On June 4, the CFPB issued eight updated FAQs to the unauthorized transfer and error resolution provisions under the Electronic Fund Transfer Act  (EFTA) and Regulation E.  Highlights from the FAQs include the following:

  • Unauthorized electronic fund transfers (EFTs) include situations where a consumer is fraudulently induced by a third party into sharing account access information without consent.
  • Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible when assessing consumer liability for unauthorized transfers. Nor may financial institutions rely on agreements with consumers that modify or waive certain protections granted by Regulation E.
  • Financial institutions may not rely on private network rules that provide less consumer protections than federal law.
  • Financial institutions must begin their investigations promptly upon receipt of an oral or written notice of error and may not delay initiating or completing investigations pending receipt of information from the consumer.

These FAQs come after the CFPB released its Summer 2020 edition of Supervisory Highlights (published in September 2020) discussing instances where examiners found that financial institutions had violated certain Regulation E requirements in their investigations of any errors filed by consumers.

Putting it Into Practice:  These FAQs indicate the CFPB expectations around Regulation E compliance.  Of note is the CFPB’s concern with requiring consumers to sign deposit agreements or stop payment request forms that indemnify and hold institutions harmless.  Financial institutions should consider revising these documents to ensure they do not contain any waivers of consumers’ rights in violation of the EFTA.  Likewise, based on the FAQs and recent CFPB exam findings noted in the Supervisory Highlights, financial institutions ought to review their policies on EFT error notice processing to comply with the Regulation E timing requirements.  Regulation E requires that notice must be received by the institution no later than 60 days after the institution sends the periodic statement that reflects the alleged error.  Financial institutions should confirm their reliance on correct dates to assess timeliness of EFT error notices.