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Infosight Highlight: Electronic Funds Transfers—Regulation E
Friday, August 4, 2017 7:00 AM

The Consumer Financial Protection Bureau’s Regulation E implements the provisions of the Electronic Fund Transfers Act (EFTA). The EFTA establishes the basic rights, liabilities, and responsibilities of consumers who use electronic fund transfer services and credit unions that offer these services.

The EFTA has two primary purposes:

  • To protect consumers by requiring credit unions to disclose all the terms and conditions surrounding an electronic fund transfer; and
  • To limit the liability of members for unauthorized transfers and establish procedures for the correction of billing errors.

What is an electronic funds transfer?
An electronic funds transfer, or EFT, is any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a credit union to debit or credit an account. Members may initiate an EFT by the use of electronic check conversion or an access device issued by the credit union. EFTs include, but are not limited to:

  • Point-of-sale (POS) transfers,
  • Automated teller machines (ATM) transfers,
  • Direct deposits or withdrawals of funds,
  • Transfers initiated by telephone,
  • Electronic check conversion by merchants, and
  • Transfers resulting from debit card transactions (whether or not initiated through an electronic terminal).

There are, however, a number of transactions that are not covered by Regulation E. For example, transfers of funds originated by checks/drafts, payments made by checks/drafts at an electronic terminal, and substitute checks covered under Check 21 are not covered by Regulation E. Likewise, Regulation E does not cover wire transfers through Fedwire, automatic transfers by account-holding credit unions, and incidental telephone transfers that are not initiated under a prearranged plan that allows periodic or recurring transfers. There is also a small credit union exemption for preauthorized transfers to or from accounts held at a credit union with $100 million or less in assets, calculated based upon assets as of the preceding Dec. 31.

Source: InfoSight Compliance

Need more info on a regular basis? Check out InfoSight, your first stop when searching for compliance answers. InfoSight operates as an online compliance manual at your fingertips, containing federal and state-specific content that is accurate, concise, and detailed on a wide range of topics and issues. Subscribers are able to access easy-to-read compliance summaries, checklists for compliance, direct links to laws and regulations, frequently asked questions, and links to additional important resources, including CUNA's online compliance resource "E-Guide." As part of InfoSight, the League sends out a weekly eNewsletter highlighting regulatory changes, hot topics in compliance, and comment calls.

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