Question of the Week: Reg E and Business Accounts
Question:
Knowing that Reg E (EFT) is only for member accounts, what protection does a Business Account have?
Answer:
Regulation E protections apply to accounts established primarily for personal, family, or household purposes; consequently, it does not apply to business accounts.
Business accounts do not typically have Regulation E protection. However, the credit union will want to look at its commercial account opening disclosures to see what limited EFT protections are offered to the business members.
While Regulation E applies to natural persons, credit unions should avoid unintentionally providing consumer account opening disclosures to business customers, as this can create a false sense of security and potentially lead to member complaints if the rules are later found not to apply. Providing consumer disclosures to a business member may create the implication that those rules apply to them, which can lead to confusion and dissatisfaction if the credit union later asserts the rules are not applicable.
Some credit unions voluntarily extend similar consumer protections to business accounts through their account agreements, but that’s contractual, not regulatory.
Subscribe
Sign up to the receive the weekly Compliance Watch newsletter email. Existing subscribers can manage their subscription.
Compliance Questions?
Cornerstone members have access to a wide variety of compliance assistance.
