Regulation E PDF

Pt. 1005 12 CFR Ch. X (1–1–24 Edition) and other mortgage or consumer credit quirements of Regulation Z, 12 CFR part 226. transactions: See 12 CFR 226.28. i. Restrictions on prepayment pena...

Pt. 1005 12 CFR Ch. X (1–1–24 Edition) and other mortgage or consumer credit quirements of Regulation Z, 12 CFR part 226. transactions: See 12 CFR 226.28. i. Restrictions on prepayment penalties or late charges (including an increase in an in- 4(d) Other Applicable Law terest rate or finance charge as a result of a 1. Other applicable law. Section 1004.4(d) late payment). permits state housing creditors that do not ii. Restrictions on transactions in which seek preemption under § 1004.3 and federal one or more of the regular periodic payments housing creditors to make alternative mort- may result in an increase in the principal gage transactions consistent with applicable balance (a negative amortization feature) or State or federal law other than § 1004.4(a) may be applied solely to accrued interest and through (c). However, § 1004.4(d) does not ex- not to loan principal (an interest-only fea- empt those housing creditors from com- ture). plying with the provisions of federal law that iii. Requirements that disclosures be pro- are incorporated by reference in § 1004.4 and vided. are otherwise applicable to the creditor. Spe- § 1004.4 Requirements for Alternative Mortgage cifically, nothing in § 1004.4(d) exempts a Transactions housing creditor from complying with 12 CFR 226.5b, 226.32, 226.34, or 226.35. 4(a) Mortgages With Adjustable or Renego- tiable Rates or Finance Charges and Home Equity Lines of Credit PART 1005—ELECTRONIC FUND TRANSFERS (REGULATION E) 1. Index values. A creditor may use any measure of index values that meets the re- quirements in § 1004.4(a)(2)(i). For example, Subpart A—General the index may be either single values as of a Sec. specific date or an average of values cal- 1005.1 Authority and purpose. culated over a specified period. 1005.2 Definitions. 2. Index beyond creditor’s control. A creditor 1005.3 Coverage. may increase an adjustable interest rate pur- 1005.4 General disclosure requirements; suant to § 1004.4(a)(2)(i) only if the increase is jointly offered services. based on an index that is beyond the credi- 1005.5 Issuance of access devices. tor’s control. For purposes of § 1004.4(a)(2)(i), 1005.6 Liability of consumer for unauthor- an index is not beyond the creditor’s control ized transfers. if the index is the creditor’s own prime rate 1005.7 Initial disclosures. or cost of funds. A creditor is permitted, 1005.8 Change in terms notice; error resolu- however, to use a published prime rate, such tion notice. as the prime rate published in the Wall Street 1005.9 Receipts at electronic terminals; Journal, even if the creditor’s own prime rate periodic statements. is one of several rates used to establish the 1005.10 Preauthorized transfers. published rate. 1005.11 Procedures for resolving errors. 3. Publicly available. For purposes of 1005.12 Relation to other laws. § 1004.4(a)(2)(i), the index must be available 1005.13 Administrative enforcement; record to the public. A publicly available index need retention. not be published in a newspaper, but it must 1005.14 Electronic fund transfer service pro- be one the consumer can independently ob- vider not holding consumer’s account. tain (by telephone, for example) and use to 1005.15 Electronic fund transfer of govern- verify the annual percentage rate applied to ment benefits. the alternative mortgage transaction. 1005.16 Disclosures at automated teller ma- 4(c) Requirements for High-Cost and Higher- chines. Priced Mortgage Loans 1005.17 Requirements for overdraft services. 1005.18 Requirements for financial institu- 1. Prepayment penalties. If applicable, credi- tions offering prepaid accounts. tors must comply with 12 CFR 226.32, includ- 1005.19 Internet posting of prepaid account ing 12 CFR 226.32(d)(6) and (d)(7) which pro- agreements. vide limitations on prepayment penalties. 1005.20 Requirements for gift cards and gift Similarly, if applicable, creditors must com- certificates. ply with 12 CFR 226.35, including 12 CFR 226.35(b)(2), which also provides limitations Subpart B—Requirements for Remittance on prepayment penalties. However, under Transfers § 1004.3, State laws regarding prepayment penalties are not preempted. See comment 1005.30 Remittance transfer definitions. 1004.3–3.i. Accordingly, creditors must also 1005.31 Disclosures. comply with any State laws regarding pre- 1005.32 Estimates. payment penalties unless an independent 1005.33 Procedures for resolving errors. basis for preemption exists, such as because 1005.34 Procedures for cancellation and re- the State law is inconsistent with the re- fund of remittance transfers. 186 Consumer Financial Protection Bureau § 1005.2 1005.35 Acts of agents. (i) Requests and receives, or signs, or 1005.36 Transfers scheduled before the date uses (or authorizes another to use) the of transfer. access device to transfer money be- APPENDIX A TO PART 1005—MODEL DISCLO- tween accounts or to obtain money, SURE CLAUSES AND FORMS property, or services; APPENDIX B TO PART 1005 [RESERVED] (ii) Requests validation of an access APPENDIX C TO PART 1005—ISSUANCE OF OFFI- CIAL INTERPRETATIONS device issued on an unsolicited basis; SUPPLEMENT I TO PART 1005—OFFICIAL INTER- or PRETATIONS (iii) Receives an access device in re- AUTHORITY: 12 U.S.C. 5512, 5581; 15 U.S.C. newal of, or in substitution for, an ac- 1693b. Subpart B is also issued under 12 cepted access device from either the fi- U.S.C. 5601 and 15 U.S.C. 1693o–1. nancial institution that initially issued the device or a successor. SOURCE: 76 FR 81023, Dec. 27, 2011, unless otherwise noted. (b)(1) ‘‘Account’’ means a demand de- posit (checking), savings, or other con- sumer asset account (other than an oc- Subpart A—General casional or incidental credit balance in § 1005.1 Authority and purpose. a credit plan) held directly or indi- rectly by a financial institution and es- (a) Authority. The regulation in this tablished primarily for personal, fam- part, known as Regulation E, is issued ily, or household purposes. by the Bureau of Consumer Financial (2) The term does not include an ac- Protection (Bureau) pursuant to the count held by a financial institution Electronic Fund Transfer Act (15 under a bona fide trust agreement. U.S.C. 1693 et seq.). The information- collection requirements have been ap- (3) The term includes a prepaid ac- proved by the Office of Management count. and Budget under 44 U.S.C. 3501 et seq. (i) ‘‘Prepaid account’’ means: and have been assigned OMB No. 3170– (A) A ‘‘payroll card account,’’ which 0014. is an account that is directly or indi- (b) Purpose. This part carries out the rectly established through an employer purposes of the Electronic Fund Trans- and to which electronic fund transfers fer Act, which establishes the basic of the consumer’s wages, salary, or rights, liabilities, and responsibilities other employee compensation (such as of consumers who use electronic fund commissions) are made on a recurring transfer and remittance transfer serv- basis, whether the account is operated ices and of financial institutions or or managed by the employer, a third- other persons that offer these services. party payroll processor, a depository The primary objective of the act and institution, or any other person; or this part is the protection of individual (B) A ‘‘government benefit account,’’ consumers engaging in electronic fund as defined in § 1005.15(a)(2); or transfers and remittance transfers. (C) An account that is marketed or [76 FR 81023, Dec. 27, 2011, as amended at 77 labeled as ‘‘prepaid’’ and that is re- FR 6285, Feb. 7, 2012] deemable upon presentation at mul- tiple, unaffiliated merchants for goods § 1005.2 Definitions. or services or usable at automated tell- Except as otherwise provided in sub- er machines; or part B, for purposes of this part, the (D) An account: following definitions apply: (1) That is issued on a prepaid basis (a)(1) ‘‘Access device’’ means a card, in a specified amount or not issued on code, or other means of access to a con- a prepaid basis but capable of being sumer’s account, or any combination loaded with funds thereafter, thereof, that may be used by the con- (2) Whose primary function is to con- sumer to initiate electronic fund trans- duct transactions with multiple, unaf- fers. filiated merchants for goods or serv- (2) An access device becomes an ‘‘ac- ices, or at automated teller machines, cepted access device’’ when the con- or to conduct person-to-person trans- sumer: fers, and 187 § 1005.2 12 CFR Ch. X (1–1–24 Edition) (3) That is not a checking account, debt and defer its payment, or purchase share draft account, or negotiable property or services and defer payment order of withdrawal account. therefor. (ii) For purposes of paragraphs (g) ‘‘Electronic fund transfer’’ is de- (b)(3)(i)(C) and (D) of this section, the fined in § 1005.3. term ‘‘prepaid account’’ does not in- (h) ‘‘Electronic terminal’’ means an clude: electronic device, other than a tele- (A) An account that is loaded only phone operated by a consumer, through with funds from a health savings ac- which a consumer may initiate an elec- count, flexible spending arrangement, tronic fund transfer. The term in- medical savings account, health reim- cludes, but is not limited to, point-of- bursement arrangement, dependent sale terminals, automated teller ma- care assistance program, or transit or chines (ATMs), and cash dispensing parking reimbursement arrangement; machines. (B) An account that is directly or in- (i) ‘‘Financial institution’’ means a directly established through a third bank, savings association, credit union, party and loaded only with qualified or any other person that directly or in- disaster relief payments; directly holds an account belonging to (C) The person-to-person a consumer, or that issues an access functionality of an account established device and agrees with a consumer to by or through the United States gov- provide electronic fund transfer serv- ernment whose primary function is to ices, other than a person excluded from conduct closed-loop transactions on coverage of this part by section 1029 of U.S. military installations or vessels, the Consumer Financial Protection Act or similar government facilities; of 2010, title X of the Dodd-Frank Wall (D)(1) A gift certificate as defined in Street Reform and Consumer Protec- § 1005.20(a)(1) and (b); tion Act, Public Law 111–203, 124 Stat. (2) A store gift card as defined in 1376. § 1005.20(a)(2) and (b); (3) A loyalty, award, or promotional (j) ‘‘Person’’ means a natural person gift card as defined in § 1005.20(a)(4), or or an organization, including a cor- that satisfies the criteria in poration, government agency, estate, § 1005.20(a)(4)(i) and (ii) and is excluded trust, partnership, proprietorship, co- from § 1005.20 pursuant to § 1005.20(b)(4); operative, or association. or (k) ‘‘Preauthorized electronic fund (4) A general-use prepaid card as de- transfer’’ means an electronic fund fined in § 1005.20(a)(3) and (b) that is transfer authorized in advance to recur both marketed and labeled as a gift at substantially regular intervals. card or gift certificate; or (l) ‘‘State’’ means any state, terri- (E) An account established for dis- tory, or possession of the United tributing needs-tested benefits in a States; the District of Columbia; the program established under state or Commonwealth of Puerto Rico; or any local law or administered by a state or political subdivision of the thereof in local agency, as set forth in this paragraph (l). § 1005.15(a)(2). (m) ‘‘Unauthorized electronic fund (c) ‘‘Act’’ means the Electronic Fund transfer’’ means an electronic fund Transfer Act (Title IX of the Consumer transfer from a consumer’s account ini- Credit Protection Act, 15 U.S.C. 1693 et tiated by a person other than the con- seq.). sumer without actual authority to ini- (d) ‘‘Business day’’ means any day on tiate the transfer and from which the which the offices of the consumer’s fi- consumer receives no benefit. The term nancial institution are open to the pub- does not include an electronic fund lic for carrying on substantially all transfer initiated: business functions. (1) By a person who was furnished the (e) ‘‘Consumer’’ means a natural per- access device to the consumer’s ac- son. count by the consumer, unless the con- (f) ‘‘Credit’’ means the right granted sumer has notified the financial insti- by a financial institution to a con- tution that transfers by that person sumer to defer payment of debt, incur are no longer authorized; 188 Consumer Financial Protection Bureau § 1005.3 (2) With fraudulent intent by the con- be processed as an electronic fund sumer or any person acting in concert transfer, and obtain a consumer’s au- with the consumer; or thorization for each transfer. A con- (3) By the financial institution or its sumer authorizes a one-time electronic employee. fund transfer (in providing a check to a [76 FR 81023, Dec. 27, 2011, as amended at 77 merchant or other payee for the MICR FR 6285, Feb. 7, 2012; 81 FR 84325, Nov. 22, encoding, that is, the routing number 2016; 83 FR 6417, Feb. 13, 2018] of the financial institution, the con- sumer’s account number and the serial § 1005.3 Coverage. number) when the consumer receives (a) General. This part applies to any notice and goes forward with the un- electronic fund transfer that author- derlying transaction. For point-of-sale izes a financial institution to debit or transfers, the notice must be posted in credit a consumer’s account. Gen- a prominent and conspicuous location, erally, this part applies to financial in- and a copy thereof, or a substantially stitutions. For purposes of §§ 1005.3(b)(2) similar notice, must be provided to the and (3), 1005.10(b), (d), and (e), 1005.13, consumer at the time of the trans- and 1005.20, this part applies to any per- action. son, other than a person excluded from (iii) A person may provide notices coverage of this part by section 1029 of that are substantially similar to those the Consumer Financial Protection Act set forth in appendix A–6 to comply of 2010, Title X of the Dodd-Frank Wall with the requirements of this para- Street Reform and Consumer Protec- graph (b)(2). tion Act, Pub. L. 111–203, 124 Stat. 1376. (3) Collection of returned item fees via The requirements of subpart B apply to electronic fund transfer—(i) General. The remittance transfer providers. person initiating an electronic fund (b) Electronic fund transfer—(1) Defini- transfer to collect a fee for the return tion. The term ‘‘electronic fund trans- of an electronic fund transfer or a fer’’ means any transfer of funds that check that is unpaid, including due to is initiated through an electronic ter- insufficient or uncollected funds in the minal, telephone, computer, or mag- consumer’s account, must obtain the netic tape for the purpose of ordering, consumer’s authorization for each instructing, or authorizing a financial transfer. A consumer authorizes a one- institution to debit or credit a con- time electronic fund transfer from his sumer’s account. The term includes, or her account to pay the fee for the re- but is not limited to: turned item or transfer if the person (i) Point-of-sale transfers; (ii) Automated teller machine trans- collecting the fee provides notice to fers; the consumer stating that the person (iii) Direct deposits or withdrawals of may electronically collect the fee, and funds; the consumer goes forward with the (iv) Transfers initiated by telephone; underlying transaction. The notice and must state that the fee will be col- (v) Transfers resulting from debit lected by means of an electronic fund card transactions, whether or not initi- transfer from the consumer’s account ated through an electronic terminal. if the payment is returned unpaid and (2) Electronic fund transfer using infor- must disclose the dollar amount of the mation from a check. (i) This part ap- fee. If the fee may vary due to the plies where a check, draft, or similar amount of the transaction or due to paper instrument is used as a source of other factors, then, except as otherwise information to initiate a one-time elec- provided in paragraph (b)(3)(ii) of this tronic fund transfer from a consumer’s section, the person collecting the fee account. The consumer must authorize may disclose, in place of the dollar the transfer. amount of the fee, an explanation of (ii) The person initiating an elec- how the fee will be determined. tronic fund transfer using the con- (ii) Point-of-sale transactions. If a fee sumer’s check as a source of informa- for an electronic fund transfer or check tion for the transfer must provide a no- returned unpaid may be collected elec- tice that the transaction will or may tronically in connection with a point- 189 § 1005.4 12 CFR Ch. X (1–1–24 Edition) of-sale transaction, the person initi- (iii) Held in book-entry form by a ating an electronic fund transfer to Federal Reserve Bank or Federal agen- collect the fee must post the notice de- cy. scribed in paragraph (b)(3)(i) of this (5) Automatic transfers by account- section in a prominent and conspicuous holding institution. Any transfer of location. The person also must either funds under an agreement between a provide the consumer with a copy of consumer and a financial institution the posted notice (or a substantially which provides that the institution similar notice) at the time of the will initiate individual transfers with- transaction, or mail the copy (or a sub- out a specific request from the con- stantially similar notice) to the con- sumer: sumer’s address as soon as reasonably (i) Between a consumer’s accounts practicable after the person initiates within the financial institution; the electronic fund transfer to collect (ii) From a consumer’s account to an the fee. If the amount of the fee may account of a member of the consumer’s vary due to the amount of the trans- family held in the same financial insti- action or due to other factors, the post- tution; or ed notice may explain how the fee will (iii) Between a consumer’s account be determined, but the notice provided and an account of the financial institu- to the consumer must state the dollar tion, except that these transfers re- amount of the fee if the amount can be main subject to § 1005.10(e) regarding calculated at the time the notice is compulsory use and sections 916 and 917 provided or mailed to the consumer. of the Act regarding civil and criminal liability. (c) Exclusions from coverage. The term (6) Telephone-initiated transfers. Any ‘‘electronic fund transfer’’ does not in- transfer of funds that: clude: (i) Is initiated by a telephone com- (1) Checks. Any transfer of funds munication between a consumer and a originated by check, draft, or similar financial institution making the trans- paper instrument; or any payment fer; and made by check, draft, or similar paper (ii) Does not take place under a tele- instrument at an electronic terminal. phone bill-payment or other written (2) Check guarantee or authorization. plan in which periodic or recurring Any transfer of funds that guarantees transfers are contemplated. payment or authorizes acceptance of a (7) Small institutions. Any check, draft, or similar paper instru- preauthorized transfer to or from an ment but that does not directly result account if the assets of the account- in a debit or credit to a consumer’s ac- holding financial institution were $100 count. million or less on the preceding Decem- (3) Wire or other similar transfers. Any ber 31. If assets of the account-holding transfer of funds through Fedwire or institution subsequently exceed $100 through a similar wire transfer system million, the institution’s exemption for that is used primarily for transfers be- preauthorized transfers terminates one tween financial institutions or between year from the end of the calendar year businesses. in which the assets exceed $100 million. (4) Securities and commodities transfers. Preauthorized transfers exempt under Any transfer of funds the primary pur- this paragraph (c)(7) remain subject to pose of which is the purchase or sale of § 1005.10(e) regarding compulsory use a security or commodity, if the secu- and sections 916 and 917 of the Act re- rity or commodity is: garding civil and criminal liability. (i) Regulated by the Securities and [76 FR 81023, Dec. 27, 2011, as amended at 77 Exchange Commission or the Com- FR 6285, Feb. 7, 2012] modity Futures Trading Commission; (ii) Purchased or sold through a § 1005.4 General disclosure require- broker-dealer regulated by the Securi- ments; jointly offered services. ties and Exchange Commission or (a)(1) Form of disclosures. Disclosures through a futures commission mer- required under this part shall be clear chant regulated by the Commodity Fu- and readily understandable, in writing, tures Trading Commission; or and in a form the consumer may keep, 190 Consumer Financial Protection Bureau § 1005.6 except as otherwise provided in this (1) In response to an oral or written part. The disclosures required by this request for the device; or part may be provided to the consumer (2) As a renewal of, or in substitution in electronic form, subject to compli- for, an accepted access device whether ance with the consumer-consent and issued by the institution or a suc- other applicable provisions of the Elec- cessor. tronic Signatures in Global and Na- (b) Unsolicited issuance. A financial tional Commerce Act (E-Sign Act) (15 institution may distribute an access U.S.C. 7001 et seq.). A financial institu- device to a consumer on an unsolicited tion may use commonly accepted or basis if the access device is: readily understandable abbreviations (1) Not validated, meaning that the in complying with the disclosure re- institution has not yet performed all quirements of this part. the procedures that would enable a (2) Foreign language disclosures. Dis- consumer to initiate an electronic fund closures required under this part may transfer using the access device; be made in a language other than (2) Accompanied by a clear expla- English, provided that the disclosures nation that the access device is not are made available in English upon the validated and how the consumer may consumer’s request. dispose of it if validation is not desired; (b) Additional information; disclosures (3) Accompanied by the disclosures required by other laws. A financial insti- required by § 1005.7, of the consumer’s tution may include additional informa- rights and liabilities that will apply if tion and may combine disclosures re- the access device is validated; and quired by other laws (such as the Truth (4) Validated only in response to the in Lending Act (15 U.S.C. 1601 et seq.) or consumer’s oral or written request for the Truth in Savings Act (12 U.S.C. 4301 validation, after the institution has et seq.) with the disclosures required by verified the consumer’s identity by a this part. reasonable means. (c) Multiple accounts and account hold- ers—(1) Multiple accounts. A financial § 1005.6 Liability of consumer for un- institution may combine the required authorized transfers. disclosures into a single statement for (a) Conditions for liability. A consumer a consumer who holds more than one may be held liable, within the limita- account at the institution. tions described in paragraph (b) of this (2) Multiple account holders. For joint section, for an unauthorized electronic accounts held by two or more con- fund transfer involving the consumer’s sumers, a financial institution need account only if the financial institu- provide only one set of the required tion has provided the disclosures re- disclosures and may provide them to quired by § 1005.7(b)(1), (2), and (3). If any of the account holders. the unauthorized transfer involved an (d) Services offered jointly. Financial access device, it must be an accepted institutions that provide electronic access device and the financial institu- fund transfer services jointly may con- tion must have provided a means to tract among themselves to comply identify the consumer to whom it was with the requirements that this part issued. imposes on any or all of them. An in- (b) Limitations on amount of liability. A stitution need make only the disclo- consumer’s liability for an unauthor- sures required by §§ 1005.7 and 1005.8 ized electronic fund transfer or a series that are within its knowledge and of related unauthorized transfers shall within the purview of its relationship be determined as follows: with the consumer for whom it holds (1) Timely notice given. If the con- an account. sumer notifies the financial institution within two business days after learning § 1005.5 Issuance of access devices. of the loss or theft of the access device, (a) Solicited issuance. Except as pro- the consumer’s liability shall not ex- vided in paragraph (b) of this section, a ceed the lesser of $50 or the amount of financial institution may issue an ac- unauthorized transfers that occur be- cess device to a consumer only: fore notice to the financial institution. 191 § 1005.7 12 CFR Ch. X (1–1–24 Edition) (2) Timely notice not given. If the con- mission to the institution by any other sumer fails to notify the financial in- usual means. Notice may be considered stitution within two business days constructively given when the institu- after learning of the loss or theft of the tion becomes aware of circumstances access device, the consumer’s liability leading to the reasonable belief that an shall not exceed the lesser of $500 or unauthorized transfer to or from the the sum of: consumer’s account has been or may be (i) $50 or the amount of unauthorized made. transfers that occur within the two (6) Liability under state law or agree- business days, whichever is less; and ment. If state law or an agreement be- (ii) The amount of unauthorized tween the consumer and the financial transfers that occur after the close of institution imposes less liability than two business days and before notice to is provided by this section, the con- the institution, provided the institu- sumer’s liability shall not exceed the tion establishes that these transfers amount imposed under the state law or would not have occurred had the con- agreement. sumer notified the institution within that two-day period. § 1005.7 Initial disclosures. (3) Periodic statement; timely notice not (a) Timing of disclosures. A financial given. A consumer must report an un- institution shall make the disclosures authorized electronic fund transfer required by this section at the time a that appears on a periodic statement consumer contracts for an electronic within 60 days of the financial institu- fund transfer service or before the first tion’s transmittal of the statement to electronic fund transfer is made involv- avoid liability for subsequent transfers. ing the consumer’s account. If the consumer fails to do so, the con- (b) Content of disclosures. A financial sumer’s liability shall not exceed the institution shall provide the following amount of the unauthorized transfers disclosures, as applicable: that occur after the close of the 60 days and before notice to the institution, (1) Liability of consumer. A summary and that the institution establishes of the consumer’s liability, under would not have occurred had the con- § 1005.6 or under state or other applica- sumer notified the institution within ble law or agreement, for unauthorized the 60-day period. When an access de- electronic fund transfers. vice is involved in the unauthorized (2) Telephone number and address. The transfer, the consumer may be liable telephone number and address of the for other amounts set forth in para- person or office to be notified when the graphs (b)(1) or (b)(2) of this section, as consumer believes that an unauthor- applicable. ized electronic fund transfer has been (4) Extension of time limits. If the con- or may be made. sumer’s delay in notifying the financial (3) Business days. The financial insti- institution was due to extenuating cir- tution’s business days. cumstances, the institution shall ex- (4) Types of transfers; limitations. The tend the times specified above to a rea- type of electronic fund transfers that sonable period. the consumer may make and any limi- (5) Notice to financial institution. (i) tations on the frequency and dollar Notice to a financial institution is amount of transfers. Details of the lim- given when a consumer takes steps rea- itations need not be disclosed if con- sonably necessary to provide the insti- fidentiality is essential to maintain tution with the pertinent information, the security of the electronic fund whether or not a particular employee transfer system. or agent of the institution actually re- (5) Fees. Any fees imposed by the fi- ceives the information. nancial institution for electronic fund (ii) The consumer may notify the in- transfers or for the right to make stitution in person, by telephone, or in transfers. writing. (6) Documentation. A summary of the (iii) Written notice is considered consumer’s right to receipts and peri- given at the time the consumer mails odic statements, as provided in § 1005.9 the notice or delivers it for trans- of this part, and notices regarding 192 Consumer Financial Protection Bureau § 1005.9 preauthorized transfers as provided in ditions is necessary to maintain or re- § 1005.10(a) and (d). store the security of an account or an (7) Stop payment. A summary of the electronic fund transfer system. If the consumer’s right to stop payment of a institution makes such a change per- preauthorized electronic fund transfer manent and disclosure would not jeop- and the procedure for placing a stop- ardize the security of the account or payment order, as provided in system, the institution shall notify the § 1005.10(c). consumer in writing on or with the (8) Liability of institution. A summary next regularly scheduled periodic of the financial institution’s liability statement or within 30 days of making to the consumer under section 910 of the change permanent. the Act for failure to make or to stop (b) Error resolution notice. For ac- certain transfers. counts to or from which electronic (9) Confidentiality. The circumstances fund transfers can be made, a financial under which, in the ordinary course of institution shall mail or deliver to the business, the financial institution may consumer, at least once each calendar provide information concerning the year, an error resolution notice sub- consumer’s account to third parties. stantially similar to the model form (10) Error resolution. A notice that is set forth in appendix A of this part substantially similar to Model Form (Model Form A–3). Alternatively, an in- A–3 as set out in appendix A of this stitution may include an abbreviated part concerning error resolution. notice substantially similar to the (11) ATM fees. A notice that a fee may model form error resolution notice set be imposed by an automated teller ma- forth in appendix A of this part (Model chine operator as defined in § 1005.16(a), Form A–3), on or with each periodic when the consumer initiates an elec- statement required by § 1005.9(b). tronic fund transfer or makes a balance inquiry, and by any network used to § 1005.9 Receipts at electronic termi- complete the transaction. nals; periodic statements. (c) Addition of electronic fund transfer services. If an electronic fund transfer (a) Receipts at electronic terminals— service is added to a consumer’s ac- General. Except as provided in para- count and is subject to terms and con- graph (e) of this section, a financial in- ditions different from those described stitution shall make a receipt avail- in the initial disclosures, disclosures able to a consumer at the time the con- for the new service are required. sumer initiates an electronic fund transfer at an electronic terminal. The [76 FR 81023, Dec. 27, 2011, as amended at 81 receipt shall set forth the following in- FR 70320, Oct. 12, 2016] formation, as applicable: § 1005.8 Change in terms notice; error (1) Amount. The amount of the trans- resolution notice. fer. A transaction fee may be included (a) Change in terms notice—(1) Prior in this amount, provided the amount of notice required. A financial institution the fee is disclosed on the receipt and shall mail or deliver a written notice displayed on or at the terminal. to the consumer, at least 21 days before (2) Date. The date the consumer initi- the effective date, of any change in a ates the transfer. term or condition required to be dis- (3) Type. The type of transfer and the closed under § 1005.7(b) of this part if type of the consumer’s account(s) to or the change would result in: from which funds are transferred. The (i) Increased fees for the consumer; type of account may be omitted if the (ii) Increased liability for the con- access device used is able to access sumer; only one account at that terminal. (iii) Fewer types of available elec- (4) Identification. A number or code tronic fund transfers; or that identifies the consumer’s account (iv) Stricter limitations on the fre- or accounts, or the access device used quency or dollar amount of transfers. to initiate the transfer. The number or (2) Prior notice exception. A financial code need not exceed four digits or let- institution need not give prior notice if ters to comply with the requirements an immediate change in terms or con- of this paragraph (a)(4). 193 § 1005.9 12 CFR Ch. X (1–1–24 Edition) (5) Terminal location. The location of tice of errors, preceded by ‘‘Direct in- the terminal where the transfer is ini- quiries to’’ or similar language. The tiated, or an identification such as a address and telephone number provided code or terminal number. Except in on an error resolution notice under limited circumstances where all termi- § 1005.8(b) given on or with the state- nals are located in the same city or ment satisfies this requirement. state, if the location is disclosed, it (6) Telephone number for preauthorized shall include the city and state or for- transfers. A telephone number the con- eign country and one of the following: sumer may call to ascertain whether (i) The street address; or preauthorized transfers to the con- (ii) A generally accepted name for sumer’s account have occurred, if the the specific location; or financial institution uses the tele- (iii) The name of the owner or oper- phone-notice option under ator of the terminal if other than the § 1005.10(a)(1)(iii). account-holding institution. (c) Exceptions to the periodic statement (6) Third party transfer. The name of requirement for certain accounts—(1) any third party to or from whom funds Preauthorized transfers to accounts. For are transferred. accounts that may be accessed only by (b) Periodic statements. For an account preauthorized transfers to the account to or from which electronic fund trans- the following rules apply: fers can be made, a financial institu- (i) Passbook accounts. For passbook tion shall send a periodic statement for accounts, the financial institution need each monthly cycle in which an elec- not provide a periodic statement if the tronic fund transfer has occurred; and institution updates the passbook upon shall send a periodic statement at least presentation or enters on a separate quarterly if no transfer has occurred. document the amount and date of each The statement shall set forth the fol- electronic fund transfer since the pass- lowing information, as applicable: book was last presented. (1) Transaction information. For each (ii) Other accounts. For accounts electronic fund transfer occurring dur- other than passbook accounts, the fi- ing the cycle: nancial institution must send a peri- (i) The amount of the transfer; odic statement at least quarterly. (ii) The date the transfer was cred- (2) Intra-institutional transfers. For an ited or debited to the consumer’s ac- electronic fund transfer initiated by count; the consumer between two accounts of (iii) The type of transfer and type of the consumer in the same institution, account to or from which funds were documenting the transfer on a periodic transferred; statement for one of the two accounts (iv) For a transfer initiated by the satisfies the periodic statement re- consumer at an electronic terminal quirement. (except for a deposit of cash or a check, (3) Relationship between paragraphs draft, or similar paper instrument), the (c)(1) and (2) of this section. An account terminal location described in para- that is accessed by preauthorized graph (a)(5) of this section; and transfers to the account described in (v) The name of any third party to or paragraph (c)(1) of this section and by from whom funds were transferred. intra-institutional transfers described (2) Account number. The number of in paragraph (c)(2) of this section, but the account. by no other type of electronic fund (3) Fees. The amount of any fees as- transfers, qualifies for the exceptions sessed against the account during the provided by paragraph (c)(1) of this sec- statement period for electronic fund tion. transfers, the right to make transfers, (d) Documentation for foreign-initiated or account maintenance. transfers. The failure by a financial in- (4) Account balances. The balance in stitution to provide a terminal receipt the account at the beginning and at for an electronic fund transfer or to the close of the statement period. document the transfer on a periodic (5) Address and telephone number for statement does not violate this part if: inquiries. The address and telephone (1) The transfer is not initiated with- number to be used for inquiries or no- in a state; and 194 Consumer Financial Protection Bureau § 1005.10 (2) The financial institution treats an transfer from the consumer’s account inquiry for clarification or documenta- by notifying the financial institution tion as a notice of error in accordance orally or in writing at least three busi- with § 1005.11. ness days before the scheduled date of (e) Exception for receipts in small-value the transfer. transfers. A financial institution is not (2) Written confirmation. The financial subject to the requirement to make institution may require the consumer available a receipt under paragraph (a) to give written confirmation of a stop- of this section if the amount of the payment order within 14 days of an transfer is $15 or less. oral notification. An institution that requires written confirmation shall in- § 1005.10 Preauthorized transfers. form the consumer of the requirement (a) Preauthorized transfers to con- and provide the address where con- sumer’s account—(1) Notice by financial firmation must be sent when the con- institution. When a person initiates sumer gives the oral notification. An preauthorized electronic fund transfers oral stop-payment order ceases to be to a consumer’s account at least once binding after 14 days if the consumer every 60 days, the account-holding fi- fails to provide the required written nancial institution shall provide notice confirmation. to the consumer by: (d) Notice of transfers varying in (i) Positive notice. Providing oral or amount—(1) Notice. When a written notice of the transfer within preauthorized electronic fund transfer two business days after the transfer oc- from the consumer’s account will vary curs; or in amount from the previous transfer (ii) Negative notice. Providing oral or under the same authorization or from written notice, within two business the preauthorized amount, the des- days after the date on which the trans- ignated payee or the financial institu- fer was scheduled to occur, that the tion shall send the consumer written transfer did not occur; or notice of the amount and date of the (iii) Readily-available telephone line. transfer at least 10 days before the Providing a readily available telephone scheduled date of transfer. line that the consumer may call to de- (2) Range. The designated payee or termine whether the transfer occurred the institution shall inform the con- and disclosing the telephone number on sumer of the right to receive notice of the initial disclosure of account terms and on each periodic statement. all varying transfers, but may give the (2) Notice by payor. A financial insti- consumer the option of receiving no- tution need not provide notice of a tice only when a transfer falls outside transfer if the payor gives the con- a specified range of amounts or only sumer positive notice that the transfer when a transfer differs from the most has been initiated. recent transfer by more than an (3) Crediting. A financial institution agreed-upon amount. that receives a preauthorized transfer (e) Compulsory use—(1) Credit. No fi- of the type described in paragraph nancial institution or other person (a)(1) of this section shall credit the may condition an extension of credit to amount of the transfer as of the date a consumer on the consumer’s repay- the funds for the transfer are received. ment by preauthorized electronic fund (b) Written authorization for transfers, except for credit extended preauthorized transfers from consumer’s under an overdraft credit plan or ex- account. Preauthorized electronic fund tended to maintain a specified min- transfers from a consumer’s account imum balance in the consumer’s ac- may be authorized only by a writing count. This exception does not apply to signed or similarly authenticated by a covered separate credit feature acces- the consumer. The person that obtains sible by a hybrid prepaid-credit card as the authorization shall provide a copy defined in Regulation Z, 12 CFR 1026.61. to the consumer. (2) Employment or government benefit. (c) Consumer’s right to stop payment— No financial institution or other per- (1) Notice. A consumer may stop pay- son may require a consumer to estab- ment of a preauthorized electronic fund lish an account for receipt of electronic 195 § 1005.11 12 CFR Ch. X (1–1–24 Edition) fund transfers with a particular insti- (ii) Enables the institution to iden- tution as a condition of employment or tify the consumer’s name and account receipt of a government benefit. number; and (iii) Indicates why the consumer be- [76 FR 81023, Dec. 27, 2011, as amended at 81 lieves an error exists and includes to FR 84326, Nov. 22, 2016] the extent possible the type, date, and § 1005.11 Procedures for resolving er- amount of the error, except for re- rors. quests described in paragraph (a)(1)(vii) of this section. (a) Definition of error—(1) Types of (2) Written confirmation. A financial transfers or inquiries covered. The term institution may require the consumer ‘‘error’’ means: to give written confirmation of an (i) An unauthorized electronic fund error within 10 business days of an oral transfer; notice. An institution that requires (ii) An incorrect electronic fund written confirmation shall inform the transfer to or from the consumer’s ac- consumer of the requirement and pro- count; vide the address where confirmation (iii) The omission of an electronic must be sent when the consumer gives fund transfer from a periodic state- the oral notification. ment; (3) Request for documentation or clari- (iv) A computational or bookkeeping fications. When a notice of error is error made by the financial institution based on documentation or clarifica- relating to an electronic fund transfer; tion that the consumer requested (v) The consumer’s receipt of an in- under paragraph (a)(1)(vii) of this sec- correct amount of money from an elec- tion, the consumer’s notice of error is tronic terminal; timely if received by the financial in- (vi) An electronic fund transfer not stitution no later than 60 days after identified in accordance with § 1005.9 or the institution sends the information § 1005.10(a); or requested. (vii) The consumer’s request for doc- (c) Time limits and extent of investiga- umentation required by § 1005.9 or tion—(1) Ten-day period. A financial in- § 1005.10(a) or for additional informa- stitution shall investigate promptly tion or clarification concerning an and, except as otherwise provided in this paragraph (c), shall determine electronic fund transfer, including a re- whether an error occurred within 10 quest the consumer makes to deter- business days of receiving a notice of mine whether an error exists under error. The institution shall report the paragraphs (a)(1)(i) through (vi) of this results to the consumer within three section. business days after completing its in- (2) Types of inquiries not covered. The vestigation. The institution shall cor- term ‘‘error’’ does not include: rect the error within one business day (i) A routine inquiry about the con- after determining that an error oc- sumer’s account balance; curred. (ii) A request for information for tax (2) Forty-five day period. If the finan- or other recordkeeping purposes; or cial institution is unable to complete (iii) A request for duplicate copies of its investigation within 10 business documentation. days, the institution may take up to 45 (b) Notice of error from consumer—(1) days from receipt of a notice of error to Timing; contents. A financial institution investigate and determine whether an shall comply with the requirements of error occurred, provided the institution this section with respect to any oral or does the following: written notice of error from the con- (i) Provisionally credits the con- sumer that: sumer’s account in the amount of the (i) Is received by the institution no alleged error (including interest where later than 60 days after the institution applicable) within 10 business days of sends the periodic statement or pro- receiving the error notice. If the finan- vides the passbook documentation, re- cial institution has a reasonable basis quired by § 1005.9, on which the alleged for believing that an unauthorized elec- error is first reflected; tronic fund transfer has occurred and 196 Consumer Financial Protection Bureau § 1005.12 the institution has satisfied the re- (ii) There is no agreement between quirements of § 1005.6(a), the institu- the institution and the third party for tion may withhold a maximum of $50 the type of electronic fund transfer in- from the amount credited. An institu- volved. tion need not provisionally credit the (d) Procedures if financial institution consumer’s account if: determines no error or different error oc- (A) The institution requires but does curred. In addition to following the pro- not receive written confirmation with- cedures specified in paragraph (c) of in 10 business days of an oral notice of this section, the financial institution error; or shall follow the procedures set forth in (B) The alleged error involves an ac- this paragraph (d) if it determines that count that is subject to Regulation T no error occurred or that an error oc- of the Board of Governors of the Fed- curred in a manner or amount different eral Reserve System (Securities Credit from that described by the consumer: by Brokers and Dealers, 12 CFR part (1) Written explanation. The institu- 220). tion’s report of the results of its inves- (ii) Informs the consumer, within two tigation shall include a written expla- business days after the provisional nation of the institution’s findings and crediting, of the amount and date of shall note the consumer’s right to re- the provisional crediting and gives the quest the documents that the institu- consumer full use of the funds during tion relied on in making its determina- the investigation; tion. Upon request, the institution shall promptly provide copies of the (iii) Corrects the error, if any, within documents. one business day after determining (2) Debiting provisional credit. Upon that an error occurred; and debiting a provisionally credited (iv) Reports the results to the con- amount, the financial institution shall: sumer within three business days after (i) Notify the consumer of the date completing its investigation (includ- and amount of the debiting; ing, if applicable, notice that a provi- (ii) Notify the consumer that the in- sional credit has been made final). stitution will honor checks, drafts, or (3) Extension of time periods. The time similar instruments payable to third periods in paragraphs (c)(1) and (c)(2) of parties and preauthorized transfers this section are extended as follows: from the consumer’s account (without (i) The applicable time is 20 business charge to the consumer as a result of days in place of 10 business days under an overdraft) for five business days paragraphs (c)(1) and (2) of this section after the notification. The institution if the notice of error involves an elec- shall honor items as specified in the tronic fund transfer to or from the ac- notice, but need honor only items that count within 30 days after the first de- it would have paid if the provisionally posit to the account was made. credited funds had not been debited. (ii) The applicable time is 90 days in (e) Reassertion of error. A financial in- place of 45 days under paragraph (c)(2) stitution that has fully complied with of this section, for completing an in- the error resolution requirements has vestigation, if a notice of error in- no further responsibilities under this volves an electronic fund transfer that: section should the consumer later re- (A) Was not initiated within a state; assert the same error, except in the (B) Resulted from a point-of-sale case of an error asserted by the con- debit card transaction; or sumer following receipt of information (C) Occurred within 30 days after the provided under paragraph (a)(1)(vii) of first deposit to the account was made. this section. (4) Investigation. With the exception [76 FR 81023, Dec. 27, 2011, as amended at 81 of transfers covered by § 1005.14 of this FR 84326, Nov. 22, 2016; 83 FR 6417, Feb. 13, part, a financial institution’s review of 2018] its own records regarding an alleged error satisfies the requirements of this § 1005.12 Relation to other laws. section if: (a) Relation to Truth in Lending. (1) (i) The alleged error concerns a The Electronic Fund Transfer Act and transfer to or from a third party; and this part govern: 197 § 1005.12 12 CFR Ch. X (1–1–24 Edition) (i) The addition to an accepted credit (2) The Truth in Lending Act and card, as defined in Regulation Z (12 Regulation Z (12 CFR part 1026), which CFR 1026.12, comment 12–2), of the ca- prohibit the unsolicited issuance of pability to initiate electronic fund credit cards, govern: transfers; (i) The addition of a credit feature or (ii) The issuance of an access device plan to an accepted access device, in- (other than an access device for a pre- cluding an access device for a prepaid paid account) that permits credit ex- account, that would make the access tensions (under a preexisting agree- device into a credit card under Regula- ment between a consumer and a finan- tion Z (12 CFR part 1026); cial institution) only when the con- (ii) Except as provided in paragraph sumer’s account is overdrawn or to (a)(1)(ii) of this section, the issuance of maintain a specified minimum balance a credit card that is also an access de- in the consumer’s account, or under an vice; and overdraft service, as defined in (iii) With respect to transactions in- § 1005.17(a) of this part; volving a prepaid account and a non- (iii) The addition of an overdraft covered separate credit feature as de- service, as defined in § 1005.17(a), to an fined in Regulation Z, 12 CFR 1026.61, a accepted access device; and consumer’s liability for unauthorized (iv) A consumer’s liability for an un- use and the investigation of errors in- volving transactions that access the authorized electronic fund transfer and non-covered separate credit feature, as the investigation of errors involving: applicable. (A) Except with respect to a prepaid (b) Preemption of inconsistent state account, an extension of credit that is laws—(1) Inconsistent requirements. The incident to an electronic fund transfer Bureau shall determine, upon its own that occurs under an agreement be- motion or upon the request of a state, tween the consumer and a financial in- financial institution, or other inter- stitution to extend credit when the ested party, whether the Act and this consumer’s account is overdrawn or to part preempt state law relating to elec- maintain a specified minimum balance tronic fund transfers, or dormancy, in- in the consumer’s account, or under an activity, or service fees, or expiration overdraft service, as defined in dates in the case of gift certificates, § 1005.17(a); store gift cards, or general-use prepaid (B) With respect to transactions that cards. involve a covered separate credit fea- (2) Standards for determination. State ture and an asset feature on a prepaid law is inconsistent with the require- account that are both accessible by a ments of the Act and this part if state hybrid prepaid-credit card as those law: terms are defined in Regulation Z, 12 (i) Requires or permits a practice or CFR 1026.61, an extension of credit that act prohibited by the Federal law; is incident to an electronic fund trans- (ii) Provides for consumer liability fer that occurs when the hybrid pre- for unauthorized electronic fund trans- paid-credit card accesses both funds in fers that exceeds the limits imposed by the asset feature of the prepaid ac- the Federal law; count and a credit extension from the (iii) Allows longer time periods than credit feature with respect to a par- the Federal law for investigating and ticular transaction; correcting alleged errors, or does not (C) Transactions that involves credit require the financial institution to extended through a negative balance to credit the consumer’s account during the asset feature of a prepaid account an error investigation in accordance that meets the conditions set forth in with § 1005.11(c)(2)(i) of this part; or Regulation Z, 12 CFR 1026.61(a)(4); and (iv) Requires initial disclosures, peri- (D) With respect to transactions in- odic statements, or receipts that are volving a prepaid account and a non- different in content from those re- covered separate credit feature as de- quired by the Federal law except to the fined in Regulation Z, 12 CFR 1026.61, extent that the disclosures relate to transactions that access the prepaid consumer rights granted by the state account, as applicable. law and not by the Federal law. 198 Consumer Financial Protection Bureau § 1005.14 (c) State exemptions—(1) General rule. § 1005.14 Electronic fund transfer serv- Any state may apply for an exemption ice provider not holding consumer’s from the requirements of the Act or account. this part for any class of electronic (a) Provider of electronic fund transfer fund transfers within the state. The service. A person that provides an elec- Bureau shall grant an exemption if it tronic fund transfer service to a con- determines that: sumer but that does not hold the con- (i) Under state law the class of elec- sumer’s account is subject to all re- tronic fund transfers is subject to re- quirements of this part if the person: quirements substantially similar to (1) Issues a debit card (or other ac- those imposed by the Federal law; and cess device) that the consumer can use (ii) There is adequate provision for to access the consumer’s account held state enforcement. by a financial institution; and (2) Has no agreement with the ac- (2) Exception. To assure that the Fed- count-holding institution regarding eral and state courts continue to have such access. concurrent jurisdiction, and to aid in (b) Compliance by service provider. In implementing the Act: addition to the requirements generally (i) No exemption shall extend to the applicable under this part, the service civil liability provisions of section 916 provider shall comply with the fol- of the Act; and lowing special rules: (ii) When the Bureau grants an ex- (1) Disclosures and documentation. The emption, the state law requirements service provider shall give the disclo- shall constitute the requirements of sures and documentation required by the Federal law for purposes of section §§ 1005.7, 1005.8, and 1005.9 of this part 916 of the Act, except for state law re- that are within the purview of its rela- quirements not imposed by the Federal tionship with the consumer. The serv- law. ice provider need not furnish the peri- odic statement required by § 1005.9(b) if [76 FR 81023, Dec. 27, 2011, as amended at 81 the following conditions are met: FR 84326, Nov. 22, 2016] (i) The debit card (or other access de- vice) issued to the consumer bears the § 1005.13 Administrative enforcement; service provider’s name and an address record retention. or telephone number for making in- (a) Enforcement by Federal agencies. quiries or giving notice of error; Compliance with this part is enforced (ii) The consumer receives a notice in accordance with section 918 of the concerning use of the debit card that is Act. substantially similar to the notice con- (b) Record retention. (1) Any person tained in appendix A of this part; subject to the Act and this part shall (iii) The consumer receives, on or retain evidence of compliance with the with the receipts required by § 1005.9(a), requirements imposed by the Act and the address and telephone number to be this part for a period of not less than used for an inquiry, to give notice of an two years from the date disclosures are error, or to report the loss or theft of the debit card; required to be made or action is re- (iv) The service provider transmits to quired to be taken. the account-holding institution the in- (2) Any person subject to the Act and formation specified in § 1005.9(b)(1), in this part having actual notice that it is the format prescribed by the auto- the subject of an investigation or an mated clearinghouse (ACH) system enforcement proceeding by its enforce- used to clear the fund transfers; ment agency, or having been served (v) The service provider extends the with notice of an action filed under time period for notice of loss or theft of sections 910, 916, or 917(a) of the Act, a debit card, set forth in § 1005.6(b)(1) shall retain the records that pertain to and (2), from two business days to four the investigation, action, or proceeding business days after the consumer until final disposition of the matter learns of the loss or theft; and extends unless an earlier time is allowed by the time periods for reporting unau- court or agency order. thorized transfers or errors, set forth 199 § 1005.15 12 CFR Ch. X (1–1–24 Edition) in §§ 1005.6(b)(3) and 1005.11(b)(1)(i), from honor debits to the account in accord- 60 days to 90 days following the trans- ance with § 1005.11(d)(2)(ii). mittal of a periodic statement by the account-holding institution. § 1005.15 Electronic fund transfer of government benefits. (2) Error resolution. (i) The service provider shall extend by a reasonable (a) Government agency subject to regu- time the period in which notice of an lation. (1) A government agency is error must be received, specified in deemed to be a financial institution for § 1005.11(b)(1)(i), if a delay resulted from purposes of the Act and this part if di- an initial attempt by the consumer to rectly or indirectly it issues an access notify the account-holding institution. device to a consumer for use in initi- (ii) The service provider shall dis- ating an electronic fund transfer of close to the consumer the date on government benefits from an account, which it initiates a transfer to effect a other than needs-tested benefits in a provisional credit in accordance with program established under state or § 1005.11(c)(2)(ii). local law or administered by a state or (iii) If the service provider deter- local agency. The agency shall comply mines an error occurred, it shall trans- with all applicable requirements of the fer funds to or from the consumer’s ac- Act and this part except as modified by count, in the appropriate amount and this section. (2) For purposes of this section, the within the applicable time period, in term ‘‘account’’ or ‘‘government ben- accordance with § 1005.11(c)(2)(i). efit account’’ means an account estab- (iv) If funds were provisionally cred- lished by a government agency for dis- ited and the service provider deter- tributing government benefits to a con- mines no error occurred, it may reverse sumer electronically, such as through the credit. The service provider shall automated teller machines or point-of- notify the account-holding institution sale terminals, but does not include an of the period during which the account- account for distributing needs-tested holding institution must honor debits benefits in a program established under to the account in accordance with state or local law or administered by a § 1005.11(d)(2)(ii). If an overdraft results, state or local agency. the service provider shall promptly re- (b) Issuance of access devices. For pur- imburse the account-holding institu- poses of this section, a consumer is tion in the amount of the overdraft. deemed to request an access device (c) Compliance by account-holding in- when the consumer applies for govern- stitution. The account-holding institu- ment benefits that the agency dis- tion need not comply with the require- burses or will disburse by means of an ments of the Act and this part with re- electronic fund transfer. The agency spect to electronic fund transfers initi- shall verify the identity of the con- ated through the service provider ex- sumer receiving the device by reason- cept as follows: able means before the device is acti- (1) Documentation. The account-hold- vated. ing institution shall provide a periodic (c) Pre-acquisition disclosure require- statement that describes each elec- ments. (1) Before a consumer acquires a tronic fund transfer initiated by the government benefit account, a govern- consumer with the access device issued ment agency shall comply with the by the service provider. The account- pre-acquisition disclosure require- holding institution has no liability for ments applicable to prepaid accounts the failure to comply with this require- as set forth in § 1005.18(b). ment if the service provider did not (2) Additional content for government provide the necessary information; and benefit accounts—(i) Statement regarding (2) Error resolution. Upon request, the consumer’s payment options. As part of account-holding institution shall pro- its short form pre-acquisition disclo- vide information or copies of docu- sures, the agency must provide a state- ments needed by the service provider ment that the consumer does not have to investigate errors or to furnish cop- to accept the government benefit ac- ies of documents to the consumer. The count and directing the consumer to account-holding institution shall also ask about other ways to receive their 200 Consumer Financial Protection Bureau § 1005.15 benefit payments from the agency in- be provided in a form substantially stead of receiving them via the ac- similar to Model Form A–10(a) of ap- count, using the following clause or a pendix A of this part. Sample Form A– substantially similar clause: ‘‘You do 10(f) in appendix A of this part provides not have to accept this benefits card. an example of the long form disclosure Ask about other ways to receive your required by § 1005.18(b)(4) when the benefits.’’ Alternatively, an agency agency does not offer multiple service may provide a statement that the con- plans. sumer has several options to receive (d) Access to account information—(1) benefit payments, followed by a list of Periodic statement alternative. A govern- the options available to the consumer, ment agency need not furnish periodic and directing the consumer to indicate statements required by § 1005.9(b) if the which option the consumer chooses agency makes available to the con- using the following clause or a substan- sumer: tially similar clause: ‘‘You have sev- (i) The consumer’s account balance, eral options to receive your payments: through a readily available telephone [list of options available to the con- line and at a terminal (such as by pro- sumer]; or this benefits card. Tell the viding balance information at a bal- benefits office which option you ance-inquiry terminal or providing it, choose.’’ This statement must be lo- routinely or upon request, on a ter- cated above the information required minal receipt at the time of an elec- by § 1005.18(b)(2)(i) through (iv). This tronic fund transfer); statement must appear in a minimum (ii) An electronic history of the con- type size of eight points (or 11 pixels) sumer’s account transactions, such as and appear in no larger a type size than through a Web site, that covers at least what is used for the fee headings re- 12 months preceding the date the con- quired by § 1005.18(b)(2)(i) through (iv). sumer electronically accesses the ac- (ii) Statement regarding state-required count; and information or other fee discounts and waivers. An agency may, but is not re- (iii) A written history of the con- quired to, include a statement in one sumer’s account transactions that is additional line of text in the short provided promptly in response to an form disclosure directing the consumer oral or written request and that covers to a particular location outside the at least 24 months preceding the date short form disclosure for information the agency receives the consumer’s re- on ways the consumer may access gov- quest. ernment benefit account funds and bal- (2) Additional access to account infor- ance information for free or for a re- mation requirements. For government duced fee. This statement must be lo- benefit accounts, a government agency cated directly below any statements shall comply with the account informa- disclosed pursuant to § 1005.18(b)(3)(i) tion requirements applicable to prepaid and (ii), or, if no such statements are accounts as set forth in § 1005.18(c)(3) disclosed, above the statement re- through (5). quired by § 1005.18(b)(2)(x). This state- (e) Modified disclosure, limitations on ment must appear in the same type liability, and error resolution require- size used to disclose variable fee infor- ments. A government agency that pro- mation pursuant to § 1005.18(b)(3)(i) and vides information under paragraph (ii), or, if none, the same type size used (d)(1) of this section shall comply with for the information required by the following: § 1005.18(b)(2)(x) through (xiii). (1) Initial disclosures. The agency shall (3) Form of disclosures. When a short modify the disclosures under § 1005.7(b) form disclosure required by paragraph by disclosing: (c) of this section is provided in writing (i) Access to account information. A or electronically, the information re- telephone number that the consumer quired by § 1005.18(b)(2)(i) through (ix) may call to obtain the account bal- shall be provided in the form of a table. ance, the means by which the con- Except as provided in sumer can obtain an electronic account § 1005.18(b)(6)(iii)(B), the short form dis- history, such as the address of a Web closure required by § 1005.18(b)(2) shall site, and a summary of the consumer’s 201 § 1005.16 12 CFR Ch. X (1–1–24 Edition) right to receive a written account his- (4) Modified error resolution require- tory upon request (in place of the sum- ments. (i) The agency shall comply with mary of the right to receive a periodic the requirements of § 1005.11 in response statement required by § 1005.7(b)(6)), in- to an oral or written notice of an error cluding a telephone number to call to from the consumer that is received by request a history. The disclosure re- the earlier of: quired by this paragraph (e)(1)(i) may (A) Sixty days after the date the con- be made by providing a notice substan- sumer electronically accesses the con- tially similar to the notice contained sumer’s account under paragraph in paragraph (a) of appendix A–5 of this (d)(1)(ii) of this section, provided that part. the electronic history made available (ii) Error resolution. A notice con- to the consumer reflects the alleged cerning error resolution that is sub- error; or stantially similar to the notice con- (B) Sixty days after the date the tained in paragraph (b) of appendix A– agency sends a written history of the 5 of this part, in place of the notice re- consumer’s account transactions re- quired by § 1005.7(b)(10). quested by the consumer under para- (2) Annual error resolution notice. The graph (d)(1)(iii) of this section in which agency shall provide an annual notice the alleged error is first reflected. concerning error resolution that is sub- (ii) In lieu of following the proce- stantially similar to the notice con- dures in paragraph (e)(4)(i) of this sec- tained in paragraph (b) of appendix A– tion, an agency complies with the re- 5 of this part, in place of the notice re- quirements for resolving errors in quired by § 1005.8(b). Alternatively, the § 1005.11 if it investigates any oral or agency may include on or with each written notice of an error from the electronic or written history provided consumer that is received by the agen- in accordance with paragraph (d)(1) of cy within 120 days after the transfer al- this section, a notice substantially legedly in error was credited or debited similar to the abbreviated notice for to the consumer’s account. periodic statements contained in para- (f) Disclosure of fees and other informa- graph (b) in appendix A–3 of this part, tion. For government benefit accounts, modified as necessary to reflect the a government agency shall comply error resolution provisions set forth in with the disclosure and change-in- this section. terms requirements applicable to pre- (3) Modified limitations on liability re- paid accounts as set forth in § 1005.18(f). quirements. (i) For purposes of (g) Government benefit accounts acces- § 1005.6(b)(3), the 60-day period for re- sible by hybrid prepaid-credit cards. For porting any unauthorized transfer shall government benefit accounts accessible begin on the earlier of: by hybrid prepaid-credit cards as de- (A) The date the consumer electroni- fined in Regulation Z, 12 CFR 1026.61, a cally accesses the consumer’s account government agency shall comply with under paragraph (d)(1)(ii) of this sec- prohibitions and requirements applica- tion, provided that the electronic his- ble to prepaid accounts as set forth in tory made available to the consumer § 1005.18(g). reflects the unauthorized transfer; or [81 FR 84326, Nov. 22, 2016] (B) The date the agency sends a writ- ten history of the consumer’s account § 1005.16 Disclosures at automated transactions requested by the con- teller machines. sumer under paragraph (d)(1)(iii) of (a) Definition. ‘‘Automated teller ma- this section in which the unauthorized chine operator’’ means any person that transfer is first reflected. operates an automated teller machine (ii) An agency may comply with at which a consumer initiates an elec- paragraph (e)(3)(i) of this section by tronic fund transfer or a balance in- limiting the consumer’s liability for an quiry and that does not hold the ac- unauthorized transfer as provided count to or from which the transfer is under § 1005.6(b)(3) for any transfer re- made, or about which an inquiry is ported by the consumer within 120 days made. after the transfer was credited or deb- (b) General. An automated teller ma- ited to the consumer’s account. chine operator that imposes a fee on a 202 Consumer Financial Protection Bureau § 1005.17 consumer for initiating an electronic of the prepaid account that meets the fund transfer or a balance inquiry must conditions of 12 CFR 1026.61(a)(4). provide a notice that a fee will be im- (b) Opt-in requirement—(1) General. posed for providing electronic fund Except as provided under paragraph (c) transfer services or a balance inquiry of this section, a financial institution that discloses the amount of the fee. holding a consumer’s account shall not (c) Notice requirement. An automated assess a fee or charge on a consumer’s teller machine operator must provide account for paying an ATM or one-time the notice required by paragraph (b) of debit card transaction pursuant to the this section either by showing it on the institution’s overdraft service, unless screen of the automated teller machine the institution: or by providing it on paper, before the (i) Provides the consumer with a no- consumer is committed to paying a fee. tice in writing, or if the consumer (d) Imposition of fee. An automated agrees, electronically, segregated from teller machine operator may impose a all other information, describing the fee on a consumer for initiating an institution’s overdraft service; electronic fund transfer or a balance (ii) Provides a reasonable oppor- inquiry only if: (1) The consumer is provided the no- tunity for the consumer to affirma- tice required under paragraph (c) of tively consent, or opt in, to the service this section, and for ATM and one-time debit card trans- (2) The consumer elects to continue actions; the transaction or inquiry after receiv- (iii) Obtains the consumer’s affirma- ing such notice. tive consent, or opt-in, to the institu- tion’s payment of ATM or one-time [76 FR 81023, Dec. 27, 2011, as amended at 78 debit card transactions; and FR 18224, Mar. 26, 2013] (iv) Provides the consumer with con- § 1005.17 Requirements for overdraft firmation of the consumer’s consent in services. writing, or if the consumer agrees, electronically, which includes a state- (a) Definition. For purposes of this ment informing the consumer of the section, the term ‘‘overdraft service’’ right to revoke such consent. means a service under which a finan- cial institution assesses a fee or charge (2) Conditioning payment of other over- on a consumer’s account held by the drafts on consumer’s affirmative consent. institution for paying a transaction A financial institution shall not: (including a check or other item) when (i) Condition the payment of any the consumer has insufficient or un- overdrafts for checks, ACH trans- available funds in the account. The actions, and other types of trans- term ‘‘overdraft service’’ does not in- actions on the consumer affirmatively clude any payment of overdrafts pursu- consenting to the institution’s pay- ant to: ment of ATM and one-time debit card (1) A line of credit subject to Regula- transactions pursuant to the institu- tion Z (12 CFR part 1026), including tion’s overdraft service; or transfers from a credit card account, (ii) Decline to pay checks, ACH home equity line of credit, or overdraft transactions, and other types of trans- line of credit; actions that overdraw the consumer’s (2) A service that transfers funds account because the consumer has not from another account held individually affirmatively consented to the institu- or jointly by a consumer, such as a sav- tion’s overdraft service for ATM and ings account; one-time debit card transactions. (3) A line of credit or other trans- (3) Same account terms, conditions, and action exempt from Regulation Z (12 features. A financial institution shall CFR part 1026) pursuant to 12 CFR provide to consumers who do not af- 1026.3(d); or firmatively consent to the institution’s (4) A covered separate credit feature overdraft service for ATM and one- accessible by a hybrid prepaid-credit time debit card transactions the same card as defined in Regulation Z, 12 CFR account terms, conditions, and features 1026.61; or credit extended through a that it provides to consumers who af- negative balance on the asset feature firmatively consent, except for the 203 § 1005.17 12 CFR Ch. X (1–1–24 Edition) overdraft service for ATM and one- stitution’s payment of overdrafts for time debit card transactions. ATM and one-time debit card trans- (c) Timing—(1) Existing account hold- actions pursuant to the institution’s ers. For accounts opened prior to July overdraft service, including the meth- 1, 2010, the financial institution must ods by which the consumer may con- not assess any fees or charges on a con- sent to the service; and sumer’s account on or after August 15, (5) Alternative plans for covering over- 2010, for paying an ATM or one-time drafts. If the institution offers a line of debit card transaction pursuant to the credit subject to Regulation Z (12 CFR overdraft service, unless the institu- part 1026) or a service that transfers tion has complied with § 1005.17(b)(1) funds from another account of the con- and obtained the consumer’s affirma- sumer held at the institution to cover tive consent. overdrafts, the institution must state (2) New account holders. For accounts that fact. An institution may, but is opened on or after July 1, 2010, the fi- not required to, list additional alter- nancial institution must comply with natives for the payment of overdrafts. § 1005.17(b)(1) and obtain the consumer’s (6) Permitted modifications and addi- affirmative consent before the institu- tional content. If applicable, the institu- tion assesses any fee or charge on the tion may modify the content required consumer’s account for paying an ATM by § 1005.17(d) to indicate that the con- or one-time debit card transaction pur- sumer has the right to opt into, or opt suant to the institution’s overdraft out of, the payment of overdrafts under service. the institution’s overdraft service for (d) Content and format. The notice re- other types of transactions, such as quired by paragraph (b)(1)(i) of this sec- checks, ACH transactions, or auto- tion shall be substantially similar to matic bill payments; to provide a Model Form A–9 set forth in appendix means for the consumer to exercise A of this part, include all applicable this choice; and to disclose the associ- items in this paragraph, and may not ated returned item fee and that addi- contain any information not specified tional merchant fees may apply. The in or otherwise permitted by this para- institution may also disclose the con- graph. sumer’s right to revoke consent. For (1) Overdraft service. A brief descrip- tion of the financial institution’s over- notices provided to consumers who draft service and the types of trans- have opened accounts prior to July 1, actions for which a fee or charge for 2010, the financial institution may de- paying an overdraft may be imposed, scribe the institution’s overdraft serv- including ATM and one-time debit card ice with respect to ATM and one-time transactions. debit card transactions with a state- (2) Fees imposed. The dollar amount of ment such as ‘‘After August 15, 2010, we any fees or charges assessed by the fi- will not authorize and pay overdrafts nancial institution for paying an ATM for the following types of transactions or one-time debit card transaction pur- unless you ask us to (see below).’’ suant to the institution’s overdraft (e) Joint relationships. If two or more service, including any daily or other consumers jointly hold an account, the overdraft fees. If the amount of the fee financial institution shall treat the af- is determined on the basis of the num- firmative consent of any of the joint ber of times the consumer has over- consumers as affirmative consent for drawn the account, the amount of the that account. Similarly, the financial overdraft, or other factors, the institu- institution shall treat a revocation of tion must disclose the maximum fee affirmative consent by any of the joint that may be imposed. consumers as revocation of consent for (3) Limits on fees charged. The max- that account. imum number of overdraft fees or (f) Continuing right to opt in or to re- charges that may be assessed per day, voke the opt-in. A consumer may af- or, if applicable, that there is no limit. firmatively consent to the financial in- (4) Disclosure of opt-in right. An expla- stitution’s overdraft service at any nation of the consumer’s right to af- time in the manner described in the no- firmatively consent to the financial in- tice required by paragraph (b)(1)(i) of 204 Consumer Financial Protection Bureau § 1005.18 this section. A consumer may also re- facing, external surface of a prepaid ac- voke consent at any time in the man- count access device’s packaging mate- ner made available to the consumer for rial. providing consent. A financial institu- (C) The disclosure required by para- tion must implement a consumer’s rev- graph (b)(2) of this section includes the ocation of consent as soon as reason-