-holding financial institution with tion, and cancellation and refund rights to consum-
respect to the service provider are found in 12 CFR ers who send remittance transfers to be received
1005.14(c)(l) and (2). by other consumers or businesses in a foreign
country.
for receiving an incoming transfer into an account telephone or by mobile application or text messag-
is a non-covered third-party fee if the institution is ing (12 CFR 1005.31(a)(3)(iv) and (a)(5)(iv)).
not acting as the agent of the remittance transfer
provider. A designated recipient’s account does
not include a credit card, prepaid card, or a virtual Disclosure Requirements—12 CFR
account held by an Internet-based or mobile 1005.31(b)
telephone company that is not a bank, savings Disclosures provided as applicable. The required
association, credit union, or equivalent institution disclosures need to be provided only to the extent
(Comment 30(h)-3). applicable. A remittance transfer provider may
choose to omit an item of information if it is
XI. Disclosures—12 CFR 1005.31
inapplicable to a particular transaction. Alterna-
Providers must give senders disclosures at certain tively, a provider may disclose a term and state that
stages of the remittance transfer process. The rule an amount or item is ‘‘not applicable,’’ ‘‘N/A,’’ or
requires providers to give senders a prepayment ‘‘None’’ (Comment 31(b)-1).
disclosure when a transfer request is made, but Substantially similar terms, language, and no-
prior to payment for the transfer. Providers must tices. Certain disclosures must be described using
also provide a receipt when payment is made for the terms set forth in 12 CFR 1005.31(b) or
the transfer. Model disclosure forms are provided substantially similar terms. Terms may be more
in Appendix A. specific than those provided. For example, a
remittance transfer provider sending funds may
General Form of Disclosures—12 CFR describe fees imposed by an agent at pick-up as
1005.31(a) ‘‘Pick-up Fees’’ in lieu of describing them as ‘‘Other
Fees.’’ Foreign language disclosures must contain
Required disclosures or disclosures permitted by accurate translations of the required terms, lan-
12 CFR 1005.31(b)(1)(viii) or 12 CFR 1005.33(h)(3) guage, and notices as well as the disclosures
must be clear and conspicuous and generally be permitted by 12 CFR 1005.31(b)(1)(viii) and
provided to the sender in writing. Disclosures may 1005.33.(h)(3) (Comment 31(b)-2).
contain commonly accepted or readily understand-
able abbreviations or symbols. Disclosures are
clear and conspicuous if they are readily under- Prepayment disclosures—12 CFR
standable and, in the case of written and electronic 1005.31(b)(1)
disclosures, the location and type size are readily A remittance transfer provider must provide the
noticeable to senders. Oral disclosures are clear prepayment disclosure when the sender requests
and conspicuous when they are given at a volume the remittance transfer but prior to payment for the
and speed sufficient for a sender to hear and transfer. The provider must disclose:
comprehend them (12 CFR 1005.31(a); Comments
31(a)(1)-1 and 31(a)(2)-2). a. the amount to be transferred (transfer amount),
Prepayment disclosures may be provided elec- b. front-end fees imposed by the provider and any
tronically without E-SIGN consent, if the sender taxes collected on the remittance transfer by
electronically requests the provider to send the the provider (transfer fees and transfer taxes),
transfer. However, the receipt for the transaction c. total amount of the transaction (the sum of the
may be provided electronically only with E-SIGN transfer amount and front-end fees and taxes),
consent (12 CFR 1005.31(a)(2); Comment 31(a)(2)-
1). d. the exchange rate,
Written and electronic disclosures generally e. any covered third-party fees (other fees),
must be made in a retainable form. Prepayment f. the total amount to be received by the desig-
disclosures provided via mobile application or text nated recipient (total amount of the transaction
message (to the extent permitted by the rule) need minus covered third-party fees), and
not be retainable. In some cases, disclosures may
g. a statement that non-covered third-party fees or
be disclosed orally. For example, prepayment
taxes collected on the remittance transfer by a
disclosures may be disclosed orally if the transac-
third person may apply to the remittance
tion is conducted orally and entirely by telephone
transfer and result in the designated recipient
and the remittance transfer provider complies with
receiving less than the amount disclosed. In this
certain other disclosure requirements (12 CFR
statement, a provider also may, but is not
1005.31(a)(2) and (a)(3)).
required, to disclose in the currency in which
Additional requirements apply for certain trans- the funds will be received, any applicable
fers scheduled at least three days before the date non-covered third-party fees or taxes collected
of transfer that are conducted orally over the by a person other than the provider.
Transfer amount. Two transfer amount disclo- Disclosure of covered third-party fees. Covered
sures are required in the prepayment disclosures. third-party fees must be disclosed in the currency
1. The transfer amount in the currency in which the in which the funds will be received by the
sender funds the remittance transfer to show the designated recipient, using the applicable ex-
calculation of the total amount of the transaction. change rate, or an estimated exchange rate to the
extent permitted, prior to any rounding of the
2. The transfer amount in the currency in which the exchange rate. If a provider does not have specific
funds will be made available to the designated knowledge regarding the currency in which the
recipient. This second transfer amount need not funds will be received, the provider may rely on a
be disclosed if covered third-party fees are not sender’s representation as to the currency in which
imposed on the remittance transfer. The terms funds will be received. If a sender does not know
used to describe each transfer amount should the currency in which funds will be received, the
be the same (Comment 31(b)(1)-2).
provider may assume that the currency in which
Fees and taxes. Fees imposed and taxes funds will be received is the currency in which the
collected on the remittance transfer by a provider remittance transfer is funded (Comment 31(b)(1)
must be disclosed in the currency in which the (vi)-1).
transaction is funded, as applicable. Taxes col-
Amount received. The remittance transfer pro-
lected on the remittance transfer by the provider
vider is required to disclose the amount that will be
include taxes imposed on the remittance transfer
received by the designated recipient in the cur-
by a state or other governmental body (Comment
rency in which the funds will be received. The
31(b)(1)-1(i)).
amount received must reflect the exchange rate, all
The fees and taxes required to be disclosed by fees imposed and all taxes collected on the
12 CFR 1005.31(b)(1)(ii) include all fees imposed remittance transfer by the remittance transfer
and all taxes collected on the remittance transfer provider, as well as any covered third-party fees
by the provider and include only those that are required to be disclosed. The disclosed amount
specifically related to the remittance transfer. For received must be reduced by the amount of any
example, a provider must disclose any service fees fees or taxes (except non-covered third-party fees
imposed by an agent at the time of the transfer and or taxes collected on the remittance transfer by a
any state taxes collected on the remittance transfer person other than the provider) imposed on the
(Comment 31(b)(1)-1(ii)). remittance transfer that affect the amount received
Applicable exchange rate. If the designated even if that amount is imposed or itemized
recipient will receive funds in a currency other than separately from the transaction amount. (Comment
the currency in which the remittance transfer is 31(b)(1)(vii)-1).
funded, a remittance transfer provider must dis-
Required disclaimer when non-covered third-
close the exchange rate to be used by the provider
party fees and taxes collected by a person other
for the remittance transfer (Comment 31(b)(1)(iv)-
than the provider may apply. The provider is
1).
required to include a disclaimer that non-covered
Rounding. The exchange rate disclosed for the third-party fees or taxes may apply to the remit-
remittance transfer is required to be rounded on the tance transfer if such taxes and fees apply to a
disclosure. The provider may round to two, three, or particular transfer or the provider does not know
four decimal places, at its option, but this must be whether they apply. This disclosure may only be
done consistently for each currency. (Comment provided to the extent applicable. For example, if
31(b)(1)(iv)-2). However, the exchange rate used to the designated recipient’s institution is an agent of
calculate: (a) the transfer amount, (b) the fees and the provider and thus non-covered third-party fees
taxes imposed on the remittance transfer by a cannot apply to the transfer, the provider must
person other than the provider, and (c) the amount disclose all fees imposed on the remittance transfer
received by the designated recipient, is prior to any and may not provide the disclaimer regarding
rounding. If an exchange rate need not be non-covered third-party fees (Comment 31(b)(1)
rounded, a provider must use that exchange rate to (viii)-1).
calculate these disclosures (Comment 31(b)(1)-3).
Optional disclosure of non-covered third-party
Exchange rate used. The exchange rate used by fees and taxes collected by a person other than the
the provider for the remittance transfer need not provider. The provider is permitted to disclose any
have been set by the provider. For example, an non-covered third-party fees or taxes collected on
exchange rate set by an intermediary institution the remittance transfer by a person other than the
and applied to the remittance transfer would be the provider that will apply to a particular transaction if
exchange rate used for the remittance transfer and it knows the amount of such fees and taxes.
must be disclosed by the provider (Comment Additionally, the provider is permitted to disclose
31(b)(1)(iv)-3). an estimate of such fees and taxes, provided any
estimates are based on reasonable source of multiple states, and the state agency that licenses
information (Comment 31(b)(1)(viii)-2; 12 CFR the provider with respect to the remittance transfer
1005.32(b)(3) and Comment 32(b)(3)-1). is determined by the sender’s location, a provider
may make the determination of the sender’s state
based on information provided by the sender and
Receipt—12 CFR 1005.31(b)(2) on any records associated with the sender. A
state-chartered bank must disclose information
When payment is made, a remittance transfer about the state agency that granted its charter,
provider must provide a receipt to a sender regardless of the location of the sender (Comment
disclosing all applicable information required in the 31(b)(2)-3).
prepayment disclosure. The receipt must also
disclose, as applicable: Date of transfer on receipt. For remittance
transfers scheduled at least three business days in
a. the date of availability of the funds (date advance, or the first transfer in a series of
available); preauthorized transfers, the date of transfer for the
b. the name and, if provided by the sender, the remittance transfer must be disclosed on the
telephone number and/or address of the desig- receipt. Additional disclosures apply to subse-
nated recipient (recipient); quent preauthorized remittance transfers, as de-
scribed below regarding 12 CFR 1005.36(d) (Com-
c. a statement about the sender’s error resolution
ment 31(b)(2)-4).
and cancellation;
Cancellation disclosure. The provider may pro-
d. specified contact information for the remittance
vide the three-business-day right-to-cancel notice
transfer provider; and
(for transfers scheduled three or more business
e. the transfer date for remittance transfers sched- days before the transfer date) and the 30-minute
uled at least three business days in advance, or right-to-cancel notice (for transfers scheduled fewer
the first transfer in a series of of preauthorized than three business days in advance), on the same
transfers. disclosure, with a checkbox or other method to
The provider must also provide a statement that clearly designate the applicable cancellation pe-
the sender can contact the state agency that riod. For transfers scheduled three or more busi-
licenses or charters the remittance transfer pro- ness days before the transfer date, the cancellation
vider with respect to the particular transfer (if disclosure should be phrased and formatted in
applicable), and the Consumer Financial Protection such a way that it is clear to the sender which
Bureau (CFPB) for questions or complaints about cancellation period is applicable to the date of
the remittance transfer provider. The statement transfer disclosed on the receipt (Comment 31(b)
must include the name of the agency(ies), tele- (2)-6).
phone number(s), and website address(es).
Date funds will be available. The provider must Combined disclosure—12 CFR
disclose the date in the foreign country on which 1005.31(b)(3)
the funds will be available to the designated
recipient, using the term ‘‘Date Available’’ or a As an alternative to providing separate pre-
substantially similar term. If a provider does not payment and receipt disclosures, a remittance
know the exact date on which funds will be transfer provider may provide the information in the
available, the provider may disclose the latest date receipt in a single disclosure when the sender
on which the funds will be available. The provider requests the remittance transfer, but prior to
may also disclose that funds ‘‘may be available payment for the transfer. If this combined disclo-
sooner’’ or use a substantially similar term to inform sure is provided and the sender completes the
senders that funds may be available to the transfer, the remittance transfer provider must
designated recipient on a date earlier than the date provide the sender with proof of payment when
disclosed (Comment 31(b)(2)-1). payment is made for the remittance transfer. For
Agencies required to be disclosed. The provider one-time transfers scheduled at least five business
must disclose information about a state agency that days in advance, or for the first in a series of
licenses or charters the provider with respect to the preauthorized transfers, the provider may provide
particular remittance transfer. If a financial institu- confirmation that the transaction has been sched-
tion is solely regulated by a federal agency, the uled in lieu of the proof of payment if payment is not
institution does not need to disclose information processed at the time the remittance transfer is
about a state agency. However, information about scheduled. No further proof of payment is required
the CFPB must be provided whether or not the when payment is later processed.
CFPB is the provider’s primary federal regulator. Proof of payment/confirmation of scheduling. The
(Comment 31(b)(2)-2). If a provider is licensed in proof of payment or confirmation of scheduling
must be clear and conspicuous, provided in writing in equal prominence to each other. They must be
or electronically, and provided in a retainable form. provided on the front of the page on which the
The proof of payment for the transaction may be disclosures are printed (12 CFR 1005.31(c)(3)).
provided on the same piece of paper as the
Segregation of disclosures from other informa-
combined disclosure or on a separate piece of
tion. Disclosures that are provided in writing or
paper. A provider may also provide this additional
electronically, other than disclosures permitted to
information to a sender on a separate piece of
be provided via mobile application or text mes-
paper when payment is made (12 CFR 1005.31(b)
sage, must be segregated from everything else
(3)(ii) and Comment 31(b)(3)-1).
and must contain only information that is ‘‘directly
related’’ to the disclosures (12 CFR 1005.31(c)(4)).
Long-form error resolution and cancellation The following is ‘‘directly related’’ information:
notice—12 CFR 1005.31(b)(4)
a. the date and time of the transaction;
At the sender’s request, a remittance transfer
b. the sender’s name and contact information;
provider is required promptly to provide a notice
describing the sender’s error resolution and can- c. the location at which the designated recipient
cellation rights, using language set forth in Model may pick up the funds;
Form A-36 of Appendix A or substantially similar d. the confirmation or other identification code;
language. For any remittance transfer scheduled
by the sender at least three business days before e. a company name and logo;
the date of the transfer, the description of the rights f. an indication that a disclosure is or is not a
of the sender regarding cancellation must instead receipt or other indicia of proof of payment;
reflect the requirements of 12 CFR 1005.36(c).
g. a designated area for signatures or initials;
h. a statement that funds may be available sooner;
Specific Format of Disclosures—12 CFR
i. instructions regarding the retrieval of funds,
1005.31(c)
such as the number of days the funds will be
Grouping of disclosed information. Disclosures available to the recipient before they are
related to transfer amount, transfer fees and taxes returned to the sender;
imposed by the provider, and the total amount of j. a statement that the provider makes money
the transaction generally must be grouped to- from foreign currency exchange; and
gether. Similarly, disclosures related to the transfer
amount in the currency to be made available to the k. disclosure of any non-covered third-party fees
designated recipient, covered third-party fees, and any taxes collected by a person other than
taxes collected on the remittance by the provider, the provider (Comment 31(c)(4)-2).
the total amount to be received by the designated Terms used in the case of estimated disclosures.
recipient, and the disclaimer statement generally A remittance transfer provider may provide esti-
must be grouped together. Information is grouped mates of the amounts required to be disclosed in
together if multiple disclosures are in close proxim- the prepayment disclosure, receipt, and combined
ity to one another and a sender can reasonably
disclosure to the extent permitted by 12 CFR
calculate the total amount of the transaction and
1005.32. An estimate must be described using the
the amount that will be received by the designated
term ‘‘Estimated’’ or a substantially similar term in
recipient (12 CFR 1005.31(c)(1) and Comment
close proximity to the estimated term or terms. For
31(c)(1)-1).
example, a remittance transfer provider could
Proximity of disclosed information. The exchange describe an estimated disclosure as ‘‘Estimated
rate used for the remittance transfer generally must Transfer Amount,’’ ‘‘Other Estimated Fees and
be disclosed in close proximity to the other Taxes,’’ or ‘‘Total to Recipient (Est.)’’ (12 CFR
information required in the prepayment disclosure. 1005.31(d) and Comment 31(d)-1).
Disclosures on error resolution and cancellation
Request to send a remittance transfer. Determin-
rights must generally be disclosed in close proxim-
ing whether a consumer has requested a remit-
ity to the other disclosures required on the receipt
tance transfer depends on the facts and circum-
(12 CFR 1005.31(c)(2)).
stances. A sender who asks a provider to send a
Prominence and size of disclosures. Disclosures remittance transfer, and provides transaction-
required by subpart B or permitted by 12 CFR specific information to the provider in order to send
1005.31(b)(1)(viii) that are provided in writing or funds to a designated recipient, has requested a
electronically, other than disclosures permitted to remittance transfer. However, a consumer who
be provided via mobile application or text mes- solely inquires about that day’s rates and fees to
sage, must be in a minimum of eight-point font and send to a particular country has not requested the
provider to send a remittance transfer (Comment one document in English and the other document in
31(e)-1). the applicable foreign language (Comment 31(g)-
When payment is made. Payment is made when 1).
a sender provides cash to the remittance transfer Language ‘‘primarily used.’’ The language pri-
provider or when payment is authorized (Comment marily used by the sender with the remittance
31(e)-2). transfer provider to conduct the transaction is the
Disclosures related to mobile application and primary language used by the sender with the
text message transactions. If a transaction is remittance transfer provider to convey the informa-
conducted entirely by telephone via mobile appli- tion necessary to complete the transaction. Simi-
cation or text message, a receipt may be mailed or larly, the language primarily used by the sender
delivered to the sender pursuant to the timing with the remittance transfer provider to assert the
requirements for transfers conducted entirely by error is the primary language used by the sender
telephone (Comment 31(e)-4). with the remittance transfer provider to provide the
information required to assert an error (Comment
Accuracy of disclosures—when payment is
31(g)-2).
made. Disclosures required by subpart B or
permitted by 12 CFR 1005.31(b)(1)(viii) must be Language ‘‘principally’’ used. Whether a foreign
accurate when a sender makes payment for the language is principally used by the remittance
remittance transfer, except to the extent estimates transfer provider to advertise, solicit, or market is
are permitted. A remittance transfer provider is not determined from all relevant facts and circum-
required to guarantee the terms of the remittance stances, including
transfer in the prepayment disclosures for any a. the frequency with which the foreign language
specific period of time. However, if any of these is used in advertising, soliciting, or marketing of
disclosures are not accurate when a sender makes remittance transfer services at that office;
payment for the remittance transfer, the provider
must give new disclosures before accepting pay- b. the prominence of the advertising, soliciting, or
ment (12 CFR 1005.31(f) and Comment 31(f)-1). marketing of remittance transfer services in that
foreign language at that office; and
Foreign language disclosures c. the specific foreign language terms used in the
advertising soliciting, or marketing of remit-
Written and electronic disclosures required by tance transfer services at that office (Comment
subpart B or permitted by 12 CFR 1005.31(b)(1) 31(g)(1)-1(i)).
(viii) generally must be provided in English and in
Language used to advertise, solicit, or market.
each foreign language principally used to adver-
Any commercial message in a foreign language,
tise, solicit, or market remittance transfer services
appearing in any medium, that promotes directly or
at the office in which a sender conducts a
indirectly the availability of remittance transfer
transaction or asserts an error. Alternatively, written
services constitutes advertising, soliciting, or mar-
and electronic disclosures can be provided in
keting in such foreign language (Comment 31(g)
English and in the foreign language primarily used
(1)-2).
by the sender with the remittance transfer provider,
provided such foreign language is principally used Office. An office includes any physical location,
to advertise, solicit, or market remittance transfers telephone number, or website of a remittance
at the office in which a sender conducts a transfer provider where a sender may conduct a
transaction or asserts an error. For transfers remittance transfer or assert an error for a remit-
requested orally, by text message, or mobile tance transfer (Comment 31(g)(1)-3).
application, the disclosures must be in the lan- At the office. Any advertisement, solicitation, or
guage primarily used by the sender to communi- marketing is considered to be made at the office in
cate with the transfer provider (12 CFR 1005.31(g)). which a sender conducts a transaction or asserts
Number of foreign languages used in written an error if it is posted, provided, or made: at a
disclosure. There is no limit to the number of physical office, on a website of a remittance
languages that may be used on a single document, transfer provider that may be used by senders to
but such disclosures must be clear and conspicu- conduct remittance transfers or assert errors,
ous. If the remittance transfer provider chooses to during a telephone call with a remittance transfer
provide written and electronic disclosures in Eng- provider that may be used by senders to conduct
lish and in the foreign language primarily used by remittance transfers or assert errors, or via mobile
the sender with the remittance transfer provider, it application or text message if the mobile applica-
may provide disclosures in a single document with tion or text message may be used by senders to
both languages or in two separate documents with conduct remittance transfers or assert errors (Com-
Control. An insured institution cannot determine a. set by the government of the recipient country
exact amounts ‘‘for reasons beyond its control’’ after the remittance transfer provider sends the
when a person other than the insured institution or remittance transfer; or
with which the insured institution has no correspon- b. set when the designated recipient receives the
dent relationship sets the exchange rate or im- funds (Comment 32(b)(1)-1).
poses a covered third-party fee required to be
Method by which transactions are made in the
disclosed. For example, if an insured institution has
recipient country. The method by which transac-
a correspondent relationship with an intermediary
tions are made in the recipient country does not
financial institution in another country and that
permit a remittance transfer provider to determine
intermediary institution sets the exchange rate or
exact amounts required to be disclosed when
imposes a fee for remittance transfers sent from the
transactions are sent via international ACH on
insured institution to the intermediary institution,
terms negotiated between the United States gov-
then this exception is not applicable and the
ernment and the recipient country’s government,
insured institution must determine exact amounts
under which the exchange rate is a rate set by the
for the disclosures because the determination of
recipient country’s central bank or other govern-
those amounts are not beyond the insured institu-
mental authority after the provider sends the
tion’s control (Comment 32(a)(1)-1).
remittance transfer (Comment 32(b)(1)-3).
Covered third-party fees. An insured institution
Safe harbor list. The remittance transfer provider
cannot determine the exact covered third-party
may rely on a list of countries published by the
fees to disclose if, for example, an intermediary
CFPB to determine whether estimates may be
institution with which the insured institution does
provided for the exchange rate, the transfer
not have a correspondent relationship imposes a
amounts, covered third-party fees, and total amount
transfer or conversion fee. However, an insured
to the recipient. If a country is on the CFPB’s list, the
institution can determine the exact covered third-
provider may give estimates under this section,
party fees required to be disclosed if it has agreed
unless it has information that a country on the list
upon the specific fees with an intermediary corre-
legally permits the provider to determine exact
spondent institution, and this correspondent insti-
disclosure amounts. If a country does not appear
tution is the only institution in the transmittal route to
on the CFPB’s list, the provider may provide
the designated recipient’s institution (Comments
estimates if it determines that the recipient country
32(a)(1)-2(ii) and -3(ii)).
does not legally permit or the method by which
The temporary exception is available for insured transactions are conducted in that country does not
institutions until July 21, 2015. permit the provider to determine exact disclosure
amounts (Comments 32(b)(1)-5 and 32(b)(1)-6). institution fees in the same country or region as the
Change in laws of recipient country. If the laws of recipient institution; information provided or sur-
a recipient country change such that a remittance veys of recipient institutions’ regulators or taxing
transfer provider can determine exact amounts, the authorities; commercially or publicly available da-
remittance transfer provider must begin providing tabases, services or sources; and information or
exact amounts for the required disclosures as soon resources developed by international nongovern-
as reasonably practicable. If the laws of a recipient mental organizations or intergovernmental organi-
country change such that the provider cannot zations (Comment 32(b)(3)-1).
determine exact disclosure amounts, the provider
may provide estimates even if that country does not Bases for Estimates—12 CFR 1005.32(c)
appear on the list published by the CFPB (Com- and (d)
ment 32(b)(1)-7).
If a remittance transfer provider qualifies for either
Permanent Exception for Transfers the temporary or permanent exception, the rule
Scheduled before the Date of allows two bases for estimating information in the
Transfer—12 CFR 1005.32(b)(2) disclosures:
For remittance transfers scheduled five or more 1. The estimates must generally be based on any
business days before the date of the transfer, of the approaches listed in the rule (12 CFR
estimates may be provided for the exchange rate, 1005.32(c)(1)).
transfer amount, covered third-party fees (where 2. Alternatively, the estimates may be based on an
the exchange rate is also estimated and affects approach that is not listed, provided that the
such fees), and the total amount to recipient, if at designated recipient receives the same, or
the time the sender schedules such a transfer, the greater, amount of funds than the remittance
provider agrees to a sender’s request to fix the transfer provider disclosed.
amount to be transferred in the currency in which
For remittance transfers scheduled five or more
the remittance transfer will be received and not the
business days before the date of the transfer,
currency in which it is funded. For example, if a
estimates must be based on the exchange rate or,
sender schedules a wire transfer to be sent from
where applicable, the estimated exchange rate that
the sender’s bank account denominated in U.S.
the provider would have used or did use that day to
dollars but to be paid to the recipient in euro
provide disclosures to a sender requesting such a
transfer, the provider is allowed to estimate the
remittance transfer to be made on the same day.
transfer amount, front-end fees or taxes collected
by the provider (if based on the amount trans-
ferred), and the total amount of the transaction. The Approaches listed in the rule
provider is also allowed to estimate any covered
Estimates of the exchange rate. For remittance
third-party fees if the exchange rate is also
transfers sent via international ACH, the estimate
estimated and the estimated exchange rate affects
must be based on the most recent exchange rate
the amount of fees. (12 CFR 1005.32(b)(2) and
set by the recipient country’s central bank or other
Comment 32(b)(2)-1).
governmental authority and reported by a Federal
Reserve Bank. For any remittance transfers for
Permanent Exception for Optional
which estimates are permitted, the exchange rate
Disclosure of Non-covered Third-Party
may be estimated based on the most recent
Fees and Taxes Collected on the publicly available wholesale exchange rate and
Remittance Transfer by a Person Other any applicable spread that the remittance transfer
Than the Provider—12 CFR provider or its correspondent typically applies for
1005.32(b)(3) remittance transfers for that currency or the most
The remittance transfer provider may provide recent exchange rate offered or used by the person
estimates (as part of the required disclaimer making funds available directly to the designated
statement) for applicable non-covered third-party recipient or by the person setting the exchange
fees and taxes collected on the remittance transfer rate (12 CFR 1005.32(c)(1)).
by a person other than the provider, if such Where the exchange rate for a remittance
estimates are based on reasonable sources of transfer sent via international ACH that qualifies for
information. Reasonable sources of information the permanent exception is set the following
may include, for example: information obtained business day, the most recent exchange rate
from recent transfers to the same institution or the available for a transfer is the exchange rate set for
same country or region; fee schedules from the the day that the disclosure is provided, i.e. the
recipient institution; fee schedules from the recipi- current business day’s exchange rate (Comment
ent institution’s competitors; surveys of recipient 32(c)(1)-1).
non-covered third-party fees or taxes collected foreign country by a person other than the desig-
on the remittance transfer by a person other nated recipient, and the recipient agent or institu-
than the provider and the provider provided the tion’s retention of the remittance transfer, instead of
required disclaimer. making the funds available to the designated
A designated recipient may receive an amount of recipient.
currency that differs from the amount of currency There is no error if funds were not made available
disclosed and an error has occurred if for example by the disclosed date due to:
a. an exchange rate other than the disclosed rate a. extraordinary circumstances outside the remit-
is applied to the remittance transfer, or tance transfer provider’s control that could not
b. the provider provides the sender a receipt have been reasonably anticipated;
stating an amount of currency that will be b. delays related to the remittance transfer provid-
received by the designated recipient, which er’s fraud screening procedures or in accor-
does not reflect additional covered third-party dance with the Bank Secrecy Act, Office of
fees that are imposed by the receiving agent in Foreign Assets Control requirements, or similar
the destination country. However, if the desig- laws or requirements; or
nated recipient will receive less than the amount
c. the remittance transfer was made with fraudu-
of currency disclosed on the receipt due solely
lent intent by the sender or any person acting in
to the additional foreign taxes that the provider
concert with the sender (i.e., friendly fraud); or
was not required to disclose, no error has
occurred (Comment 33(a)-3(ii)). d. the sender provided the remittance transfer
provider an incorrect account number or recipi-
Exception for extraordinary circumstances out- ent institution identifier for the designated
side the remittance transfer provider’s control. If the recipient’s account or institution, and the remit-
provider fails to make the amount of currency tance transfer provider
disclosed available to the designated recipient,
such an occurence is not an error if such failure i. can demonstrate that the sender provided
was caused by extraordinary circumstances out- an incorrect account number or recipient
side the remittance transfer provider’s control that institution identifier to the provider in con-
could not have been reasonably anticipated. nection with the remittance transfer;
Examples of extraordinary circumstances outside ii. prior to or when sending the transfer, used
the remittance transfer provider’s control that could reasonably available means to verify (for
not have been reasonably anticipated include war recipient institution identifier errors only)
or civil unrest, natural disaster, garnishment or that the recipient institution identifier pro-
attachment of some of the funds after the transfer is vided by the sender corresponded to the
sent, and government actions or restrictions that recipient institution name provided by the
could not have been reasonably anticipated by the sender;
remittance transfer provider, such as the imposition iii. provided notice to the sender (prior to
of foreign currency controls or foreign taxes payment for the remittance transfer) that, in
unknown at the time the receipt or combined the event the sender provided an incorrect
disclosure is provided (Comment 33(a)-4). Note account number or recipient institution
that foreign taxes are not required to be disclosed. identifier, the sender could lose the transfer
However, if a provider, believing that there is no amount.
applicable foreign tax, elects not to provide a
iv. the incorrect account number or recipient
disclaimer pursuant to 1005.31(b)(1)(viii), no error
institution identifier resulted in the deposit of
has occurred if a new tax is imposed that could not
the remittance transfer into a customer’s
have been reasonably anticipated at the time the
account that is not the designated recipi-
receipt or combined disclosure was required to be
ent’s account; and
given.
v. promptly used reasonable efforts to recover
Error due to failure to make funds available by
the amount that was to be received by the
disclosed date of availability. This error generally
designated recipient.
covers disputes about the failure to make remit-
tance transfer funds available to a designated Account number or recipient institution identifier.
recipient by the disclosed date of availability. Account number and recipient institution identifier
Examples of errors for failure to make funds refer to alphanumerical account or institution iden-
available by the disclosed date of availability tifiers other than names or addresses, such as
include, late or non-delivery of a remittance trans- account numbers, routing numbers, Canadian
fer, delivery of funds to the wrong account, the transit numbers, International Bank Account Num-
fraudulent pick-up of a remittance transfer in a bers, Business Identifier Codes, and other similar
account or institution identifiers used to route a Issues that are not considered errors under
transaction. Designated recipient’s account refers subpart B
to an asset account but does not include a credit
The following are not errors:
card, prepaid card, or a virtual account held by an
Internet-based or mobile telephone company that a. an inquiry about the status of a remittance
is not a bank, savings association, credit union, or transfer except where the funds from the
equivalent institution (Comment 33(a)-8). transfer were not made available to a desig-
nated recipient by the disclosed date of avail-
Reasonable methods of verification. Reasonably
ability;
available means may include accessing a directory
of Business Identifier Codes and verifying that the b. a request for information for tax or other
code provided by the sender matches the provided record-keeping purposes;
institution name, and, if possible, the specific c. a change requested by the designated recipi-
branch or location provided by the sender. A ent that the remittance transfer provider or
provider may also rely on other commercially others involved in the remittance transfer de-
available databases or directories to check other cide to accommodate; or
recipient institution identifiers. The requirement to
d. a change in the amount or type of currency
verify would be met if no reasonably available
received by the designated recipient from the
means exist to verify the accuracy of the recipient
amount or type of currency stated in the
institution identifier if the other conditions are
disclosure provided to the sender if the remit-
satisfied (Comment 33(h)-1).
tance transfer provider relied on information
Reasonable efforts. Whether a provider has used provided by the sender (12 CFR 1005.33(a)(2)
reasonable efforts does not depend on whether the and Comment 33(a)-10).
provider is ultimately successful in recovering the
amount that was to be received by the designated
recipient. If the remittance transfer provider is Notice of Error from Sender—12 CFR
requested to provide documentation or other 1005.33(b)
supporting information in order for the pertinent
Person asserting or discovering error. The error
institution or authority to obtain the proper authori-
resolution procedures apply only when a notice of
zation for the return of the incorrectly credited
error is received from the sender (Comment
amount, reasonable efforts to recover the amount
33(b)-1).
include timely provision of any such documentation
to the extent that it is available and permissible Timing of error notice. The notice of error must be
under law (Comment 33(h)-2). received by the remittance transfer provider within
180 days of the disclosed date of availability of the
Promptness of reasonable efforts. Whether a
remittance transfer (12 CFR 1005.33(b)(1)). But if
provider acts promptly to use reasonable efforts
the notice of error is based on documentation,
depends on the facts and circumstances. For
additional information, or clarification provided by
example, if, before the disclosed date of availability
the remittance transfer provider, then notice is
the sender informs the provider that the sender
timely if it is received by the remittance transfer
provided a wrong account number, the provider
provider the later of
will have acted promptly if it attempts to contact the
recipient’s institution before the date of availability a. 180 days after the disclosed date of availability
(Comment 33(h)-3). of the remittance transfer, or
Failure to make funds available by disclosed b. 60 days after the provider sent the documenta-
date of availability due to circumstances outside tion, information, or clarification that had been
the remittance transfer provider’s control. A remit- requested (12 CFR 1005.33(b)(2)).
tance transfer provider’s failure to deliver or Content of error notice. Errors may be reported
transmit a remittance transfer by the disclosed date orally or in writing. The notice of error is effective so
of availability is not an error if such failure was long as the remittance transfer provider is able to
caused by extraordinary circumstances outside the identify
remittance transfer provider’s control that could not
have been reasonably anticipated. Examples of a. the sender’s name and telephone number or
such circumstances include war or civil unrest, address (or e-mail address);
natural disaster, garnishment or attachment of b. the recipient’s name and, if known, telephone
funds after the transfer is sent, and government number and address;
actions or restrictions that could not have been
reasonably anticipated by the remittance transfer c. the remittance transfer to which the notice of
provider, such as the imposition of foreign currency error applies; and
controls (Comment 33(a)-6). d. why the sender believes an error exists and, if
possible, the type, date, and amount of the which the provider relied in making its determina-
error, except for errors involving requests for tion (Comment 33(c)-1).
documentation, additional information, or clari-
fication.
Remedies
For example, the sender could provide the
confirmation number or code that would be used If the remittance transfer provider determines an
by the designated recipient to pick up the transfer, error (as defined in subpart B) occurred and the
or other identification number or code supplied by error relates to
the remittance transfer provider in connection with
a. an incorrect amount paid by the sender,
the transfer, if the number or code is sufficient for
the remittance transfer provider to identify the b. a computational or bookkeeping error made by
sender (and contact information), designated re- the remittance transfer provider, or
cipient, and the transfer in question (Comment c. failure to make the amount of currency stated in
33(b)-2 and 3). the disclosures available to the designated
Effect of late notice. A remittance transfer recipient.
provider is not required to comply with the error the provider must either
resolution requirements for any notice of error from
a sender that is received more than 180 days from a. refund the amount of funds provided by the
the disclosed date of availability of the remittance sender in connection with a remittance transfer
transfer or, if applicable, more than 60 days after a which was not properly transmitted or the
provider sent documentation, additional informa- amount appropriate to resolve the error, or
tion, or clarification requested by the sender b. make available to the designated recipient, the
(Comment 33(b)-4). amount appropriate to resolve the error without
Notice of error provided to agent. A notice of additional cost to the sender or the designated
error provided by a sender to an agent of the recipient (12 CFR 1005.33(c)(2)(i)).
remittance transfer provider is deemed to be If the error relates to a sender’s request for
received by the provider when the agent receives it documentation or additional information or clarifi-
(Comment 33(b)-5). cation to determine whether an error exists, the
Consumer notice of error resolution rights. In remittance transfer provider must provide the
addition to the requirement to provide an abbrevi- requested information (12 CFR 1005.33(c)(2)(iv)).
ated notice of the consumer’s error resolution rights
on the receipt or combined notice, the remittance
transfer provider must make available to a sender,
Remedy in the case of failure to make funds
upon request, a notice providing a full description
available by the disclosed date of
of the sender’s error resolution rights, using
availability.
language set forth in Appendix A (Model Form a. Where failure to make funds available by the
A-36) or substantially similar language (Comment disclosed date of availability occurred due to
33(b)-6). incorrect or insufficient information provided by
the sender:
The remittance transfer provider is required to
Time Limits and Extent of refund to the sender the amount of funds that
Investigation—12 CFR 1005.33(c) was not properly transmitted, or the amount
A remittance transfer provider must investigate appropriate to resolve the error, within three
promptly and determine whether an error occurred business days of providing the written explana-
within 90 days of receiving a notice of error. The tion of findings. However, the provider may
remittance transfer provider must report the results agree to the sender’s request, upon receiving
to the sender within three business days after the results of the error investigation, to apply the
completing its investigation and include notice of funds toward a new remittance transfer, rather
any remedies available for correcting any error that than be refunded, if the provider has not yet
the provider determines has occurred. If the processed a refund.
remittance transfer provider determines during its In such an instance, the provider may deduct
investigation that an error occurred as described from the amount refunded or applied toward a
by the sender, the remittance provider may inform new transfer any fees actually imposed by a
the sender of its findings either orally or in writing. person other than the provider (except those
However, if the provider determines that no error or that will ultimately be refunded to the provider)
a different error occurred, the provider must on or, to the extent not prohibited by law, taxes
provide a written explanation of the findings, and actually collected on the remittance transfer as
note the sender’s right to request the documents on part of the first unsuccessful remittance transfer
attempt and inform the sender of the deduction same form of payment that was initially provided by
and reason. The agreement to apply the funds the sender for the remittance transfer (Comment
toward a new transfer is treated as a new 33(c)-6).
remittance transfer, and the provider must Remedies for incorrect amount paid. If an error
provide new disclosures in accordance with 12 relates to the payment of an incorrect amount, the
CFR 1005.31 and all other applicable provi- sender may request a refund of the amount
sions of subpart B (12 CFR 1005.33(c)(2)(iii)) necessary to resolve the error or request that the
and Comments 33(c)-11 and -12). remittance transfer provider make the amount
b. All other instances of failure to make funds necessary to resolve the error available to the
available by the disclosed date of availability: designated recipient at no additional cost (Com-
As applicable, the remittance transfer provider ment 33(c)-7).
must either Correction of an error if funds were not not
i. refund to the sender, the amount of funds available by disclosed date. If the remittance
which was not properly transmitted or the transfer provider determines an error related to
amount appropriate to resolve the error; or failure to make funds available by the disclosed
date occured, it must correct the error and refund
ii. make available to the designated recipient any fees imposed by the provider or a third party
the amount appropriate to resolve the error involved in sending the transfer, such as an
without additional cost to the sender or to intermediary bank involved in sending a wire
the designated recipient; and transfer or the institution from which the funds are
refund to the sender any fees imposed and, picked up (unless the sender provided incorrect or
to the extent not prohibited by law, taxes insufficient information to the remittance transfer
collected on the remittance transfer (12 provider in connection with the remittance transfer)
CFR 1005.33(c)(2)(ii). (Comment 33(c)-8).
Designation of requested remedy. The provider Charges for error resolution. If an error occurred,
may request that the sender indicate the preferred whether as alleged or in a different amount or
remedy when providing the notice of the error. If the manner, the remittance transfer provider may not
provider does so, it should indicate that a resend impose a charge related to any aspect of the error
remedy may be unavailable if the error occurred resolution process (including charges for documen-
because the sender provided incorrect or insuffi- tation or investigation) (Comment 33(c)-9).
cient information. If the sender does not indicate Correction without investigation. A remittance
the desired remedy at the time of providing notice transfer provider may correct an error, without
of error, the remittance transfer provider must notify investigation, in the amount or manner alleged by
the sender of any available remedies in the written the sender, or otherwise determined, to be in error,
explanation of findings (Comment 33(c)-3). but must comply with all other applicable require-
ments (Comment 33(c)-10).
Default remedy (except where the sender pro-
vided incorrect or insufficient information). The
provider may set a default remedy that the
Procedures if Remittance Transfer
remittance transfer provider will use if the sender
does not designate a remedy within a reasonable
Provider Determines No Error or
time after receiving the written explanation of Different Error Occurred—12 CFR
findings. If a default remedy is provided, the 1005.33(d)
remittance transfer provider must correct the error
If the remittance transfer provider determines that
within one business day or as soon as reasonably
no error occurred or that an error occurred in a
practicable, after the reasonable time for the
manner or amount different from that described by
sender to designate the remedy has passed. For
the sender, its report of the results of the investiga-
purposes of designating a remedy, 10 days is
tion must include a written explanation of the
deemed a reasonable time (Comment 33(c)-4).
provider’s findings and shall note the sender’s right
Amount appropriate to resolve the error. The to request the documents on which it relied in
amount appropriate to resolve the error is the making its determination. The explanation should
specific amount of transferred funds that should also address the specific complaint of the sender.
have been received if the remittance transfer had Upon the sender’s request, the remittance transfer
taken place without error. It does not include provider must also promptly provide copies of the
consequential damages (Comment 33(c)-5). documents on which it relied to make its error
Form of refund. Where a refund may be issued, a determination (12 CFR 1005.33(d)).
remittance transfer provider may generally, at its Error different from that alleged. If a remittance
discretion, issue a refund either in cash or in the transfer provider determines that an error occurred
in a manner or amount different from that described sender’s account, and the error is not also an error
by the sender, it must comply with the requirements under 12 CFR 1005.33 (such as the omission of an
of both 12 CFR 1005.33(c) (concerning the inves- EFT on a periodic statement), then the error-
tigation) and (d) (procedures if remittance transfer resolution provisions of 12 CFR 1005.11 exclusively
provider determines no error or different error apply to the error. However, if a sender asserts an
occurred), as applicable. The provider may give error under 12 CFR 1005.33 with a remittance
the notice of correction and the explanation transfer provider that holds the sender’s account,
separately or in a combined form (Comment and the error is also an error under 12 CFR 1005.11
33(d)-1). (such as when the amount the sender requested to
be deducted from the sender’s account and sent
for the remittance transfer differs from the amount
Reassertion of Error—12 CFR 1005.33(e) that was actually deducted from the account and
A remittance transfer provider that has fully com- sent), then the error-resolution provisions of 12 CFR
plied with the error resolution requirements of this 1005.33 exclusively apply to the error (Comment
section generally has no further responsibilities 33(f)-1).
should the sender later reassert the same error, Relation to Truth in Lending Act and Regulation
except in the case of an error asserted by the Z. If an alleged error involves an incorrect exten-
sender following receipt of additional information sion of credit in connection with a remittance
requested from the provider (12 CFR 1005.33(e)). transfer, an incorrect amount received by the
Withdrawal of error; right to reassert. The remit- designated recipient that is an extension of credit
tance transfer provider has no further error resolu- for property or services not delivered as agreed, or
tion responsibilities if the sender voluntarily with- the failure to make funds available by the disclosed
draws the notice alleging an error. A sender who date of availability that is an extension of credit for
has withdrawn an allegation of error has the right to property or services not delivered as agreed, and
reassert the allegation unless the remittance trans- the sender provides a notice of error to the creditor
fer provider had already complied with all of the extending the credit, the error resolution provisions
error resolution requirements before the allegation of Regulation Z, 12 CFR 1026.13 apply to the
was withdrawn. The sender must do so, however, creditor, rather than the requirements of 12 CFR
within the original 180-day period from the dis- 1005.33, even if the creditor is the remittance
closed date of availability or, if applicable, the transfer provider. However, if the creditor is the
60-day period for a notice of error based on remittance transfer provider, the error resolution
documentation or clarification that the sender requirements of 12 CFR 1005.33(b) will apply
previously requested (Comment 33(e)-1). instead of 12 CFR 1026.13(b). If the sender instead
provides a notice of error to the remittance transfer
provider that is not also the creditor, then the
Relation to Other Laws—12 CFR error-resolution provisions of 12 CFR 1005.33 apply
1005.33(f) to the remittance transfer provider (12 CFR 1005.33
(f)(2)).
Relation to Regulation E for incorrect EFTs from a
Unauthorized remittance transfers. If an alleged
sender’s account (12 CFR 1005.11). If an alleged
error involves an unauthorized electronic fund
error involves an incorrect electronic fund transfer
transfer for payment in connection with a remit-
from a sender’s account in connection with a
tance transfer, 12 CFR 1005.6 and 1005.11 apply
remittance transfer, and the sender provides a
with respect to the account-holding institution. If an
notice of error to the account-holding institution, the
alleged error involves an unauthorized use of a
requirements of 12 CFR 1005.11 governing error
credit account for payment in connection with a
resolution apply if the account-holding institution is
remittance transfer, the provisions of Regulation Z,
not also the remittance transfer provider. However,
12 CFR 1026.12(b), if applicable, and 12 CFR
if the remittance transfer provider is also the
1026.13, apply with respect to the creditor (12 CFR
account holding institution, then the error-resolution
1005.33(f)(3)).
provisions of 12 CFR 1005.33 apply when the
sender provides such notice of error (12 CFR Holder in due course. The error resolution
1005.33(f)(1)). provisions in subpart B do not affect a sender’s
rights to assert claims and defenses against a card
Concurrent error obligations. A remittance trans-
issuer concerning property or services purchased
fer provider that holds the sender’s account may
with a credit card under Regulation Z, 12 CFR
have error obligations under both 12 CFR 1005.11
1026.12(c)(1), as applicable (Comment 33(f)-2).
and 1005.33, depending on the relationship with
the sender and the nature of the error. For example, Assertion of the same error with multiple parties.
if a sender asserts an error under 12 CFR 1005.11 If a sender receives credit to correct an error of an
with a remittance transfer provider that holds the incorrect amount paid in connection with a remit-
tance transfer from either the remittance transfer provider is required to include an abbreviated
provider or account-holding institution (or creditor), notice of the sender’s right to cancel a remittance
and subsequently asserts the same error with transfer on the receipt or combined disclosure
another party, that party has no further responsibili- provided to the sender. In addition, the remittance
ties to investigate the error if the error has been transfer provider must make available to a sender
corrected. In addition, nothing prevents an account- upon request, a notice providing a full description
holding institution or creditor from reversing of the right to cancel a remittance transfer (Com-
amounts it has previously credited to correct an ment 34(a)-2). See also Model Form 36 in Appendix
error if a sender receives more than one credit to A.
correct the same error (Comment 33(f)-3).
Thirty-minute cancellation right. Except for cer-
tain remittance transfers scheduled in advance
Error Resolution Standards and subject to 12 CFR 1005.36(c), a remittance transfer
Recordkeeping Requirements—12 CFR provider must comply with the cancellation and
refund requirements if the cancellation request is
1005.33(g)
received no later than 30 minutes after the sender
Compliance program. A remittance transfer pro- makes payment (Comment 34(a)-3).
vider must develop and maintain written policies Cancellation request provided to agent. A can-
and procedures that are designed to ensure cellation request provided by a sender to an agent
compliance with the error resolution requirements of the remittance transfer provider is deemed to be
applicable to remittance transfers. received by the provider when received by the
Policies and procedures must address the agent (Comment 34(a)-4).
retention of records related to error investigations Time limits and refund requirements. If a sender
(12 CFR 1005.33(g)(1) and (2)). provides a timely request to cancel a remittance
Record retention requirements. Remittance trans- transfer, a remittance transfer provider must, within
fer providers are subject to the record retention three business days of receiving the request,
requirements under subpart A (12 CFR 1005.13 refund all funds provided by the sender in connec-
and Comment 33(g)-1). See also section XVIII tion with the remittance transfer, including any fees
below. and, to the extent not prohibited by law, taxes that
have been imposed for the transfer, whether the fee
XIV. Procedures for Cancellation and or tax was assessed by the provider or a third
party, such as an intermediary institution, the agent
Refund of Remittance Transfers— or bank in the recipient country, or a state or other
12 CFR 1005.34 governmental body (12 CFR 1005.34(b) and Com-
ment 34(b)-2).
Sender’s right of cancellation and refund Form of refund. A remittance transfer provider
generally may issue a refund either in cash or in the
Except for certain remittance transfers scheduled same form of payment that was initially provided by
in advance subject to 12 CFR 1005.36(c), a the sender for the remittance transfer (Comment
remittance transfer provider generally must comply 34(b)-1).
with any oral or written request to cancel a
remittance transfer from the sender that is received
by the provider no later than 30 minutes after the
XV. Acts of Agents—12 CFR 1005.35
sender makes payment in connection with the A remittance transfer provider is strictly liable for a
remittance transfer if violation by an agent, when such agent acts on its
a. the request to cancel enables the provider to behalf. Remittance transfer providers must comply
identify the sender’s name and address or with the requirements of subpart B, even if an agent
telephone number and the particular transfer to or other person performs functions for the remit-
be cancelled; and tance transfer provider and regardless of whether
the provider has an agreement with a third party
b. the transferred funds have not been picked up
that transfers or otherwise makes funds available to
by the designated recipient or deposited into an
a designated recipient (12 CFR 1005.35 and
account of the designated recipient (12 CFR
Comment 35-1).
1005.34(a)).
Agencies responsible for enforcing the require-
Content of cancellation request. A request to
ments of EFTA section 919 and subpart B of
cancel a remittance transfer is valid so long as the
Regulation E may consider, in any action or other
remittance transfer provider is able to identify the
proceeding against a remittance transfer provider,
remittance transfer in question (Comment 34(a)-1).
the extent to which the provider had established
Notice of cancellation right. A remittance transfer and maintained policies or procedures for compli-
ance, including policies, procedures, or other situations where an updated receipt that contained
appropriate oversight measures designed to as- no estimates was provided prior to the scheduled
sure compliance by an agent or authorized del- date of the next subsequent preauthorized remit-
egate acting for such provider (EFTA section tance transfer. If the remittance transfer involves
919(f)(2)). the transfer of funds from the sender’s account held
by the provider, the receipt may be provided on or
XVI. Transfers Scheduled before the with the next periodic statement for that account, or
Date of Transfer—12 CFR 1005.36 within 30 days after the date of the transfer if a
periodic statement is not provided (12 CFR 1005.36
Applicability of subpart B. The requirements set (a)(2)(ii)).
forth in subpart B apply to remittance transfers
scheduled before the transfer date, unless modi-
fied by 12 CFR 1005.36. For example, the foreign Accuracy—12 CFR 1005.36(b)
language disclosure requirements apply to disclo- For a one-time transfer scheduled five or more
sures provided in connection with transfers sched- business days in advance or for the first in a series
uled in advance (Comment 36-1). of preauthorized remittance transfers, disclosures
provided must be accurate when a sender makes
Timing—12 CFR 1005.36(a) payment except to the extent estimates are permit-
ted. Unless estimates are permitted, for each
For one-time transfers scheduled five or more subsequent preauthorized remittance transfer, the
business days in advance or for the first in a series most recent receipt provided must generally be
of transfers authorized in advance to recur at accurate as of when such transfer is made except
substantially regular intervals (preauthorized remit- to the extent estimates are permitted. Temporal
tance transfers), the remittance transfer provider elements in the disclosures like the date of
must provide either a prepayment disclosure and a availability and the transfer date must only be
receipt or a combined disclosure at the time the accurate if the transfer is the first transfer after the
sender requests the transfer but prior to payment. If disclosure was provided (12 CFR 1005.36(b)).
any of the disclosures provided contain estimates,
the provider must mail or deliver an additional
receipt no later than one business day after the Cancellation—12 CFR 1005.36(c)
date of the transfer. If the transfer involves the Cancellation of transfers scheduled at least three
transfer of funds from the sender’s account held by days in advance. A remittance transfer provider
the provider, this additional receipt may be pro- must comply with any oral or written request to
vided on or with the next periodic statement for that cancel any remittance transfer scheduled by the
account or within 30 days after the date of the sender at least three business days before the date
transfer if a periodic statement is not provided. of the remittance transfer if the request to cancel
Subsequent preauthorized remittance transfers. a. enables the provider to identify the sender’s
For each subsequent preauthorized remittance name and address or telephone number and
transfer, the provider must provide an updated the particular transfer to be cancelled, and
receipt if any of the information (other than temporal
disclosures) on the most recent receipt is no longer b. is received by the provider at least three
accurate for reasons other than as permitted in the business days before the scheduled date of the
estimates provisions of 12 CFR 1005.32. The remittance transfer (12 CFR 1005.36(c)).
receipt must clearly and conspicuously indicate The right of cancellation applies when a remit-
that it contains updated disclosures and must be tance transfer is scheduled by the sender at least
mailed or delivered to the sender within a reason- three business days before the date of the transfer,
able time prior to the scheduled date of the next regardless of whether the sender schedules a
subsequent preauthorized remittance transfer. If preauthorized remittance transfer or a one-time
the disclosure is mailed no later than 10 business transfer. For transfers scheduled less than three
days or delivered by hand or electronically no later business days before the date of transfer the 30
than 5 business days before the scheduled date of minute cancellation deadline in 12 CFR 1005.34
the transfer, the provider is deemed to have applies (Comment 36(c)-1).
provided the disclosure within a reasonable time
Cancelled preauthorized remittance transfers.
(12 CFR 1005.36(a)(2)(i) and Comments 36(a)
For preauthorized remittance transfers, the pro-
(2)-1, -2, and -3).
vider must assume the request to cancel applies to
For each subsequent preauthorized transfer, the all future preauthorized remittance transfers, unless
remittance transfer provider must mail or deliver to the sender specifically indicates that it should
the sender a receipt no later than one business day apply only to the next scheduled transfer (Com-
after the date of the transfer. This is not required in ment 36(c)-2).
Concurrent cancellation obligations. A financial the applicable cancellation period on either the
institution that is also a remittance transfer provider receipt provided when payment is made or on a
may have both stop payment obligations under 12 second receipt, the disclosure must be phrased
CFR 1005.10 and cancellation obligations under 12 and formatted in such a way that it is clear to the
CFR 1005.36. If a sender cancels a remittance sender which cancellation period is applicable to
transfer under 12 CFR 1005.36 with a remittance any date of transfer on the receipt (Comments
transfer provider that holds the sender’s account, 31(b)(2)-4 and -5).
and the transfer is a preauthorized transfer, 12 CFR
1005.36 applies exclusively (Comment 36(c)-3).
THE FOLLOWING SECTIONS ARE
Additional Requirements for Subsequent APPLICABLE TO BOTH SUBPART A
Preauthorized Remittance Transfers— AND SUBPART B.
12 CFR 1005.36(d)
XVII. Preemption
Disclosure requirement. For any subsequent trans-
fer in a series of preauthorized remittance transfers, The EFTA and Regulation E preempt inconsistent
the remittance transfer provider must disclose state laws but only to the extent of the inconsis-
tency. The CFPB is given the authority to determine
a. the date of the subsequent transfer using the
whether or not a state law is inconsistent. An entity,
term ‘‘Future Transfer Date’’ or a substantially
state, or other interested party may request the
similar term,
CFPB to make such a determination. A state law will
b. a statement of the sender’s cancellation rights, not be deemed inconsistent if it is more protective
and of the consumer than the EFTA or Regulation E.
c. the name, telephone number(s), and website of Upon application, the CFPB has the authority to
the remittance transfer provider (12 CFR exempt any state from the requirements of the
1005.36(d)(1)). EFTA or the regulation for any class of EFTs within
a state, with the exception of the civil liability
The disclosures must be provided no more than provision (EFTA section 922 and 12 CFR 1005.12(b)
12 months, and no less than 5 business days prior and (c)).
to, the date of the subsequent preauthorized
remittance transfer. For any subsequent preautho-
rized remittance transfer for which the date of XVIII. Administrative Enforcement
transfer is 4 or fewer business days after the date and Record Retention—12 CFR
payment is made, the disclosure must generally be
provided on or with the receipt for the initial transfer
1005.13
in that series (12 CFR 1005.36(d)(2)). Section 918 of the EFTA sets forth the federal
A remittance transfer provider has some flexibil- agencies responsible for enforcing compliance
ity in determining how and when the disclosures with the provisions of the law and its implementing
required by 12 CFR 1005.36(d)(1) may be provided regulation.
to senders. They may be provided as a separate Record retention. Any person subject to the
disclosure, or on or with any other disclosure EFTA and Regulation E must maintain evidence of
required by subpart B related to the same series of compliance with the EFTA and Regulation E for at
preauthorized remittance transfers, provided that least two years from the date the disclosures are
the disclosure and timing requirements in 12 CFR required to be made or action is required to be
1005.36(d)(2) and other applicable provisions in taken. The agency supervising the person may
subpart B are satisfied (Comment 36(d)-1). extend this period. The period may also be
If any of the information provided in these extended if the person is subject to an action filed
disclosures change, the provider must provide an under Sections 910, 915, or 916(a) of the EFTA,
updated disclosure with the revised information which generally apply to the person’s liability under
that is accurate as of when the transfer is made (12 the EFTA and Regulation E. Persons subject to the
CFR 1005.36(d)(1) and (4) and Comments 36(d)-2, EFTA who have actual notice that they are being
-3 and -4). investigated or subject to an enforcement proceed-
ing must retain records until disposition of the
For any subsequent preauthorized remittance
proceeding (12 CFR 1005.13 and 1005.33(g)).
transfer, the future date of transfer must be
provided on any receipt provided for the initial Records may be stored on microfiche, microfilm,
transfer in that series of preauthorized remittance magnetic tape, or in any other manner capable of
transfers. If the provider discloses the dates of accurately retaining and reproducing the informa-
subsequent preauthorized remittance transfers and tion.
References
Laws
15 U.S.C. 1693 et seq., Electronic Fund Transfer
Act
15 U.S.C. 7001 et seq., Electronic Signatures in
Global and National Commerce
Regulations
Consumer Financial Protection Bureau
Regulations (12 CFR)
Part 1005 Electronic Fund Transfers (Regulation E)
These examination procedures are divided into (e.g., written policies and procedures, manage-
three sections: ment’s self-assessments, customer complaints,
• Section I covers management and policy related prior examination reports) and any compliance
procedures for both financial institutions and audit material, including work papers and re-
other entities that may be remittance transfer ports, determine whether
providers (referred to herein as ‘‘entity’’). a. there are any weaknesses or other risks in
• Section II covers electronic fund transfers con- the business model
ducted by financial institutions. b. the scope of the audit addresses all provi-
• Section III applies to remittance transfer provid- sions of Regulation E as applicable
ers (including financial institutions). c. the scope of the audit addresses all key
business processes and functions, including
Each examination should be risk-based and may
those carried out by third-party service
not require an examiner to complete all three
providers or key business partners, as ap-
sections. In addition, each agency may have its
propriate
own supervisory strategy that will dictate which
sections of these examination procedures are d. management has taken corrective actions to
required to be completed. follow up on previously identified deficien-
cies
e. as applicable, testing includes risk-based
EXAMINATION OBJECTIVES samples covering product types and deci-
In general, a Regulation E examination is con- sion centers
ducted to f. there is an audit trail that supports the
A. determine the entity’s compliance with Regula- findings and conclusions of the work per-
tion E formed
B. assess the quality of the entity’s compliance risk g. significant deficiencies and their causes are
management systems and its policies and included in reports to management and/or to
procedures for implementing Regulation E the board of directors or principal(s)
C. determine the level of reliance that can be h. the frequency of review is appropriate
placed on the entity’s internal controls and 3. Through discussions with management and
procedures for monitoring the entity’s compli- review of available information, determine
ance with Regulation E whether the entity’s internal controls are ad-
D. as appropriate, direct corrective action when equate to ensure compliance with respect to the
violations of law are identified or when the Regulation E area under review. Consider among
entity’s policies or internal controls are deficient other things
a. organizational charts;
sections of Regulation E that apply to the customer liability. The deposit agreement
individual entity’s product offerings and op- may not impose greater liability than Regu-
erations including, to the extent appropriate, lation E provides but may provide for less
those functions carried out by third-party consumer liability (12 CFR 1005.6).
service providers or other business partners,
f. preauthorized debits and credits comply
such as agents and correspondent banks
with the regulation (12 CFR 1005.10)
Section II—Subpart A
Based on the materials reviewed within Section I, Disclosures, notices, receipts, periodic
and as applicable, complete Section II to deter- statements, and preauthorized transfers
mine the financial institution’s compliance with 3. If the financial institution has changed the
Regulation E. terms or conditions of initial disclosures for EFT
services since the last examination that re-
Transaction-related examination procedures quired a written notice to the customer, deter-
mine that the institution provided the proper
Conduct transaction testing, using the following notice in a timely manner (12 CFR 1005.8(a)).
examination procedures:
4. Review a sample of periodic statements for
1. Obtain and review copies of the following: each type of account in which electronic fund
a. disclosure forms; transfers occur to determine that they contain
sufficient information for the consumer to
b. advertising and scripts for overdraft opt-ins;
identify transactions adequately and that they
c. account agreements; otherwise comply with regulatory requirements
d. procedural manuals and written policies; (12 CFR 1005.9).
required to be taken (12 CFR 1005.13(b)). sumer of the right to revoke such consent.
NOTE: An institution does not have to meet the
Payroll cards and ATMs notice requirements described above if it has a
9. If the financial institution maintains payroll card policy and practice of declining to authorize and
accounts and does not provide periodic state- pay any ATM or one-time debit card transactions
ments under 12 CFR 1005.9(b) for these when it has a reasonable belief at the time of the
accounts, verify that the institution makes authorization request that the consumer does not
available the account balance by telephone, an have sufficient funds available to cover the trans-
electronic history of account transactions, and action. However, it is still prohibited from charging
(upon request) a written history of account fees for paying an ATM or one-time debit transac-
transactions (12 CFR 1005.18(b)). tion overdraft (12 CFR 1005, and Comment 1005.17
(b)-1(iv)).
10. If the financial institution maintains payroll card
accounts, verify that the financial institution 13. Determine that in assessing overdraft fees for
complies with the modified requirements with consumers who have not opted in, the institu-
respect to the required initial disclosures, error tion charges fees only for negative balances,
resolution notices, limitations on liability, and daily, or sustained overdraft, or similar fees,
error resolution procedures (12 CFR 1005.18 when the negative balance is attributable in
(c)). whole or in part to checks, automated clearing
house (ACH) or other transactions not subject
11. If the financial institution operates one or more
to the fee prohibition, and that the fee is
ATMs for which it charges a fee for use,
determine that the financial institution provides assessed based on the date when the check is
notice of the fee and the amount of the fee on paid into overdraft, not the date of the ATM or
the screen of the ATM or on paper before the one-time debit transaction (Comment 1005.17
consumer is committed to paying the fee (12 (b)-9).
CFR 1005.16). 14. Determine that the financial institution does not
(12 CFR 1005.17(b)(2))
Overdrafts a. condition the payment of any overdrafts for
12. Determine that the financial institution holding a checks, ACH transactions, and other types
consumer’s account does not assess a fee or of transactions on the consumer affirma-
charge on a consumer’s account for paying an tively consenting to the institution’s pay-
ATM or one-time debit card transaction pursu- ment of ATM and one-time debit card
ant to the institution’s overdraft service,19 transactions pursuant to the institution’s
unless the institution (12 CFR 1005.17(b)(1)) overdraft service; or
a. provides the consumer with a notice in b. decline to pay checks, ACH transactions,
writing (or if the consumer agrees, electroni- and other types of transactions that over-
cally), that is segregated from all other draw the consumer’s account because the
information and describes the institution’s consumer has not affirmatively consented
overdraft service; to the institution’s overdraft service for ATM
and one-time debit card transactions.
b. provides a reasonable opportunity for the
consumer to affirmatively consent, or opt in, 15. Determine that the financial institution provides
to the service for ATM and one-time debit to consumers who do not affirmatively consent
card transactions; to the institution’s overdraft service for ATM and
one-time debit card transactions the same
c. obtains the consumer’s affirmative consent, account terms, conditions, and features that it
or opt-in, to the institution’s payment of ATM provides to consumers who affirmatively con-
or one-time debit card transactions; and sent, except for the overdraft service for ATM
d. provides the consumer with confirmation of and one-time debit card transactions (12 CFR
the consumer’s consent in writing (or if the 1005.17(b)(3)).
consumer agrees, electronically), which 16. Ensure that the notice required by 12 CFR
includes a statement informing the con- 1005.17(b)(1)(i) is substantially similar to Model
Form A-9 (Model Consent Form for Overdraft
19. The term ‘‘overdraft service’’ means a service under which Services), includes all applicable items in the
a financial institution assesses a fee or charge on a consumer’s following list, and does not contain any addi-
account held by the financial institution for paying a transaction
(including a check or other item) when the consumer has tional information (12 CFR 1005.17(d) and
insufficient or unavailable funds in the account (12 CFR 1005.17 Comments 1005.17(d)-1 through 1005.17(d)-5):
(a)). ‘‘Overdraft service’’ does not include a service that transfers
funds from another account held by a consumer or a line of credit. a. Overdraft service. A brief description of the
financial institution’s overdraft service and consent. The response portion of Model Form A-9
the types of transactions for which a fee or may be tailored to the methods offered for opting in
charge for paying an overdraft may be and may include reasonable methods to identify
imposed, including ATM and one-time debit the account, such as a bar code.
card transactions. 17. Determine that, when two or more consumers
b. Fees imposed. The dollar amount of any jointly hold an account, the financial institution
fees or charges assessed by the financial treats the affirmative consent of any of the joint
institution for paying an ATM or one-time consumers as affirmative consent for that
debit card transaction pursuant to the account and treats a revocation of affirmative
institution’s overdraft service, including any consent by any of the joint consumers as
daily or other overdraft fees. If the amount of revocation of consent for that account (12 CFR
the fee is determined on the basis of the 1005.17(e)).
number of times the consumer has over- 18. Ensure that a consumer may affirmatively
drawn the account, the amount of the consent to the financial institution’s overdraft
overdraft, or other factors, the institution service at any time in the manner described in
must disclose the maximum fee that may be the institution’s (12 CFR 1005.17(b)(1)(i)) no-
imposed. tice, and that a consumer may also revoke
c. Limits on fees charged. The maximum consent at any time in the manner made
number of overdraft fees or charges that available to the consumer for providing con-
sent (12 CFR 1005.17(f)).
may be assessed per day, or, if applicable,
that there is no limit. 19. Determine that the financial institution imple-
ments a consumer’s revocation of consent as
d. Disclosure of opt-in right. An explanation of
soon as reasonably practicable (12 CFR 1005
the consumer’s right to affirmatively con-
(17)(f)).
sent to the financial institution’s payment of
overdrafts for ATM and one-time debit card 20. Determine that a consumer’s affirmative con-
transactions pursuant to the financial insti- sent to the institution’s overdraft service is
tution’s overdraft service, including the effective until revoked by the consumer or until
methods by which the consumer may the financial institution terminates the service
consent to the service; and (12 CFR 1005.17(g)).
e. Alternative plans for covering overdrafts. If 21. Determine that the financial institution’s over-
the institution offers both a line of credit draft protection program incorporates your
subject to Regulation Z (12 CFR Part 1026) agency’s guidance as applicable.
and a service that transfers funds from
another account of the consumer held at
Gift card disclosures
the institution to cover overdrafts, the insti-
tution must state in its opt-in notice that both 22. Determine that the disclosures required by the
alternative plans are offered. If the institu- sections listed below are made on the certifi-
tion offers one, but not the other, it must cate or card, or in the case of a loyalty, award,
state in its opt-in notice the alternative plan or promotional gift card, on the card, code, or
that it offers. If the institution does not offer other device:
either plan, it should omit the reference to a. 12 CFR 1005.20(a)(4)(iii) (loyalty, award, or
the alternative plans. If the financial institu- promotional gift card);
tion offers additional alternatives for paying
overdrafts, it may (but is not required to) b. 12 CFR 1005.20(d)(2) (dormancy, inactivity,
disclose those alternatives. or service fees);
NOTE: Permitted modifications and additional con- c. 12 CFR 1005.20(e)(3) (expiration date or
tent. If applicable, the institution may modify the phone and web regarding replacement);
content required by 12 CFR 1005.17(d) to indicate and
that the consumer has the right to opt into, or opt d. 12 CFR 1005.20(f)(2) (phone and web
out of, the payment of overdrafts under the regarding fees).
institution’s overdraft service for other types of
transactions, such as checks, ACH transactions, or NOTE: A disclosure made in an accompanying
automatic bill payments; to provide a means for the terms and conditions document, on packaging
consumer to exercise this choice; and to disclose surrounding a certificate or card, or on a sticker or
the associated returned-item fee and that addi- other label affixed to the certificate or card does not
tional merchant fees may apply. The institution may constitute a disclosure on the certificate or card.
also disclose the consumer’s right to revoke If the certificate or card is electronic, determine
that disclosures are provided electronically on the prominence and in close proximity to the
certificate or card provided to the consumer. certificate or card expiration date, that:
If an issuer provides a code or confirmation to a i. the certificate or card expires, but the
consumer orally, determine that the issuer provides underlying funds either do not expire or
to the consumer a written or electronic copy of the expire later than the certificate or card,
code or confirmation promptly and the applicable and
disclosures are provided on the written copy of the ii. the consumer may contact the issuer
code or confirmation (12 CFR 1005.20(c)(4)). for a replacement card (12 CFR 1005.20
23. Determine that the following are stated, as (e)(3)).
applicable, clearly and conspicuously on the
26. Determine that a loyalty, award, or promotional
gift certificate, store gift card, or general-use
gift card sold or issued by the examined
prepaid card:
institution sets forth the following disclosures,
a. the amount of any dormancy, inactivity, or as applicable: (12 CFR 1005.20(a)(4)(iii))
service fee that may be charged;
a. a statement on the front of the card, code,
b. how often such fee may be assessed; and or other device, indicating that the card,
c. that such fee may be assessed for inactivity code, or other device is issued for loyalty,
(12 CFR 1005.20(d)(2)). award, or promotional purposes;
24. Determine that the following disclosures and b. the expiration date for the underlying funds
information are provided in connection with a on the front of the card, code, or other
gift certificate, store gift card, or general-use device;
prepaid card as applicable. For each type of c. the amount of any fees that may be
fee that may be imposed in connection with the imposed in connection with the card, code,
certificate or card (other than a dormancy, or other device, and the conditions under
inactivity, or service fee, which are discussed which they may be imposed. This disclo-
above) the following information must be pro- sure must be provided on or with the card,
vided on or with the certificate or card: code, or other device; and
a. the type of fee; d. a toll-free telephone number and, if one is
b. the amount of the fee (or an explanation of maintained, a website that a consumer may
how the fee will be determined); use to obtain fee information on the card,
c. the conditions under which the fee may be code, or other device.
imposed; and 27. Determine that a person (examined institution)
d. a toll free number, and if one is maintained, that issues or sells a gift certificate, store gift
a website that a consumer may use to card, or general-use prepaid card discloses to
obtain information about the fees described the consumer, prior to purchase, the informa-
in paragraphs 12 CFR 1005.20(d)(2) and 12 tion required by 12 CFR 1005.20(d)(2) (dor-
CFR 1005.20(f)(1) (described immediately mancy, inactivity, or service fees), 12 CFR
above) of this section must be disclosed on 1005.20(e)(3) (expiration date or phone and
the certificate or card (12 CFR 1005.20(f)). web regarding replacement), and 12 CFR
1005.20(f)(1) (other fees). (12 CFR 1005.20(c)
25. If an expiration date applies to a certificate or
(3))
card, determine that the following disclosures
are provided on the certificate or card, as 28. Determine that the fees, terms, and conditions
applicable: of expiration that are required to be disclosed
prior to purchase are not changed after
a. the expiration date for the underlying funds
purchase. (12 CFR 1005.20(c)(3))
or, if the underlying funds do not expire, that
fact; 29. Determine that no person (examined institution)
imposes a dormancy, inactivity, or service fee
b. a toll-free telephone number and, if one is
with respect to a gift certificate, store gift card,
maintained, a website that a consumer may
or general-use prepaid card, unless (12 CFR
use to obtain a replacement certificate or
1005.20(d))
card after the certificate or card expires if
the underlying funds may be available; and a. there has been no activity with respect to
the certificate or card, in the one year
c. except where a non-reloadable certificate
period ending on the date on which the fee
or card bears an expiration date that is at
is imposed;
least seven years from the date of manufac-
ture, a statement, disclosed with equal b. required disclosures are provided; and
c. not more than one dormancy, inactivity, or relates to the provider’s remittance program.
service fee is imposed in any given calen-
Examples of this include but are not limited to:
dar month.
a. list of divisions or departments involved in
30. Determine that the person (examined institu-
offering or providing remittance transfers (e.g.
tion) does not sell or issue a gift certificate,
retail, high net worth, prepaid cards, bill pay-
store gift card, or general-use prepaid card
ment, online or mobile banking, foreign ex-
with an expiration date unless (12 CFR 1005.20
change and/or treasury departments);
(e))
b. remittance transfer products offered;
a. required expiration date disclosures are
provided on the certificate or card, as c. disclosure forms in all languages (as appli-
applicable; cable);
b. it has established policies and procedures d. list of foreign countries to which the provider
to provide consumers with a reasonable sends remittance transfers;
opportunity to purchase a certificate or card
e. list of all foreign currencies in which remittance
with at least five years remaining until the
transfers sent by the provider may be received
certificate or card expiration date;
where there are limitations on such currencies,
c. the expiration date for the underlying funds and identification of the currencies in which the
is at least the later of provider controls the exchange rate;
i. five years after the date the gift certifi- f. list of all third-party service providers or busi-
cate was initially issued, or the date on ness partners involved in remittance transfers,
which funds were last loaded to a store including correspondent banks, payment net-
gift card or general-use prepaid card; works, payment processors, software provid-
or ers, foreign currency providers, agents in the
ii. the certificate or card expiration date, if United States or abroad, or similar entities;
any; and g. locations of U.S. and foreign agents;
d. no fee or charge is imposed on the h. applicable documentation related to remittance
cardholder for replacing the gift certificate, transfer operations (e.g., transaction logs, agent/
store gift card, or general-use prepaid card correspondent agreements, advertising and
or for providing the certificate or card marketing material including any done in for-
holder with the remaining balance in some eign languages, and documentation regarding
other manner prior to the funds expiration calculation or estimates of fees, taxes, ex-
date, unless such certificate or card has change rates, and dates included on disclo-
been lost or stolen. sures);
i. procedural manuals and written policies;
Section III—Subpart B: Requirements
for remittance transfers j. error resolution files;
k. form letters used in case of errors or questions
If an entity provides remittance transfers in its
concerning a remittance transfer (including any
‘‘normal course of business,’’ it is a remittance
provided in foreign languages);
transfer provider subject to the rule and should be
examined based on the following procedures.20 l. any agreements with third parties allocating
compliance responsibilities; and
e. disclosures comply with the format require- iii. the amount that will be received by the
ments regarding grouping of like items, designated recipient (total amount of
proximity, prominence and size, and segre- the transaction minus covered third-
gation from other information; and party fees) using the term ‘‘Total to
Recipient’’ or a substantially similar
f. disclosure of amounts required to be dis- term; and
closed under 12 CFR 1005.31(b) (1), (2),
and (3), use the appropriate terms (e.g., iv. if applicable, a statement that non-
transfer amount, transfer taxes, currency) or covered third-party fees or taxes col-
substantially similar terms. lected on the remittance transfer by a
third person may apply to the remit-
2. If applicable, determine whether the provider tance transfer and result in the desig-
complies with the foreign language disclosure nated recipient receiving less than the
requirements as outlined under 12 CFR amount disclosed.
1005.31(g).
d. If the provider includes in the statement
under (c)(iii) above, the optional estimated
Prepayment disclosures—12 CFR disclosure of applicable non-covered third-
party fees or taxes, determine if the esti-
1005.31(b)(1)
mates are based on reasonable sources.
3. Based on a review of the provider’s policies
NOTE: The exchange rate used to calculate the
and if appropriate, sampled transactions, de-
amounts under (c) is prior to any rounding.
termine that it appropriately categorizes third-
party fees as covered or non-covered.
4. Based on a review of the provider’s policies on Receipt disclosures—12 CFR
prepayment disclosures and if appropriate, 1005.31(b)(2)
sampled prepayment disclosures and related
documentation, determine whether the pro- 5. Review policies on receipt disclosures, sample
vider appropriately calculates and discloses receipts, and related documentation to deter-
a. in the currency in which the remittance mine whether the provider appropriately calcu-
transfer is funded: lates and discloses:
(CFPB) and if applicable, the state agency b. For amounts that are not estimates, confirm
that licenses or charters the remittance that the disclosed amounts were accurate
transfer provider with respect to the remit- at the time that payment was made.
tance transfer and for questions or com-
c. For amounts that are estimates, determine
plaints about the remittance transfer pro-
whether the estimates were calculated
vider, as well as their telephone number(s)
correctly, in accordance with the applicable
and website addresses.
bases outlined in 12 CFR 1005.32.
NOTE: For any remittance transfer scheduled by d. In the case of estimates pursuant to 1005.32
the sender at least three business days before the (a), (b)(1), and (b)(2) that are based on an
date of the transfer, the statement about the rights approach that is not one of the listed bases
of the sender regarding cancellation must state that in 1005.32(c), determine that the recipient
the sender must request the cancellation, at least received the same, or greater, amount of
three business days before the next scheduled funds than what was disclosed.
transfer. The statement must also note that the
request must enable the provider to identify the 8. Review processes and procedures or records,
sender’s contact information and the particular as appropriate, to determine whether the
transfer to be cancelled. required disclosures are provided in accor-
dance with the timing requirements in 12 CFR
1005.31(e).
Combined disclosures—12 CFR a. Determine whether prepayment disclosures
1005.31(b)(3) are provided when the sender requests the
remittance transfer, but prior to payment.
NOTE: Complete this section only if the provider
provides combined disclosures as an alternative to b. Determine whether receipts are provided
the prepayment and receipt disclosures. when payment is made, or in accordance
with 1005.31(e)(2) for transactions con-
6. Review policies on combined disclosures, ducted by telephone.
sample disclosures and related documentation
to
a. determine that they contain all the informa- Long-form error resolution and
tion required for the prepayment disclosure cancellation notice—12 CFR
and receipt disclosure as described above; 1005.31(b)(4)
b. determine that the provider provides a 9. Determine the provider’s policy for providing
proof of payment after payment is made for long-form error resolution and cancellation
each transaction; and notices to senders upon request.
c. determine that the proof of payment is clear 10. Review the provider’s records of senders’
and conspicuous, provided in writing or requests and determine that a long-form error
electronically, and provided in a retainable resolution and cancellation notice is promptly
form. provided in response to each request.
11. Review sample notices to determine that they
Accuracy and timing—12 CFR use language set forth in Model Form A-36
1005.31(e) and (f) (Model Form for Error Resolution and Cancel-
lation Disclosures (Long) of Appendix A to
7. Review, as appropriate, all available informa- subpart B) or substantially similar language.
tion including transactions or investigation/
trace logs/records or similar documents to
verify (subject to the disclaimer statement with Estimates—12 CFR 1005.32
respect to non-covered third-party fees and
third-party taxes) the accuracy of disclosures Temporary exception for insured
provided to consumers. institutions—12 CFR 1005.32(a)
a. In instances in which prepayment disclo- 12. Determine that the remittance transfer provider
sures and receipts are provided that do not is an insured institution within the definition of
contain estimates, confirm with respect to the rule. If it is, review the appropriate informa-
any transaction for which payment was tion including transaction log/records, etc., to
made, that the information on the most identify remittance transfer transactions that
recent prepayment disclosure for that trans- were sent from the sender’s account with the
action and the information on the receipt for institution. From the list, identify transactions for
that transaction are the same. which estimates were used.
determine whether it has developed and main- i. an incorrect amount paid by the sender;
tains adequate written policies and procedures ii. a computational or bookkeeping error
designed to ensure compliance with the error made by the remittance transfer pro-
resolution requirements applicable to remit- vider; or
tance transfers.
iii. failure to make the amount of currency
Consider: stated in the disclosures available to
a. the procedures for receiving complaints of the designated recipient.
error from branches, agents, or other loca- 26. Determine whether the provider either
tions where a consumer may lodge a
complaint; a. refunds the amount of funds provided by
the sender (in case of a transaction that was
b. the procedures for identifying complaints not properly transmitted) or the amount
alleging ‘‘errors’’ as identified in 12 CFR appropriate to resolve the error; or
1005.33(a); and
b. makes available to the designated recipient
c. the procedures for investigating, respond- the amount appropriate to resolve the error
ing to, and resolving complaints. without additional cost to the sender or the
23. Determine the extent of the provider’s compli- designated recipient.
ance with its policies and procedures on error c. If the error relates to the failure to make
resolution. funds available to the designated recipient
24. Determine the provider’s compliance with the by the disclosed date of availability (other
regulatory requirements regarding investiga- than an error resulting from incorrect or
tion of alleged errors and notification of con- insufficient information provided by the
sumers within the allotted time frames. sender), determine whether the provider
ii. if the sender requested a remedy, ii. refunds to the sender any fees and, to
determine whether the provider pro- the extent not prohibited by law, taxes
vides the remedy selected by the collected on the remittance transfer.
sender. If a default remedy is provided, d. In the case of errors involving incorrect or
determine whether the sender had a insufficient information provided by the
reasonable time to designate a remedy sender for the transfer
after receiving a report of the error.
i. determine whether the provider refunds
iii. if the remedy is delivery of the amount to the sender the amount of funds that
appropriate to correct the error, deter- was not properly transmitted, or the
mine whether the provider corrects the amount appropriate to resolve the error,
error within one business day, or as within three business days of providing
soon as reasonably practicable, apply- the written explanation of findings;
ing the same exchange rate, fees, and
ii. alternatively, if the provider has not yet
taxes stated in the disclosure provided
processed a refund and agrees to the
in connection with the remittance trans-
sender’s request to apply the funds
fer with respect to which the error was
toward a new remittance transfer, in-
made;
stead of a refund, determine whether
iv. if the remedy is a refund, determine the provider treats the request as a new
whether the provider refunds the appro- remittance transfer, provides the appro-
priate amount within one business day priate disclosures, and appropriately
or as soon as reasonably practicable deducts those fees and taxes actually
thereafter. collected for the original unsuccessful
b. If the provider determines that an error transaction.
occurred that relates to 27. Determine that the provider is maintaining
records of compliance for a period of not less ii. the quality and frequency of training
than two years from the date a notice of error provided to ensure that agents are
was submitted to the provider or action was aware of the regulatory requirements
required to be taken by the provider. and the provider’s internal policy guide-
lines; and
Procedures for cancellation and refund iii. the adequacy of the provider’s over-
sight of agents’ activities.
of remittance transfers—12 CFR 1005.34
and 12 CFR 1005.36(c) 34. Select a sample of agents used by the provider
and review their records in addition to relevant
28. Review and assess the provider’s policies and
records held by the provider directly to deter-
procedures regarding cancellation and refund
mine that the activities performed by the agent
of remittance transfer transactions, including:
on the provider’s behalf are in compliance with
a. the procedures for receiving requests of the regulatory requirements.
cancellation from branches, agents, or
other locations where a consumer may
request cancellation Transfers scheduled before the date of
b. the procedures for identifying which trans- transfer—12 CFR 1005.36
actions are eligible for cancellation 35. Review and assess the adequacy of the
c. the procedures for issuing refunds provider’s policies and procedures regarding
transfers scheduled before the date of transfer.
29. Determine the extent of the provider’s compli-
ance with its own policies and procedures on 36. As appropriate, select a sample of records of
cancellation and refund. transfers scheduled in advance to determine
whether the provider complies with the timing
30. Determine the provider’s compliance with the
of disclosures, accuracy of disclosures (and
regulatory requirements regarding senders’
estimates pursuant to 1005.32(b)(2)), and the
request for cancellation and refund.
sender’s request for cancellation. Use the
31. Determine whether the provider complies with same methods identified in the sections above,
any oral or written request to cancel any regarding other disclosures. Consider the fol-
remittance transfer scheduled by the sender at lowing:
least three business days before the date of the
a. For one-time transfers scheduled five or
remittance transfer.
more business days in advance or for the
first in a series of preauthorized remittance
Acts of agents—12 CFR 1005.35 transfers, determine whether the provider
provides either a prepayment disclosure
NOTE: Complete this section if the provider uses and a receipt or a combined disclosure at
agent(s) to conduct any element of remittance the time the sender requests the transfer
transfer transactions. but prior to payment.
32. Review the provider’s agreements with agents (NOTE: If any of the disclosures provided contain
used for remittance transfers to determine estimates as permitted by 12 CFR. 1005.32(b)(2),
whether they are appropriate for the activities the provider must mail or deliver an additional
delegated. receipt no later than one business day after the
33. Determine whether the provider has estab- date of the transfer. If the transfer involves the
lished appropriate internal controls and review transfer of funds from the sender’s account held by
procedures in relation to the work done by the provider, this additional receipt may be pro-
agents on its behalf to ensure compliance with vided on or with the next periodic statement for that
the regulatory requirements. Consider account or within 30 days after the date of the
transfer if a periodic statement is not provided).
a. the extent to which the provider has estab-
lished and maintained policies or proce- b. For each subsequent preauthorized remit-
dures for compliance, including policies, tance transfer, determine whether the pro-
procedures, or other appropriate oversight vider provides an updated receipt if any of
measures designed to assure compliance the information (other than temporal disclo-
by an agent or authorized delegate acting sures or disclosures that are permitted to
for such provider including: be estimated) on the most recent receipt is
no longer accurate.
i. the degree of control the agent exer-
cises over the remittance transfer activi- (NOTE: The receipt must clearly and conspicuously
ties performed on the provider’s behalf; indicate that it contains updated disclosures and
Examiner’s Summary,
Recommendations, and Comments
This questionnaire can be used to review audit workpapers, to evaluate financial institution policies, to
perform transaction testing, and to train as appropriate. Complete only those aspects of the checklist that
specifically relate to the issue being reviewed, evaluated, or tested, and retain those completed sections in
the workpapers.
When reviewing audits, evaluating financial institution policies, or performing transaction testing, a ‘‘No’’
answer indicates a possible exception/deficiency, and you should explain it in the workpapers. If a line item
is not applicable within the area you are reviewing, indicate by using ‘‘NA.’’
Subpart A
Issuance of Access Devices—12 CFR 1005.5
1. Do the financial institution’s policies, practices, and procedures allow that
validated access devices are issued only:
• In response to oral or written requests (12 CFR 1005.5(a)(1)) Yes No NA
or
• As a renewal or substitution for an accepted access device? (12 CFR
1005.5(a)(2)) Yes No NA
2. Do the financial institution’s policies, practices, and procedures allow that
unsolicited access devices are issued only when the devices are:
• Not validated? (12 CFR 1005.5(b)(1)) Yes No NA
• Accompanied by a clear explanation that they are not validated and how
they may be disposed of if validation is not desired? (12 CFR 1005.5(b)(2)) Yes No NA
• Accompanied by the initial disclosures required by 12 CFR 1005.7? (12
CFR 1005.5(b)(3)) Yes No NA
• Validated only in response to a consumer’s request and after the financial
institution has verified the consumer’s identity by reasonable means (e.g.,
photograph, fingerprint, personal visit, and signature)? (12 CFR 1005.5
(b)(4) and Staff Commentary) Yes No NA
Consumer Liability for Unauthorized Electronic Fund Transfers (EFTs)—12 CFR 1005.6
3. Does the financial institution impose liability on the consumer for unauthor-
ized transfers only if: (12 CFR 1005.6(a))
• Any access device that was used was an accepted access device? Yes No NA
• The institution has provided a means to identify the consumer to whom it
was issued? Yes No NA
• The institution has provided the disclosures required by 12 CFR
1005.7(b)(l), (2), and (3)? Yes No NA
4. Does the financial institution not rely on consumer negligence or the deposit
agreement to impose greater consumer liability for unauthorized EFTs than is
permitted under Regulation E? (12 CFR Part 1005, Supp. 1, Comments
1005.6(b)-1 and -2) Yes No NA
5. If a consumer notifies the financial institution within two business days after
learning of the loss or theft of an access device, does the financial institution
limit the consumer’s liability for unauthorized EFTs to the lesser of $50 or
actual loss? (12 CFR 1005.6(b)(1)) Yes No NA
6. If a consumer does not notify the financial institution within two business days
after learning of the loss or theft of an access device, does the institution limit
the consumer’s liability for unauthorized EFTs to the lesser of $500 or the sum
of (12 CFR 1005.6(b)(2)):
• $50 or the amount of unauthorized EFTs that occurred within the two
business days, whichever is less; Yes No NA
Plus
• The amount of unauthorized EFTs that occurred after the close of two
business days and before notice to the financial institution (provided the
financial institution establishes that these transfers would not have
occurred had the consumer notified the financial institution within that
two-day period)? Yes No NA
7. If a consumer notifies the financial institution of an unauthorized EFT within 60
calendar days of transmittal of the periodic statement upon which the
unauthorized EFT appears, does the financial institution not hold the
consumer liable for the unauthorized transfers that occur after the 60-day
period? (12 CFR 1005.6(b)(3)) Yes No NA
8. If a consumer does not notify the financial institution of an unauthorized EFT
within 60 calendar days of transmittal of the periodic statement upon which
the unauthorized EFT appears, does the financial institution ensure that the
consumer’s liability does not exceed the amount of the unauthorized transfers
that occur after the close of the 60 days and before notice to the financial
institution, if the financial institution establishes that the transfers would not
have occurred had timely notice been given? (12 CFR 1005.6(b)(3)) Yes No NA
9. If a consumer notifies the financial institution of an unauthorized EFT within
the time frames discussed in questions 7 or 8 and the consumer’s access
device is involved in the unauthorized transfer, does the financial institution
hold the consumer liable for amounts as set forth in 12 CFR 1005.6(b)(1) or
(2) (discussed in questions 5 and 6)? (12 CFR 1005.6(b)(3)) Yes No NA
NOTE: The first two tiers of liability (as set forth in 12 CFR 1005.6(b)(1) and (2)
and discussed in questions 5 and 6) do not apply to unauthorized transfers
from a consumer’s account made without an access device. (Comment
1005.6(b)(3)-2)
10. Does the financial institution extend the 60-day time period by a reasonable
amount if the consumer’s delay in notification was due to an extenuating
circumstance? (12 CFR 1005.6(b)(4)) Yes No NA
11. Does the financial institution consider notice to be made when the consumer
takes steps reasonably necessary to provide the institution with pertinent
information, whether or not a particular employee or agent of the institution
actually received the information? (12 CFR 1005.6(b)(5)(i)) Yes No NA
12. Does the financial institution allow the consumer to provide notice in person,
by telephone, or in writing? (12 CFR 1005.6(b)(5)(ii)) Yes No NA
13. Does the financial institution consider written notice to be given at the time the
consumer mails or delivers the notice for transmission to the institution by any
other usual means? (12 CFR 1005.6(b)(5)(iii)) Yes No NA
14. Does the financial institution consider notice given when it becomes aware of
circumstances leading to the reasonable belief that an unauthorized transfer
to or from the consumer’s account has been or may be made? (12 CFR
1005.6(b)(5)(iii)) Yes No NA
15. Does the financial institution limit the consumer’s liability to a lesser amount
than provided by 12 CFR 1005.6, when state law or an agreement between
the consumer and the financial institution provide for such an amount? (12
CFR 1005.6(b)(6)) Yes No NA
20. Does the financial institution provide either the long-form error resolution
notice at least once every calendar year or the short-form error resolution
notice on each periodic statement? (12 CFR 1005.8(b)) Yes No NA
26. Does the financial institution credit the amount of a preauthorized transfer as
of the date the funds for the transfer are received? (12 CFR 1005.10(a)(3)) Yes No NA
27. Does the financial institution ensure that an authorization is obtained for
preauthorized transfers from a consumer’s account by a written, signed or
similarly authenticated authorization, and is a copy of the authorization
provided to the consumer? (12 CFR 1005.10(b)) Yes No NA
28. Does the financial institution allow the consumer to stop payment on a
preauthorized EFT by oral or written notice at least three business days
before the scheduled date of the transfer? (12 CFR 1005.10(c)(1)) Yes No NA
29. If the financial institution requires that the consumer give written confirmation
of an oral stop-payment order within 14 days, does the financial institution
inform the consumer, at the time they give oral notification, of the requirement
and provide the address where they must send the written confirmation? Yes No NA
NOTE: An oral stop-payment order ceases to be binding after 14 days if the
consumer fails to provide the required written confirmation. (12 CFR
1005.10(c)(2))
30. Does the financial institution inform, or ensure that third-party payees inform,
the consumer of the right to receive notice of all varying transfers? Yes No NA
or
Does the financial institution give the consumer the option of receiving notice
only when a transfer falls outside a specified range of amounts or differs from
the most recent transfer by an agreed-upon amount? (12 CFR 1005.10(d)(2)) Yes No NA
31. If the financial institution or third-party payee is obligated to send the
consumer written notice of the EFT of a varying amount, does the financial
institution ensure that:
• The notice contains the amount and date of transfer? Yes No NA
• The notice is sent at least 10 days before the scheduled date of transfer?
(12 CFR 1005.10(d)(1)) Yes No NA
32. Does the financial institution not condition an extension of credit to a
consumer on the repayment of loans by preauthorized EFT, except for credit
extended under an overdraft credit plan or extended to maintain a specified
minimum balance in the consumer’s account? (12 CFR 1005.10(e)(1)) Yes No NA
33. Does the financial institution not require a consumer to establish an account
for EFTs with a particular institution as a condition of employment or receipt
of government benefits? (12 CFR 1005.10(e)(2)) Yes No NA
37. Does the financial institution report investigation results to the consumer
within three business days after completing its investigation and correct any
error within one business day after determining that an error occurred? (12
CFR 1005.11(c)(1)) Yes No NA
38. If the financial institution is unable to complete its investigation within 10
business days, does the financial institution have procedures to investigate
and resolve alleged errors within 45 calendar days of receipt of a notice of
error; and:
• Does the financial institution provisionally credit the consumer’s account in
the amount of the alleged error (including interest, if applicable) within 10
business days of receiving the error notice (however, if the financial
institution requires, but does not receive, written confirmation within 10
business days, the financial institution is not required to provisionally credit
the consumer’s account)? Yes No NA
• Within two business days after granting any provisional credit, does the
financial institution inform the consumer of the amount and date of the
provisional credit and gives the consumer full use of the funds during the
investigation? Yes No NA
• Within one business day after determining that an error occurred, does the
financial institution correct the error? Yes No NA
• Does the financial institution report the results to the consumer within three
business days after completing its investigation including, if applicable,
notice that provisional credit has been made final? (12 CFR 1005.11(c)) Yes No NA
NOTE: The time period is extended in certain circumstances. (12 CFR
1005.11(c)(3))
39. If a billing error occurred, does the financial institution not impose a charge
related to any aspect of the error-resolution process? (Comment 1005.11
(c)-3) Yes No NA
40. If the financial institution determines that no error occurred (or that an error
occurred in a manner or amount different from that described by the
consumer), does the financial institution send a written explanation of its
findings to the consumer and note the consumer’s right to request the
documents the financial institution used in making its determination? (12 CFR
1005.11(d)(1)) Yes No NA
41. When the financial institution determines that no error (or a different error)
occurred, does the financial institution notify the consumer of the date and
amount of the debiting of the provisionally credited amount and the fact that
the financial institution will continue to honor checks and drafts to third parties
and preauthorized transfers for five business days (to the extent that they
would have been paid if the provisionally credited funds had not been
debited)? (12 CFR 1005.11(d)(2)) Yes No NA
44. Does the financial institution provide the notice required by 12 CFR
1005.16(b) either by showing it on the ATM screen or by providing it on paper
before the consumer is committed to paying a fee? (12 CFR 1005.16(c)) Yes No NA
51. Does the financial institution provide consumers who do not affirmatively
consent to the institution’s overdraft service for ATM and one-time debit card
transactions the same account terms, conditions, and features that it
provides to consumers who affirmatively consent, except for the overdraft
service for ATM and one-time debit card transactions? (12 CFR 1005.17(b)
(3)) Yes No NA
52. Is the notice required by (12 CFR 1005.17(b)(1)(i)) substantially similar to
Model Form A-9 set forth in Appendix A of (12 CFR 1005.17), including
applicable items from the list below, and does it not contain any additional
information? (12 CFR 1005.17(d)) Yes No NA
• Overdraft service—Does the notice provide a brief description of the
overdraft service and the types of transactions for which a fee or charge for
paying an overdraft may be imposed, including ATM and one-time debit
card transactions? (12 CFR 1005.17(d)(1)) Yes No NA
• Fees imposed—Does the notice contain the dollar amount of any fees or
charges assessed by the financial institution for paying an ATM or one-time
debit card transaction pursuant to the financial institution’s overdraft
service, including any daily or other overdraft fees? Yes No NA
NOTE: If the amount of the fee is determined on the basis of the number of
times the consumer has overdrawn the account, the amount of the
overdraft, or other factors, the institution must disclose the maximum fee
that may be imposed. (12 CFR 1005.17(d)(2))
• Limits on fees charged—Does the notice disclose the maximum number of
overdraft fees or charges that may be assessed per day or, if applicable,
that there is no limit? (12 CFR 1005.17(d)(3)) Yes No NA
• Disclosure of opt-in right—Does the notice explain the consumer’s right to
affirmatively consent to the financial institution’s payment of overdrafts for
ATM and one-time debit card transactions pursuant to the institution’s
overdraft service, including the methods by which the consumer may
consent to the service? (12 CFR 1005.17(d)(4)) Yes No NA
• Alternative plans for covering overdrafts—As applicable, does the
institution’s opt-in notice appropriately address the alternative methods for
covering overdrafts? Yes No NA
• If the institution offers both a line of credit subject to Regulation Z (12 CFR
Part 1026) and a service that transfers funds from another account of the
consumer held at the institution to cover overdrafts, does the notice state
that both alternative plans are offered? Yes No NA
• If the institution offers one alternative plan, but not the other, does the notice
state which alternative plan it offers? If the institution does not offer either a
line of credit subject to Regulation Z (12 CFR Part 1026) or a service that
transfers funds from another account of the consumer held at the institution
to cover overdrafts plan, does the notice exclude information regarding
either of these plans? Yes No NA
• If the financial institution offers additional alternatives for paying overdrafts,
at its option the institution may (but is not required to) disclose those
alternatives. Does its notice describe those alternatives? Yes No NA
• Permitted modifications and additional content—If the institution modifies
the notice, are the modifications permitted: to indicate that the consumer
has the right to opt into, or out of, the payment of overdrafts under the
institution’s overdraft service for other types of transactions, such as
checks, ACH transactions, or automatic bill payments; to provide a means
for the consumer to exercise this choice; and to disclose the associated
returned item fee and that additional merchant fees may apply? Yes No NA
NOTE: The institution may also disclose the consumer’s right to revoke
consent. The response portion of Model Form A-9 may be tailored to the
methods offered for opting in and may include reasonable methods to identify
the account, such as a bar code. (12 CFR 1005.17(d)(6) and Comments
1005.17(d)-1 through -5))
53. Joint accounts—When two or more consumers jointly hold an account, does
the financial institution treat the affirmative consent of any of the joint
consumers as affirmative consent for that account, and treat the revocation of
affirmative consent by any of the joint consumers as revocation of consent for
that account? (12 CFR 1005.17(e)) Yes No NA
54. Continuing right to opt-in or to revoke opt-in—Does the financial institution
allow the consumer to affirmatively consent to the financial institution’s
overdraft service at any time in the manner described in the notice required
under (12 CFR 1005.17(b)(1)(i)) and allow a consumer to revoke consent at
any time in the manner made available to the consumer for providing
consent? (12 CFR 1005.17(f)) Yes No NA
55. Does the financial institution implement a consumer’s revocation of consent
as soon as reasonably practicable? (12 CFR 1005.17(f)) Yes No NA
56. Is the consumer’s affirmative consent to the overdraft service effective until
revoked by the consumer, or unless the financial institution terminates the
service? (12 CFR 1005.17(g)) Yes No NA
60. Does the financial institution begin the 60-day period for reporting any
unauthorized transfer under 12 CFR 1005.6(b)(3) on the earlier of the date the
consumer electronically accesses the consumer’s account after the elec-
tronic history made available to the consumer reflects the transfer, or the date
the financial institution sends a written history of the consumer’s account
transactions requested by the consumer in which the unauthorized transfer is
first reflected? (12 CFR 1005.18(c)(3)) Yes No NA
NOTE: A financial institution may comply with the provision above by limiting
the consumer’s liability for an unauthorized transfer as provided under 12
CFR 1005.6(b)(3) for any transfer reported by the consumer within 120 days
after the transfer was credited or debited to the consumer’s account.
61. Does the financial institution comply with the error resolution requirements in
response to an oral or written notice of an error from the consumer that is
received by the earlier of 60 days after the date the consumer electronically
accesses the consumer’s account after the electronic history made available
to the consumer reflects the alleged error, or 60 days after the date the
financial institution sends a written history of the consumer’s account
transactions requested by the consumer in which the alleged error is first
reflected? (12 CFR 1005.18(c)(4)) Yes No NA
NOTE: The financial institution may comply with the requirements for resolving
errors by investigating any oral or written notice of an error from the consumer
that is received by the institution within 120 days after the transfer allegedly in
error was credited or debited to the consumer’s account.
• The amount of fees that may be imposed in connection with the card, code,
or other device, and the conditions under which they may be imposed,
which must be provided with the card, code, or other device (12 CFR
1005.20(a)(4)(iii)(C)); and Yes No NA
• A toll-free telephone number and, if one is maintained, a website, that a
consumer may use to obtain fee information, which must be included on or
with the card, code, or other device (12 CFR 1005.20(a)(4)(iii)(D))? Yes No NA
65. If the terms of the gift certificate, store gift card, or general-use prepaid card
impose a dormancy, inactivity, or service fee as defined under (12 CFR
1005.20(a)), please answer the following:
• Has there been activity with respect to the certificate or card, in the
one-year period ending on the date on which the fee was imposed (12 CFR
1005.20(d)(1)); Yes No NA
• As applicable, are the following, clearly and conspicuously stated on the
gift certificate, store gift card, or general-use prepaid card Yes No NA
− The amount of any dormancy, inactivity, or service fee that may be
charged (12 CFR 1005.20(d)(2)(i)); Yes No NA
− How often such a fee may be assessed (12 CFR 1005.20(d)(2)(ii)); and Yes No NA
− That such fee may be assessed for inactivity (12 CFR 1005.20(d)(2)(iii))? Yes No NA
• Is the dormancy, inactivity, or service fee imposed limited to one in any
given calendar month (12 CFR 1005.20(d)(3))? Yes No NA
66. If the financial institution sells or issues a gift certificate, store gift card, or
general-use prepaid card with an expiration date, please answer the
following:
• Has the financial institution established policies and procedures to provide
consumers with a reasonable opportunity to purchase a certificate or card
with at least five years remaining until the certificate or card expiration date
(12 CFR 1005.20(e)(1))? Yes No NA
• The expiration date for the underlying funds is at least the later of five years
after the date the gift certificate was initially issued, or the date on which
funds were last loaded to a store gift card or general-use prepaid card; or
the certificate or card expiration date, if any (12 CFR 1005.20(e)(2))? Yes No NA
67. If the financial institution sells or issues a gift certificate, store gift card, or
general-use prepaid card with an expiration date, then are the following
disclosures provided on the certificate or card, as applicable:
• The expiration date for the underlying funds, or if the underlying funds do
not expire, the fact that the funds do not expire (12 CFR 1005.20(e)(3)(i)); Yes No NA
• A toll-free number and, if one is maintained, a website that a consumer may
use to obtain a replacement certificate or card after the certificate or card
expires if the underlying funds may be available (12 CFR 1005.20(e)(3)(ii));
and Yes No NA
• Except where a non-reloadable certificate or card bears an expiration date
that is at least seven years from the date of manufacture, a statement,
disclosed with equal prominence and in close proximity to the certificate or
card expiration date, that: Yes No NA
– The certificate or card expires, but the underlying funds either do not
expire or expire later than the certificate or card (12 CFR 1005.20(e)(3)
(iii)(A)); Yes No NA
– The consumer may contact the issuer for a replacement card (12 CFR
1005.20(e)(3)(iii)(B)); and Yes No NA
Complete the rest of the checklist if the provider offers remittance transfers in the
normal course of business.
2. Does the provider have written policies and operating procedures that
govern its remittance transfer operations? Yes No NA
3. Do these policies and procedures adequately address the requirements of
subpart B? Yes No NA
4. Are the provider’s personnel who are involved in remittance transfer
operations knowledgeable about the requirements of subpart B? Yes No NA
NOTE:
1. The proof of payment must be clear and conspicuous, provided in writing
or electronically, and provided in a retainable form.
2. For one-time transfers scheduled five or more business days in advance or
for the first in a series of preauthorized transfers, the provider may provide
confirmation that the transaction has been scheduled in lieu of the proof of
payment if payment is not processed at the time the remittance transfer is
scheduled. No further proof of payment is required when payment is later
processed.
Permanent exception for transfers scheduled before the date of transfer—12 CFR
1005.32(b)(2)
29. For transfers scheduled five or more business days before the date of the
transfer for which estimates may be provided, does the provider comply with
the requirements of 12 CFR 1005.32(b)(2)? Yes No NA
Permanent exception for optional disclosure of non-covered third-party fees and taxes
collected by a third party—12 CFR 1005.32(b)(3)
30. If the provider includes in the disclaimer statement required by 12 CFR
1005.31(b)(1)(viii), an optional estimated disclosure of applicable non-
covered third-party fees or taxes, are the estimates based on reasonable
sources? (12 CFR 1005.32(b)(3)? Yes No NA
NOTE: The provider can ask the sender to designate a preferred remedy at
the time the sender provides notice of the error but must indicate that a
resend remedy may be unavailable if the error occurred because the sender
provided incorrect or insufficient information.
39. If the sender provided an incorrect account number or recipient institution
identifier, does the provider comply with the requirements of 12 CFR
1005.33(h) in determining that no error occurred? Yes No NA
40. If the provider determines that no error or a different error occurred, does it
provide a written explanation of the findings, and note the sender’s right to
request the documents upon which the provider relied in making its
determination (12 CFR 1005.33(d))? Yes No NA
41. If the provider provides a default remedy, does it correct the error within one
business day or as soon as reasonably practicable, after the reasonable time
(deemed to be 10 business days) or the sender to designate the remedy has
passed? Yes No NA
NOTE: A default remedy is not applicable where the sender provided
incorrect or insufficient information.
42. If the sender requests a refund (for errors other than those related to failure
to deliver by the disclosed date where the sender provided incorrect or
insufficient information), does the provider refund within one business day or
as soon as reasonably practicable thereafter (12 CFR 1005.33(c)(2)(A))? Yes No NA
NOTE: The provider may generally, at its discretion, issue a refund either in
cash or in the same form of payment that was initially provided by the sender
for the remittance transfer.
43. If the sender requests delivery of the amount appropriate to correct the error
and the error did not occur because the sender provided incorrect or
insufficient information, does the provider correct the error within one
business day, or as soon as reasonably practicable, applying the same
exchange rate, fees, and taxes stated in the disclosure provided in
connection with the unsuccessful remittance transfer attempt (Comment
33(c)-3)? Yes No NA
44. In the case of errors involving incorrect or insufficient information provided by
the sender for the transfer, does the provider comply with the requirements of
12 CFR 1005.33(c)(2)(iii)? Yes No NA
45. If the provider determines that an error occurred that relates to: Yes No NA
• an incorrect amount paid by the sender;
• a computational or bookkeeping error made by the remittance transfer
provider; or
• failure to make the amount of currency stated in the disclosures available
to the designated recipient,
does the provider either:
• refund the amount of funds provided by the sender (in case of a transaction
that was not properly transmitted);
• refund the amount appropriate to resolve the error; or
• make available to the designated recipient, the amount appropriate to
resolve the error without additional cost to the sender or the designated
recipient (12 CFR 1005.33(c)(2)(i))?
46. If the error relates to the failure to make funds available to the designated
recipient by the disclosed date of availability (except in cases where the
sender provided incorrect or insufficient information), does the provider Yes No NA
• either (i) refund the amount of funds that was not properly transmitted, or
the amount appropriate to resolve the error to the sender; or (ii) make
available to the designated recipient the amount appropriate to resolve the
error;
and
• refund to the sender any fees and, to the extent not prohibited by law, taxes
imposed for the remittance transfer? (12 CFR 1005.33(c)(2)(ii))
47. If an error occurred, does the provider impose a charge related to any aspect
of the error resolution process (including charges for documentation or
investigation)? (Comment 33(c)-9) If so, is the provider in violation of 12 CFR
1005.33(c)? Yes No NA
48. Does the provider retain policies and procedures and documentation,
including those related to error investigations, for a period of not less than two
years from the date a notice of error was submitted to the provider or action
was required to be taken by the provider (12 CFR 1005.33(g) and 1005.13)? Yes No NA
Comments