EFT

Question 1

What types of electronic funds transfer services are protected under the act? (6)

Answer 1

• transfers through automated teller machines (ATMs);
• point-of-sale (POS) terminals;
• automated clearinghouse (ACH) systems;
• telephone bill-payment plans in which periodic or recurring transfers are contemplated;
• remote banking programs; and
• remittance transfers. (wires)

Question 2

What is an access device?

What two items are not considered access devices under the act?

Answer 2

A card, code, or other means of access to a consumer’s account or a combination of these used by the consumer to initiate EFTs. Access devices include debit cards, personal identification numbers (PINs), telephone transfer and telephone bill payment codes, and other means to initiate an EFT to or from a consumer account.

The following are not considered access devices:

• Magnetic tape or other devices used internally by a financial institution to initiate electronic transfers.
• A check or draft used to capture the MICR (Magnetic Ink Character Recognition) encoding or routing, account, and serial numbers to initiate a one-time ACH debit

Question 3

What is an accepted access device? (3)

Answer 3

It is an access device that a consumer:

• Requests and receives, signs, or uses (or authorizes another to use) to transfer money between accounts or to obtain money, property, or services.
• Requests to be validated even if it was issued on an unsolicited basis.
• Receives as a renewal or substitute for an accepted access device from either the financial institution that initially issued the device or a successor

Question 4

What is considered an account under EFT? (2)

Answer 4

• Checking, savings, or other consumer asset account held by a financial institution (directly or indirectly),
including certain club accounts, established primarily for personal, family, or household purposes
• A prepaid account

Question 5

What types of accts are included in the definition of a prepaid account? (4)

Answer 5

• a payroll card account, which is an account established directly or indirectly through an employer, to which EFTs of the consumer’s wages, salary, or other employee compensation (such as commissions), are made on a recurring basis;
• a government benefit account, which is an account established by a government agency for distributing govt benefits to a consumer electronically (can be through ATM or POS, also does not include distributions under a needs-tested benefit program)
• an account that is marketed or labeled as “prepaid” and that is redeemable upon presentation at multiple, unaffiliated merchants for goods or services or usable at ATMs; or
• an account

(1) that is issued on a prepaid basis in a specified amount or not issued on a prepaid basis but capable of being loaded with funds thereafter,
(2) whose primary function is to conduct transactions with multiple, unaffiliated merchants for goods or services or at ATMs, or to conduct person-to-person transfers, and
(3) that is not a checking account, share draft account, or negotiable order of withdrawal account.

Question 6

What are some examples of things that are not considered accounts under EFT? (5)

Answer 6

• An account held by a financial institution under a bona fide trust agreement.
• An occasional or incidental credit balance in a credit plan.
• Profit-sharing and pension accounts established under a bona fide trust agreement.
• Escrow accounts such as for payments of real estate taxes, insurance premiums, or completion of repairs
or improvements.
• Accounts for purchasing U.S. savings bonds

Question 7

A prepaid account does not include what? (5)

Answer 7

• An account that is loaded only with funds from a health savings account, flexible spending arrangement, medical savings account, health reimbursement arrangement, dependent care assistance program, or transit or parking reimbursement arrangement;

• An account that is directly or indirectly established through a third party and loaded only with qualified
disaster relief payments;

• The person-to-person functionality of an account established by or through the United States government
whose primary function is to conduct closed-loop transactions on U.S. military installations or vessels,
or similar government facilities;

• A gift certificate, store gift card, loyalty, award, or promotional gift card, or a general use prepaid card that is marketed and labeled as a gift card or gift certificate.
• An account established for distributing needs-tested benefits in a program established under state or local law or administered by a state or local agency

Question 8

A payroll account does not include a card used how? (3)

Answer 8

• Solely to disburse incentive-based payments (other than commissions when they represent the primary means through which a consumer is paid) that are unlikely to be a consumer’s primary source of salary or other compensation;
• Solely to make disbursements unrelated to compensation, such as petty cash reimbursements or travel per diem payments; or
• In isolated instances to which an employer typically does not make recurring payments

Question 9

What does activity mean under EFT?

Answer 9

means any action that results in an increase or decrease of the funds underlying a certificate or card, other
than the imposition of a fee, or an adjustment due to an error or a reversal of a prior transaction

Question 10

What is an electronic check conversion (ECK) transaction?

Answer 10

transactions where a check, draft, or similar paper instrument is used as a source of information to initiate a one-time electronic fund transfer from a consumer’s account. The consumer must authorize the transfer

Question 11

What is an electronic fund transfer?

Answer 11

a transfer of funds initiated through an electronic terminal, telephone, computer (including on-line banking) or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account.

EFTs include, but are not limited to, point-of-sale (POS) transfers; automated teller machine (ATM) transfers; direct deposits or withdrawals of funds; transfers initiated by telephone; and transfers resulting from debit card transactions, whether or not initiated through an electronic terminal

Question 12

What is an electronic terminal?

Answer 12

is an electronic device, other than a telephone call by a consumer, through which a consumer may initiate an EFT. The term includes, but is not limited to, point of-sale terminals, automated teller machines, and cash dispensing machines

Question 13

What types of card, codes and other devices are excluded from the Gift Card definition? (6)

i.e not subject to dormancy fee, inactivity fee, service fee, or expiration date restrictions

Answer 13

• Useable solely for telephone services;
• Reloadable and not marketed or labeled as a gift card or gift certificate. For purposes of this exception, the term “reloadable” includes a temporary non-reloadable card issued solely in connection with a reloadable card, code, or other device;
• A loyalty, award, or promotional gift card (except that these must disclose on the card or device itself, information such as the date the funds expire, fee information and a toll-free number);
• Not marketed to the general public;
• Issued in paper form only; or
• Redeemable solely for admission to events or venues at a particular location or group of affiliated locations, or to obtain goods or services in conjunction with admission to such events or venues, at the event or venue or at specific locations affiliated with and in geographic proximity to the event or venue.

Question 14

What is a general use prepaid card? (2)

Answer 14

a card, code, or other device:

• Issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in a specified
amount, whether or not that amount may be increased or reloaded, in exchange for payment; and

• That is redeemable upon presentation at multiple, unaffiliated merchants for goods or services, or that may be usable at automated teller machines

Question 15

What is the definition of a gift certificate?

Answer 15

A card, code, or other device issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in a specified amount that may not be increased or reloaded in exchange for payment and
redeemable upon presentation at a single merchant or an affiliated group of merchants for goods or services

Question 16

What is a loyalty, award, or promotional gift card? (3)

Answer 16

Is a card, code, or other device

(1) issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in connection with a loyalty, award, or promotional program;
(2) that is redeemable upon presentation at one or more merchants for goods or services, or usable at automated teller machines; and
(3) that sets forth certain disclosures, including a statement indicating that the card, code, or other device is issued for loyalty, award, or promotional purposes

Question 17

What is an overdraft service?

And overdraft service does not include payments made from where? (4)

Answer 17

A financial institution provides an overdraft service if it assesses a fee or charge for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account to pay the transaction.

However, an overdraft service does not include payments made from the following:

• A line of credit subject to Regulation Z, such as a credit card account, a home equity line of credit, or an overdraft line of credit;
• A service that transfers funds from another account held individually or jointly by the consumer, such as a savings account;
• A line of credit or other transaction in securities or commodities accounts in which credit is extended by a broker-dealer registered with the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC); or
• A covered separate credit feature accessible by a hybrid prepaid-credit card, or credit extended through a negative balance on the asset feature of the prepaid account

Question 18

What is a preauthorized EFT?

Answer 18

is an EFT authorized in advance to recur at substantially regular intervals

Question 19

What is a service fee?

prepaid giftcards

Answer 19

Means a periodic fee for holding or use of a gift certificate, store gift card, or general-use prepaid card. A periodic fee includes any fee that may be imposed on a gift certificate, store gift card, or general-use prepaid card from time to time for holding or using the certificate or card.

For example, a service fee may include a monthly maintenance fee, a transaction fee, an ATM fee, a reload fee, a foreign currency transaction fee, or a balance inquiry fee, whether or not the fee is waived for a certain period of time or is only imposed after a certain period of time.

However, a service fee does not include a one-time fee or a fee that is unlikely to be imposed more than once while the underlying funds are still valid, such as an initial issuance fee, a cash-out fee, a supplemental card fee, or a lost or stolen certificate or card replacement fee.

Question 20

What is a dormancy fee and inactivity fee?

Answer 20

means a fee for non-use of or inactivity on a gift certificate, store gift card, or general-use prepaid card

Question 21

What is an Unauthorized EFT?

And this definition does not include an EFT initiated in what ways? (3)

Answer 21

Is an EFT from a consumer’s account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit.

This does not include an EFT initiated in any of the following ways:

• By a person who was furnished the access device to the consumer’s account by the consumer, unless the
consumer has notified the financial institution that transfers by that person are no longer authorized;
• With fraudulent intent by the consumer or any person acting in concert with the consumer; or
• By the financial institution or its employee

Question 22

Generally, what is included under Subpart A (9) and Subpart B (7) of the Regulation?

Answer 22

Subpart A:

• Scope and Definitions
• Disclosures
• Overdraft Opt In
• Issuance of Access Devices
• Liability and Error Resolution
• Receipts and Periodic Statements
• Gift Cards
• Prepaid Account Requirements
• Internet posting of Prepaid account agreements

Subpart B:

• Remittance Transfer Definitions
• Disclosures
• Estimates
• Procedures for resolving errors
• Procedures for Cancellation and Refund of Remittance Transfers
• Acts of Agents
• Transfers Scheduled before the date of transfer

Question 23

What applies under subpart A of the regulation (general EFT requirements)?

Generally what is covered, and what types of accounts are covered?

Answer 23

Any EFT that authorizes a financial institution to debit or credit a consumer account.

The requirements of subpart A of Regulation E apply only to accounts for which there is an agreement for EFT services to or from the account between (i) the consumer and the financial institution or (ii) the consumer and a third party, when the account-holding financial institution has received notice of the agreement and the fund transfers have begun

Question 24

What is excluded from coverage under Subpart A (general EFT requirements)? (7)

(transfers that are not EFTs)

Answer 24

• Transfers originated by check, draft, or paper
• check guarantee or authorization services that do not directly result in a debit or credit to a consumer’s account
• Transfer of funds from a consumer within a system that is used primarily to transfer funds between financial institutions or businesses (Fedwire)
• transfer of funds for purchase or sale of securities/ commodities.
• intra-institutional automatic transfers under an agreement between a consumer and bank
• transfers initiated by telephone between a consumer and bank provided the transfer is not a function of written plan contemplating periodic or recurring transfers. (written plan includes brochures)
• preauthorized transfers to or from financial institutions with assets of less than $100MM in preceding Dec 31. However such transfers remain subject to the compulsory use prohibition, civil and criminal liability.

Question 25

Is an Electronic Check Conversion treated as an EFT under Subpart A?

Answer 25

Yes, although transfers originated by checks are not covered by subpart A, an ECK is treated as an EFT and not a payment originated by check.

In an ECK transaction, a consumer provides a check to a payee and information from the check is used to initiate a one-time EFT from the consumer’s account.

Question 26

What are the requirements for Payees in ECK transactions?

Answer 26

Payees must obtain the consumer’s authorization for each ECK transaction. A consumer authorizes a one-time EFT for an ECK transaction when the consumer receives notice that the transaction will or may be processed as an EFT and goes forward with the underlying transaction.

For POS transactions, the notice must be posted in a prominent and conspicuous location and a copy of the notice must be provided to the consumer at the time of the transaction.

Question 27

If a payee re-presents electronically a check that has been returned unpaid, is that transaction an EFT?

Does Subpart A apply?

Answer 27

No it is not an EFT and subpart A does not apply because the transaction originated by check.

However, subpart A applies to a fee collected electronically from a consumer’s account for a check or EFT returned unpaid. A consumer authorizes a one-time EFT from the consumer’s account to pay the fee for the returned item or transfer if the person collecting the fee provides notice to the consumer stating the amount of the fee, and the consumer goes forward with the underlying transaction.

Question 28

True or false:

Financial institutions have the option of disclosing additional information and combining disclosures required by other laws with regulation E disclosures.

Answer 28

True

Question 29

Can a bank combine required disclosures into a single statement if a consumer holds multiple accounts at the same bank?

How many disclosures must be provided for a joint account?

Answer 29

Yes if the consumer holds two or more accounts. Thus a single periodic statement or error resolution notice is sufficient for multiple accounts.

Its only necessary for a financial institution to provide one set of disclosures for a joint account.

Question 30

What disclosures must a bank provide before the first EFT is made? (2)

Answer 30

The bank must provide initial disclosures of the terms and conditions of EFT services before the first EFT is made or at the time the consumer contracts for an EFT service.

Question 31

What must be included as part of the initial disclosure of terms and conditions of EFT services? (5)

Answer 31

The disclosures must include a summary of various consumer rights under the regulation, including:

• the consumer’s liability for unauthorized EFTs,
• the types of EFTs the consumer may make,
• limits on the frequency or dollar amount,
• fees charged by the financial institution, and
• the error-resolution procedures.

Question 32

What are the timing requirements or EFT disclosures under subpart A?

Answer 32

Financial institutions must make the required disclosures at the time a consumer contracts for an electronic fund transfer service or before the first electronic fund transfer is made involving the consumer’s account.

If subsequent accounts are opened/ or the financial institution changes updates services, and the consumer has already received disclosures for another account, the bank need only disclose terms and conditions that differ from those previously given.

Question 33

What is the required content of the disclosures under subpart A (efts)? (11)

Answer 33

• Liability of consumers for unauthorized EFTs
• Telephone number and address
• Business days
• Types of transfers; limitations on frequency or dollar amount.
• Fees
• Right to documentation
• Stop Payments
• Liability of institution
• Confidentiality
• Error Resolution
• ATM Fees

Question 34

What do financial institutions need to disclose regarding liability of consumers?

Answer 34

The financial institution must include a summary of the consumer’s liability for unauthorized transfers. A
financial institution does not need to provide the liability disclosures if it imposes no liability.

If it later decides to impose liability, it must first provide the disclosures. The financial institution can choose to include advice on promptly reporting unauthorized transfers or the loss or theft of an access device.

Question 35

What do financial institutions need to disclose regarding Types of transfers?

Answer 35

Limitations on the frequency and dollar amount of transfers generally must be disclosed in detail.

A limitation on account activity that restricts the consumer’s ability to make EFTs must be disclosed even if the restriction also applies to transfers made by non-electronic means.

Financial institutions are not required to list preauthorized transfers among the types of transfers that a consumer can make. Financial institutions must disclose the fact that one-time EFTs initiated using information from a consumer’s check are among the types of transfers that a consumer can make.

Question 36

What do financial institutions need to disclose regarding Fees?

Answer 36

They must disclose all fees for EFTs or for the right to make EFTs.

Other fees, like minimum balance fees, stop payment fees, account overdrafts, or ATM fees, MAY, but need no be disclosed under Reg E. (See Reg DD requirements for these disclosures)

A per-item fee for EFTs must be disclosed even if the same fee is imposed on non-electronic transfers. Conditions for such fees also must be disclosed.

Question 37

What do financial institutions need to disclose regarding documentation?

Answer 37

A summary of the consumer’s right to receipts and periodic statements, and notices regarding preauthorized transfers.

Question 38

What do financial institutions need to disclose regarding stop payment?

Answer 38

A summary of the consumer’s right to stop payment of preauthorized EFTs and the procedures for placing a stop payment order.

Question 39

What do financial institutions need to disclose regarding liability of the institution?

Answer 39

A summary of the financial institution’s liability to the consumer under Section 910 of the EFTA for failure to make or to stop certain transfers.

Question 40

What do financial institutions need to disclose regarding confidentiality?

Answer 40

The circumstances under which, in the ordinary course of business, the financial institution may provide information concerning the consumer’s account to third parties.

A financial institution must describe the circumstances under which any information relating to an account to or from which EFTs are permitted will be made available to third parties, not just information concerning those EFTs. Third parties include other subsidiaries of the same holding company

Question 41

What do financial institutions need to disclose regarding error resolution?

Answer 41

The error-resolution notice must be substantially similar to Model Form A-3 in Appendix A of Part 1005. A financial institution may use different wording so long as the substance of the notice remains the same.

To take advantage of the longer time periods for resolving errors under 12 CFR 1005.11(c)(3) (for new accounts as defined in Regulation CC, transfers initiated outside the United States, or transfers resulting from POS debit card transactions), a financial institution must have disclosed these longer time periods.

Similarly, for a financial institution relying on the exception from provisional crediting for accounts relating to extension on credit by securities brokers or dealers, must disclose accordingly.

Question 42

Under what circumstances is a financial institution required to provide a Change in Terms notice? (4)

And when must they provide this notice to consumers? What about for immediate changes?

Answer 42

If a bank contemplates a change, it must provide a Change in terms notice to consumers at least 21 days before the effective date of any change/ condition required to be disclosed, but only if the change would result in one of the following:

• Increased fees or charges
• Increased liability for the consumer
• Fewer types of available EFTs, or
• Stricter limitations on the frequency or dollar amounts of transfers.

If an immediate change is necessary to maintain or restore security of EFT system/ account. The bank need not provide advanced notice, but if the change will be permanent, the institution must provide notice in writing of the change on or with the next periodic statement or within 30 days.

Question 43

When is the error resolution notice required, and when should it be provided to consumers?

Are there any alternatives?

Answer 43

For accounts to or from which EFTs can be made, the financial institution must mail, deliver, or provide electronically to the consumer at least once each calendar year, the error resolution notice.

Alternatively, the bank may include an abbreviated error resolution notice substantially similar to the model form with each periodic statement (typically on the back)

Question 44

What disclosures are required at ATMs?

Answer 44

An ATM operator that charges a fee is required to provide notice that a fee will be imposed and disclose the amount of the fee. The notice must be provided either by showing it on the screen of the automated teller machine or on paper before the consumer is committed to paying a fee.

These fee disclosures are not required where a network owner is not charging a fee directly to the consumer (i.e., some network owners charge an interchange fee to financial institutions whose customers use the network). If the network practices change such that the network charges the consumer directly, these fee disclosure requirements would apply to the network.

Question 45

A fee may be imposed by an ATM operator only if what two conditions are met?

Answer 45

The fee may be imposed by the ATM operator only if: (1) the consumer is provided the required notice, and (2) the consumer elects to continue the transaction or inquiry after receiving such notice

Question 46

What disclosures are required to be made on the physical gift card? (5)

What additional disclosure requirements are there for gift cards?

Answer 46

• The existence, amount, and frequency of any dormancy, inactivity, or service fee;
• The expiration date for the underlying funds (or the fact that the funds do not expire);
• A toll-free telephone number and (if any) a website that the consumer may use to obtain a replacement certificate or card if the certificate expires while underlying funds are still available.
• A statement that the certificate or card expires, but the underlying funds do not expire or expire later than the certificate or card, as well as a statement that the consumer may contact the issuer for a replacement card; and
• A toll-free telephone number and (if any) a website that the consumer may use to obtain information about fees

In addition to the disclosure requirements related to dormancy, inactivity, or service fees, all other fees must be disclosed as well. These disclosures must be provided on or with the certificate or card and disclosed prior to purchase. The certificate or card must also disclose a toll-free telephone number and website, if one is maintained, that a consumer may use to obtain fee information or replacement certificates or cards

Question 47

True or false:

Making gift card disclosures in an accompanying terms and conditions document, on packaging surrounding a certificate or card, or on a sticker or other label affixed to the certificate or card does constitute a disclosure on the certificate or card

Answer 47

False, the required disclosures must be made on the physical card, not anywhere else.

The only exception is that any additional disclosure requirements regarding fees can be provided on or with the card prior to purchase.

Question 48

To qualify for the exclusion for loyalty, award, or promotional gift cards, what needs to be disclosed? (4)

If they qualify, they are not subject to the substantive restrictions on imposing dormancy, inactivity, or
service fees, or on expiration dates. (i.e they don’t meet the definition of a gift card under Reg E)

Answer 48

• A statement indicating that the card, code, or other device is issued for loyalty, award, or promotional purposes, which must be included on the front of the card, code, or other device;
• The expiration date for the underlying funds, which must be included on the front of the card, code, or other device;
• The amount of any 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 on or with the card, code, or other device; and
• 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 the card, code, or other device.

Question 49

What disclosures are required on in-store signs, messages during customer service calls, websites, and general advertising regarding gift cards? (3)

Answer 49

• The funds underlying the gift card do not expire;
• Consumers have the right to receive a free replacement card, along with the packaging and materials that typically accompany the gift card; and
• The issuer will charge dormancy, inactivity, or service fees only if the fee is permitted by the gift card rule.

Question 50

A bank can assess an overdraft fee for paying an ATM or one-time debit card transaction if it has met what requirements? (4)

Answer 50

• Bank has provided consumer with separate overdraft notice describing the overdraft service
• bank has provided the consumer a reasonable opportunity to affirmatively consent (opt-in) to the overdraft service for ATM and one-time debit card transactions.
• the bank has obtained the opt in notice from the consumer, and
• the bank has provided confirmation of the consent, including a statement informing the consumer of the right to revoke consent. An institution complies if it adopts reasonable procedures to ensure that it assesses overdraft fees only for transactions paid after mailing the confirmation to the consumer.

Question 51

True or false:

A bank is prohibited from paying an ATM or one-time debit overdraft if the consumer’s account is not opted-in to overdraft protection.

Answer 51

False.

Lack of consent does not prohibit the financial institution from paying ATM or one-time debit card overdrafts. However, the financial institution may charge a fee only if the consumer has consented to the institution’s overdraft service for ATM and onetime debit card transactions.

Conversely, the financial institution is not required to pay an ATM or one-time debit card overdraft even if the consumer has consented to pay a fee

Question 52

True or false:

If a negative balance is attributable in part to a check, ACH, or other type of transaction not subject to the prohibition on assessing overdraft fees, the institution may charge a daily or sustained overdraft or similar fee, even if the consumer has not opted in.

Answer 52

True.

Question 53

True or false:

The overdraft law only applies to transactions that are not pre-authorized, such as ATM withdrawals and debit card transactions. Pre-authorized withdrawals, such as automatic bill payments and checks, do not fall under the umbrella of the overdraft protection law and can still lead to overdraft charges.

Answer 53

True

Question 54

What types of transactions required opt-in for overdrafts, and which ones do not require opt in for overdrafts?

Answer 54

Non-Pre authorized transactions such as ATM or one-time debit card transactions (pos) cannot be associated with an overdraft fee unless the consumer has opted in.

Preauthorized transactions such as ACH, automatic bill pay, and checks do not receive overdraft protection and can still lead to overdraft charges regardless if the consumer has opted in.

Question 55

What information is required in the content of the notice describing the overdraft service? (5)

What information is optional to include? (3)

Must be substantially similar to Model A-9 and may not contain any other information not expressly permitted.

Answer 55

Required:
• A brief description of the overdraft service and the types of transactions for which the financial institution may charge a fee;
• The dollar amount of any fee that may be charged for an ATM or one-time debit card transaction, including any daily or other overdraft fees;
• The maximum number of fees that may be charged per day, or, if applicable, that there is no limit;
• An explanation of the right to affirmatively consent to the overdraft service, including the methods by which the consumer may consent; and
• The availability of a line of credit or a service that transfers funds from another account to cover overdrafts, if the financial institution offers those alternatives

Optional:
• Disclosure of the right to opt into, or out of, the payment of overdrafts for other types of transactions (e.g., checks, ACH transactions, or automatic bill payments) and a means for the consumer to exercise such choices;
• Disclosure of the financial institution’s returned item fee, as well as the fact that merchants may charge additional fees; and
• Disclosure of the right to revoke consent

Question 56

When making overdraft disclosures,

If the amount of the fee may vary based on the number of times the consumer has overdrawn the account, the amount of the overdraft, or other factors, how should the institution disclose the dollar amount of the overdraft fee?

Answer 56

The financial institution must disclose the maximum fee.

Question 57

In the opt in notice, what must an institution disclose regarding the availability of a line of credit, sweep account or other alternatives?

Answer 57

If the institution offers both a line of credit subject to Regulation Z and a service that transfers funds from another account of the consumer held at the institution to cover overdrafts, the institution must state in its opt-in notice that both alternative plans are offered. If the
institution offers one, but not the other, it must state in its opt-in notice the alternative plan that it offers. If the institution does not offer either plan, it should omit the reference to the alternative plans. If the financial institution offers additional alternatives for paying overdrafts, it may (but is not required to) disclose those alternatives

Question 58

What would be considered a reasonable opportunity for a consumer to consent to overdrafts in the following formats:

Mail, Telephone, Electronic, In person.

Answer 58

Mail would be if the institution provided a form for the consumer to fill out and mail.

Telephone if the institution provides a readily available telephone line the consumer may call.

Electronic if the institution provides a form that can be accessed and processed through its website, where the consumer may click on a button to affirm consent.

In person if the institution provides a form for the consumer to complete and present at a branch or office.

An institution may provide these opportunities to consent and require the consumer to make a choice as a step to opening an account.

Question 59

How does an institution comply with the requirement to confirm the consumer’s right to revoke consent regarding overdrafts?

Answer 59

Not only must the consumer affirmatively consent, but the institution must mail or deliver to the consumer a written confirmation (or electronic, if the consumer agrees) that the consumer has consented, along with a statement informing the
consumer of the right to revoke the consent at any time. An institution complies with the confirmation requirement if it has adopted reasonable procedures to ensure that overdraft fees are assessed only on transactions paid after the confirmation is
mailed or delivered to the consumer

Question 60

If a negative balance is attributable in part to an ATM transaction and in part to a check and the consumer has not opted into overdraft protection, can the bank charge an overdraft fee?

Answer 60

Yes, a fee may be assessed based on the date when the check is paid into overdraft, not the date of the ATM or one time debit transaction.

Question 61

If a consumer has not opted in to overdraft protection can a bank charge an overdraft fee for ATM or one-time debit transactions?

What about for ACH, Check or automated billing transactions?

Answer 61

They are prohibited from charging fees for ATM and one-time debit if the consumer has not opted in.

However, this prohibition does not apply to negative balances attributed whole or in part to ACH, Check or automatic billing transactions.

Question 62

True or false:

A financial institution can condition the payment of other types of overdraft transactions (non-ATM or one time debit) on the consumer’s affirmative consent.

Answer 62

False

The financial institution may
not use different criteria for paying other types of overdraft transactions for consumers who have consented and for
consumers who have not consented

Question 63

Can a financial institution provide consumers who do not affirmatively consent to overdrafts different account terms, conditions, or features than those afforded to consumers who do affirmatively consent?

Answer 63

NO! Consumers who opted out must receive the same account terms, conditions and features as consumers who opt in. That requirement includes:

• Interest rates paid
• Fees assessed
• the Type of ATM or debit card provided (i.e. no separation between consumers who get debit cards with pins and cards without)
• minimum balance requirements
• online bill payment services

Question 64

For joint accounts, does one or both consumers need to consent to receive overdraft protection?

Answer 64

Any one account holder may consent, or revoke consent, for payment of ATM or one-time debit card transactions from a joint account

Question 65

When can a consumer consent to overdraft protection, and when can they revoke it?

Answer 65

A consumer may consent to the payment of ATM and onetime debit card overdrafts at any time. A consumer may also revoke consent at any time. The financial institution must
implement a revocation as soon as reasonably practicable

Question 66

True or false:

A financial institution may terminate overdraft services if the consumer makes excessive use of the service.

Answer 66

True

Question 67

In general, a financial institution may issue an access device to a consumer only in what two cases?

Answer 67

• The consumer requests it in writing or orally

- it is a renewal of, or a substitute for, an accepted access device.

Question 68

How many renewal or substitute access devices can a institution issue to replace a previously issued device?

Answer 68

Only one renewal or substitute device may replace a previously issued device. A financial institution may provide additional devices at the time it issues the renewal or substitute
access device provided the institution complies with the
requirements for issuing unsolicited access devices for the additional devices

Question 69

A bank can issue an unsolicited access device only if the access device meeting what criteria? (4)

Answer 69

The access device is:
• Not validated - that is, it cannot be used to initiate an EFT.
• Accompanied by the explanation that it is not validated and instructions on how the consumer may dispose of it if the consumer does not wish to validate it.
• Accompanied by a complete disclosure, in accordance with 12 CFR 1005.7, of the consumer’s rights and liabilities that will apply if the access device is validated.
• Validated only upon oral or written request from the consumer and after a verification of the consumer’s identity by some reasonable means

Question 70

When is a consumer deemed to request an access device for a payroll card account?

What about for a prepaid account?

Answer 70

When the consumer chooses to receive salary or other compensation through a payroll card account, or for govt. benefit account when the consumer applied for govt benefits that an agency disburses by means of an EFT.

A consumer is deemed to request an access device for a prepaid account when, for example, the consumer acquires a prepaid account offered for sale at a retail location or applies for a prepaid account by telephone or online.

Question 71

When does Regulation E apply vs. Regulation Z if EFT is added to a credit card?

Answer 71

The EFTA and Regulation E apply when the capability to initiate EFTs is added to an accepted credit card (as defined under Regulation Z). The EFTA and Regulation E also apply to the issuance of an access device (other than an access device for a prepaid account) that permits credit extensions under a preexisting agreement between the consumer and a financial institution to extend credit only to cover overdrafts (or to maintain a specified minimum balance).

The Truth in Lending Act and Regulation Z govern the addition of a credit feature to an accepted access device, and except as discussed above, the issuance of a credit card that is also an access device.

Question 72

True or false:

In EFT there is no clear time limit within which consumers must report unauthorized EFTs?

Answer 72

True, the extent of the consumers liability is determined solely by their promptness in notifying the financial institution.

A consumer may be liable depending on when the consumer notifies the bank and whether an access device was used.

Question 73

Can other factors (aside from time of notification) be used as a basis to hold consumers liable for unauthorized EFTs?

What factors does EFT prohibit as a basis for imposing greater liability than is permissible? (3)

Answer 73

Other factors MAY NOT be used as a basis to hold consumers liable. It is determined solely by the consumer’s promptness in notifying the bank.

The reg prohibits the following factors as the basis for imposing greater liability that is permissible:

• The consumer was negligent (wrote pin on card)
• an agreement between the consumer and the bank provides for greater liability
• consumer is liable for greater amount under state law.

Question 74

A consumer can only be held liable for an unauthorized transaction if what? (3)

Answer 74

• If the bank has provided the following written disclosures to the consumer:
• -Summary of consumer’s liability for unauthorized EFT
• -telephone number and address for reporting the unauthorized EFT
• -Bank business days
• Any access device used to initiate an EFT was an accepted access device
• The bank has provided a means to identify the consumer to whom the access device was issued.

Question 75

Can a bank impose consumer liability requirements for unauthorized EFTs on prepaid accounts (non payroll and govt benefit)?

Answer 75

Yes, for prepaid accounts that are not payroll card accounts or government benefit accounts, a financial institution is not required to comply with the liability limits and error resolution requirements for any prepaid account for which it has not successfully completed its consumer identification and verification process, provided certain disclosures are given.

Question 76

What is the max consumer liability for the following unauthorized EFT?

Loss or theft of access device, including if a PIN was used without the card.

Consumer notified the bank within 2 business days after learning of the loss or theft

Answer 76

Max Liability:

-Lesser of $50 OR total amount of unauthorized transfers that occur before notice to the bank.

Question 77

What is the max consumer liability for the following unauthorized EFT?

Loss or theft of access device.

Consumer notified bank more than 2 bus days after learning of loss or theft up to 60 days after transmittal of statement showing first unauthorized transfer made with access device.

Answer 77

Max liability is the lesser of $500, OR the sum of:

(a) $50 or the total amount of unauthorized transfers occurring in the first two business days, whichever is less; AND
(b) The amount of unauthorized transfers occurring after two business days and before notice to the financial institution. (provided the bank can demonstrate these transfers would not have occurred had notice been given within 2 bus days)

Question 78

What is the max consumer liability for the following unauthorized EFT?

Loss or theft of access device.

Consumer notified bank 60 days after transmittal of statement showing first unauthorized transfer made with access device.

Answer 78

For transfers occurring within the 60-day period, the lesser of $500, OR the sum of:

(a) Lesser of $50 or the amount of unauthorized transfers in first two business days; AND
(b) The amount of unauthorized transfers occurring after two business days.

For transfers occurring after the 60-day period, unlimited liability (until the financial institution is notified)

Question 79

What is the max consumer liability for the following unauthorized EFT?

Unauthorized transfer not involving loss or theft of an access device.

Consumer notified bank within 60 days after transmittal of the periodic statement on which the unauthorized transfer first appears.

Answer 79

No Liability

Question 80

What is the max consumer liability for the following unauthorized EFT?

Unauthorized transfer not involving loss or theft of an access device.

Consumer notified bank more than 60 days after transmittal of the periodic statement on which the unauthorized transfer first appears.

Answer 80

Unlimited liability for unauthorized transfers occurring 60 days after the periodic statement and before notice to the bank.

Question 81

Does that fact that a consumer has received a periodic statement reflecting an unauthorized transfer conclusive evidence in determining whether the consumer had knowledge of a loss or theft of an access device?

Answer 81

No, it is a factor but not conclusive evidence.

Question 82

When is notice considered to be given to the financial institution regarding unauthorized transfers?

Is a consumer required to provide information for notice to have been effectively given to limit consumer liability?

Answer 82

A consumer gives notice to a financial institution about unauthorized use when the consumer takes reasonable steps to provide the financial institution with the pertinent information, whether or not a particular employee actually receives the information. Even if the consumer is unable to provide the account number or the card number, the notice effectively limits the consumer’s liability if the consumer sufficiently identifies the account in question, for example, by giving the name on the account and the type of account.

Notice can be given in person, by telephone, or in writing. Notice in writing is considered given as of the mail date.

Notice may also be considered given when the financial institution becomes aware of circumstances leading to the reasonable belief that an unauthorized transfer has been or may be made.

Question 83

What is considered an Error under EFT? (7)

Answer 83

• An unauthorized EFT.
• An incorrect EFT to or from the consumer’s account.
• The omission from a periodic statement of an EFT to or from the consumer’s account that should have been included.
• A computational or bookkeeping error made by the financial institution relating to an EFT.
• The consumer’s receipt of an incorrect amount of money from an electronic terminal.
• An EFT not identified in accordance with the requirements of 12 CFR 1005.9 or 1005.10(a).
• A consumer’s request for any documentation required by 12 CFR 1005.9 or 1005.10(a) or for additional information or clarification concerning an EFT (12 CFR 1005.11(a)(1)).

Question 84

The term error does not include what?(2)

Answer 84

• A routine inquiry about the balance in the consumer’s account or a request for duplicate copies of documentation or other information that is made only for tax or other record-keeping purposes

• The fact that a financial institution does not make a terminal receipt available for a transfer of $15 or less in
accordance with

Question 85

A financial institution must comply with error resolution procedures with respect to any oral or written notice of error from the consumer that? (3)

Answer 85

• The financial institution receives not later than 60 days after sending a periodic statement or other documentation first reflecting the alleged error
• Enables the financial institution to identify the consumer’s name and account number.
• Indicates why the consumer believes the error exists and, to the extent possible, the type, date, and amount of the error

Question 86

True or false:

A financial institution may require a consumer to give written confirmation of an error within 10 business days of giving oral notice.

Answer 86

True, however they must start the investigation promptly at notification not once the written confirmation is received.

Also, the bank must provide the address where confirmation must be sent.

Question 87

After receiving notice of error, the bank must do what? (4)

Answer 87

• Promptly investigate the oral or written allegation of error.
• Complete its investigation within 10 business days.
• Report the results of its investigation within three business days after completing its investigation.
• Correct the error within one business day after determining that an error has occurred

Question 88

A bank may take up to 45 days to complete its investigation if what conditions are met? (3)

Answer 88

Provided the bank:

• provisionally credits the funds (including interest if applicable) within 10 business days
• Advises the consumer within 2 business days of the provisional credit
• gives the consumer full used of the funds during the investigation.

Question 89

In what scenarios is a bank not required to provisionally credit the account to take up to 45 days to complete its investigation? (2)

Answer 89

• If the consumer fails to provide the required written confirmation of an oral notice of error within 10 business days.
• Or if the notice of error involves an account subject to the margin requirements under Reg T (Securities credit by Brokers and Dealers)

However, where an error involves an unauthorized EFT, the bank must comply with the requirements of the provisions relating to unauthorized EFTs before holding the consumer liable, even if the consumer does not provide a notice of error within the time limits (1005.11(b)).

Question 90

If, after investigation of an error, the bank determines that an error has occurred, what procedures must it follow?

Answer 90

It must promptly (within one business day after such determination) correct the error, including the crediting of interest if applicable. The financial institution must provide within three business days of the completed investigation an oral or written report of the correction to the consumer and, as applicable, notify the consumer that the provisional credit has been made final.

Question 91

What procedures must a bank follow if after an investigation, it determined that no error occurred or that an error occurred in a different manner or amount from that described by the consumer?

What must they do if there is a provisional credit that needs to be returned now (debit)?

Answer 91

The financial institution must mail or deliver a written explanation of its findings within three business days after concluding its investigation. The explanation must include a notice of the consumer’s rights to request the documents upon which the financial institution relied in making its determination.

Upon debiting a provisionally credited amount, the financial institution must notify the consumer of the date and amount of the debit and of the fact that the financial institution will honor (without charge) checks, drafts, or similar paper instruments payable to third parties and preauthorized debits for five business days after transmittal of the notice. The financial institution need honor only items that it would have paid if the provisionally credited funds had not been debited.

Upon request from the consumer, the financial institution must promptly mail or deliver to the consumer copies of documents upon which it relied in making its determination

Question 92

What are the time period extensions for errors that occur within 30 days after the first deposit to the account?

Answer 92

The time periods are extended from 10 and 45 days, to 20 and 90 days, respectively.

Question 93

What is the time period extension if the notice of error involves a transaction that was not initiated in a State or resulted from a POS debit card transaction?

Answer 93

The 45 day period is extended to 90 Days.

ATM/Checks/ACH-45 days (provisional credit)

POS- 90 days (provisional credit)

Question 94

Receipts must be made available at the time a consumer initiates an EFT at an electronic terminal.
Financial institutions may provide receipts only to consumers who request one. The receipt must include what elements? (6)

Answer 94

• Amount of transfer (can include charge for making EFT)
• Date
• Type of transfer and type of account (withdrawal from checking)
• Number or code identifying consumer’s account or access device used (need not exceed 4 digits)
• Location of the Terminal (code/name/address)
• Name of Third Party to or from whom funds are transferred (a code can be used)

Question 95

True or false:

ATM receipts are required for EFTs less than $15.

Answer 95

False

Question 96

How often must periodic statements be sent to consumers?

Answer 96

For each monthly cycle in which an EFT has occurred, and at least quarterly if no EFT has occurred.

Question 97

On a periodic statement, for each EFT made during the cycle, the statement must include what information? (10)

Answer 97

• Amount of the transfer (can include ATM fees)
• Date transfer posted to account
• Type of transfers and types of accounts to or from which funds were transferred.
• Terminal location for each transfer (except deposits of cash, or a check, draft or similar paper instrument) initiated at an electronic terminal
• Name of third party or payee/ payor
• Account numbers
• Total amount of any fees and charges for making EFTs, or account maintenance
• Balance at beginning and close of statement period
• Address and Telephone for error resolution notices (unless on abbreviated notice)
• Telephone number for preauthorized transfers, if applicable

Question 98

What is the exception to periodic statement requirements for Passbook accounts?

Answer 98

Where a consumer’s passbook may not be accessed by an EFT other than preauthorized transfers to the account, a periodic statement need not be sent, provided that the financial institution updates the consumer’s passbook or provides the required information on a separate document at the consumer’s request. To update the passbook, the amount and date of each EFT made since the passbook was last presented must be listed. For other accounts that may be accessed only by preauthorized transfers to the account, the financial institution must send a periodic statement at least quarterly.

Question 99

What is the exception to periodic statement requirements regarding transfers between accounts?

Answer 99

If a transfer occurs between two accounts of the consumer at the same financial institution, the transfer need only be documented for one of the two accounts. A preauthorized transfer between two accounts of the consumer at the same financial institution is subject to the rule on preauthorized transfers and not the rule on intra-institutional transfers

Question 100

What is the exception to periodic statement requirements regarding foreign-initiated transfers?

Answer 100

If an EFT is initiated outside the United States, the financial institution need not provide a receipt or a periodic statement reflecting the transfer if it treats an inquiry for clarification or documentation as a notice of error.

Question 101

Third parties and employers/service providers would be considered a financial institution if it meets what two requirements?

if they meet these two requirements they would be considered a financial institution and would be subject to EFT.

Answer 101

• Hold prepaid accounts (including payroll card accounts)

- issue prepaid cards and agree with consumers to provide EFT services in connection with prepaid accounts.

Question 102

A government agency is deemed to be a “financial institution” subject to the regulation if it does what?

Answer 102

if it directly or indirectly issues an access device to a consumer for use in initiating an EFT of government benefits from an account, other than needs-tested benefits in a program established under state or local law or administered by a state or local agency

Question 103

A financial institution (which can include govt agencies, employers/servicers) is not required to furnish period statements if it makes what information available to consumers? (3)

Answer 103

• The account balance, through a telephone line and govt benefit accounts also through a terminal.
• An electronic history of account transactions (website) covering at least 12 months prior
• Written history of account transaction provided promptly in response to an oral or written request and covering 24 months prior to the request (not required for prepaid accounts that have not gone through ID verification)

Electronic and written histories must include same information required on periodic statements.

Question 104

If a financial institution provides an alternative to periodic statements, they must modify the initial EFT disclosures in what ways? (4)

Answer 104

Modify the initial disclosures by disclosing:

• Telephone number to obtain account balance
• Means consumer can obtain an electronic account history (address of website)
• summary of consumer right to receive written account history (replacing summary of right to receive periodic statement) including phone number to request history
• different model form for error resolutions

Question 105

If a financial institution provides an alternative to periodic statements, they must modify the annual error resolution notice in what ways? (2)

Answer 105

• To comply with modified timing provisions for limited liability requirements
• to comply with modified timing provisions for error resolution requirements (generally if it investigates oral or written notice of error resolution within 120 days after transfer allegedly in error was credited or debited to the consumer’s account)

See model form A-7(b)

Question 106

What must a financial institution disclose regarding Summary total of Fees on a periodic statement or history of account transactions? (2)

Answer 106

• Amount of any fees assessed against the account for EFTs or otherwise
• A summary total of the amount of all fees assessed by the bank against the consumer’s prepaid account for the prior calendar month and for the calendar year to date.

Question 107

What is the scope of the gift card rule under EFT?

Answer 107

The rule is generally limited to gift certificates, store gift cards, or general-use prepaid cards sold or issued to consumers primarily for personal, family, or household purposes. It generally does not apply to cards, codes, or other devices that are reloadable and not marketed or labeled as a gift card or gift certificate and loyalty, award, and promotional gift cards.

Question 108

No person may impose a dormancy, inactivity, or service fee on a gift certificate, store gift card, or prepaid card unless what three conditions are satisfied?

Answer 108

• There has been no activity with respect to the certificate or card within the one-year period prior to the imposition of the fee;
• Only one such fee is assessed in a given calendar month; and
• Disclosures regarding dormancy, inactivity, or service fees are clearly and conspicuously stated on the certificate or card, and the person issuing or selling the certificate or card has provided these disclosures to the purchaser before the certificate or card is purchased.

Question 109

What are the expiration date restrictions for gift certificates, store gift cards, or general use prepaid cards? (5)

Answer 109

• Cannot be sold or issued unless the expiration date of the funds is no less than 5 years after the date of issuance (date of last load funds for prepaid and store cards).
• Info regarding expiration must be disclosed on the certificate/card prior to purchase
• No person my sell or issue a card with an expiration date unless they have established policies and procedures to provide consumers with a reasonable opportunity to purchase a card that is at least 5 years from the expiration date. (preventing sale of cards with less than 5 years till expiration)
• must disclose on card the difference between the certificate/card expiration and the funds expiration, if any and to contact issuer for replacement. (non reloadable cards with at least 7 yrs from expiration need not include this disclosure)
• Fees may not be imposed for replacing an expired card if the funds remain valid, unless the card has been lost or stolen. (in lieu of a replacement, issuers and refund the remaining balance to the consumer without charge.)

Question 110

Do government benefit cards meet the definition of a prepaid account?

Are they subject to the prepaid account rules?

Answer 110

Although government benefit cards are defined as prepaid accounts, slightly different rules apply in certain circumstances, which can be found in 12 CFR 1005.15.

Question 111

What disclosures must be provided prior to acquiring a prepaid account?

Answer 111

Generally, the financial institution must provide the required short and long form disclosures.

However, the long form disclosures need not be provided prior to acquisition at a retail location or orally by telephone if certain conditions are met.

Question 112

What fees and information must me disclosed on the short form disclosure for prepaid accounts? (12)

Answer 112

• Periodic fee (annual fee/ monthly fee)
• Per purchase fee
• ATM Withdrawal Fee ( Both in network and out of network fees)
• Cash reload fee
• ATM balance inquiry fee (both in network and out of network fees)
• Customer Service fees (both for contacting automated or life agent customer service)
• Inactivity fee (non-use, dormancy, or inactivity fee and conditions that trigger the fee)
• Additional fee types (statement disclosing the additional fee types and directing consumers to the disclosure. If applicable, disclose the two AFTs that generate the most revenue)
• Overdraft credit features (If it is offered or not and applicable fees)
• registration and insurance (statement on eligibility for FDIC insurance or NCUA insurance and directing consumer to register for insurance)
• Bureau website (direction for general information about prepaid accounts)
• Info on all fees and services (direction to the long form disclosure to find details and conditions for all fees and services. Must include Tele # and URL to Long form)

Question 113

Regarding the Short form disclosure for payroll card accounts, what additional disclosures must be made?

Answer 113

In addition to the standard short form elements, Payroll card accounts must include the following on the short form:

• Statement that the consumer does not have to accept the payroll card account, and directing consumer to ask about other ways to receive wages. (alternatively a statement that the consumer has several options to receive wages or salary, followed by a list, and directing consumer to contact employer about choice)
• May but not required to include statement on ways a consumer may access govt benefit account funds and balance info for free or reduced fee.

Question 114

Should a financial institution include third party fees in the short form disclosure for prepaid accounts?

Answer 114

A financial institution may not include any third-party fees in the required short form disclosure, except for the cash reload fee, which must be the total of all charges from the financial institution and any third parties.

Question 115

True or false:

Regarding prepaid accounts, where the rule requires disclosure of two fees, a financial institution may disclose a single fee amount when the amount is the same for both fees.

Answer 115

True.

Question 116

True or false:

A financial institution can include any finance charges imposed in connection with a covered separate credit feature accessible by hybrid prepaid credit card in its disclosures for prepaid accounts. (ie. overdraft credit features)

Answer 116

False, there is a prohibition on disclosure of finance charges for prepaid accounts.

Question 117

What additional information must be disclosed to the consumer outside of the short form regarding prepaid accounts? (4)

Orally or on packaging

Answer 117

At the time the institution provides the short form disclosure they must also provide the following information either orally or on the packaging:

• Name of financial institution
• name of prepaid account program
• Purchase price for prepaid account, if any
• Fee for activating, if any

If this is not in a retail location the purchase price cannot be disclosed on the packaging.

Question 118

What is the required content of the long form disclosures for prepaid accounts? (7)

Answer 118

• Heading with name of prepaid account program and that this contains a list of all fees for that program.
• All fees that may be imposed in connection with a prepaid account. For each fee, the amount and conditions for imposition waiver or reduction.
• Statement regarding registration for FDIC of NCUA insurance (eligibility, benefits, consequences of lack of coverage, and directions to registry)
• Statement regarding overdraft credit features (same as short form
• Contact information
• Bureau website and telephone
• Reg Z disclosures for overdraft credit features.

Question 119

True or false:

Short and long form disclosures for prepaid accounts must disclose fees in a table format.

Answer 119

True when provided in writing or electronically.

Question 120

What disclosures must be provided on prepaid account access devices? (3)

On the physical card

Answer 120

• Name of institution
• URL
• Telephone

Question 121

What two additional rules apply to Hybrid Prepaid-Credit Cards beyond the standard prepaid account rules?

Answer 121

The following rules apply to a prepaid account program where consumers may be offered a covered separate credit feature accessible by a hybrid prepaid-credit card:

• A financial institution must provide to any prepaid account without a covered separate credit feature the same account terms, conditions, and features that it provides on prepaid accounts in the same prepaid account program
that have such a credit feature.

• A financial institution is not prohibited from imposing a higher fee or charge on the asset feature of a prepaid account with a covered separate credit feature accessible by a hybrid prepaid-credit card than the amount of a comparable fee or charge that it imposes on any prepaid account in the same prepaid account program that does not have such a credit feature.

Question 122

Is a temporarily suspended prepaid account (for example due to a report by a consumer of unauthorized used of the card) considered an “open account”?

Answer 122

Yes,

if there is an outstanding balance, the consumer can load funds to the account, or can access credit from a separate card feature it is considered an open account.

Question 123

If an issuer of prepaid accounts chooses to submit account agreements to the CFPB on a rolling basis, when must they submit them?

Answer 123

An issuer must make submissions of prepaid account agreements to the CFPB on a rolling basis, in the form and manner specified by the CFPB, no later than 30 days after the issuer offers, amends, or ceases to offer any prepaid account agreement

Question 124

An issuer need not make submissions of prepaid account agreements to the CFPB if the issuer has fewer than ________open prepaid accounts as of the last day of the calendar quarter?

Answer 124

3,000

Question 125

In addition to providing prepaid account agreements to the CFPB (for applicable institutions), where else must they maintain an agreement?

Answer 125

An issuer must post and maintain on its publicly available website any prepaid account agreements offered to the general public that the issuer is required to submit to the CFPB. Posted agreements must conform to the form and content requirements for agreements submitted to the CFPB. Agreements must be updated as frequently as the issuer is required to submit new or amended agreements to the Bureau. Agreements must be placed in a location that is prominent and readily accessible to the public, and must also be accessible without submission of personally identifiable information.

Question 126

With respect to any open prepaid account agreements (regardless if the agreement is required to be provided to the CFPB), an issuer must either… (2)

Answer 126

• Post and maintain the consumer’s agreement on its website; or
• Promptly provide a copy of the consumer’s agreement to the consumer upon the consumer’s request. If the request is via telephone the issuer must send a copy no later than 5 business days after request.

Question 127

A preauthorized transfer may be either a ____ to or a _____ from an account

Answer 127

Credit to or a debit from

Question 128

When an account is scheduled to be credited by a preauthorized EFT from the same payor at least once every _____ days, the financial institution must provide some form of notice to the consumer so that the consumer can find out whether or not the transfer occurred

Answer 128

60

Question 129

The notice requirement for preauthorized transfers to a consumers account will be satisfied if what occurs?

What if that doesn’t happen, what other means does the bank have to provide notice?

Answer 129

If the payor provides notice to the consumer that the transfer has been initiated.

If the payor does not provide notice, the bank must adopt one of 3 alternative procedures for giving notice:

• The financial institution may give the consumer oral or written notice within two business days after a
preauthorized transfer occurs.

• The financial institution may give the consumer oral or written notice, within two business days after the
preauthorized transfer was scheduled to occur, that the transfer did not occur.

• The financial institution may establish a readily available telephone line that the consumer may call to find out if the transfer occurred. This number must be included in the initial disclosures and each periodic statement.

Question 130

If a financial institution provides notice regarding a preauthorized transfer to a consumers account as a result of no notice being provided by the payor, what must be included in the notice?

Answer 130

The financial institution need not use any specific language to give notice but may not simply provide the current account balance. The financial institution may use different methods of notice for different types of preauthorized transfers and need not offer consumers a choice of notice methods.

Question 131

The financial institution that receives a preauthorized transfer must credit the consumer’s account as of ___ ____ the funds are received.

Answer 131

The day the funds are received.

Question 132

Preauthorized transfers from a consumer’s account can only be authorized if the consumer provides what?

Answer 132

Authorization of the transfer in writing and signed or similarly authenticated by the consumer. (can be done electronically)

If the bank or a third party fails to receive authorization this is a violation.

Question 133

When do consumers have a right to request a Stop Payment?

How and when must they submit the stop payment to the bank?

What happens if the debit item is resubmitted for payment?

Answer 133

Consumers have the right to stop payment of preauthorized transfers from accounts. The consumer must notify the financial institution orally or in writing at any time up to three business days before the scheduled date of the transfer. If the debit item is resubmitted, the institution must continue to honor the stop-payment order.

Question 134

Can a financial institution require written confirmation of an oral stop payment order to be made?

If so, what are the requirements for that?

Answer 134

The financial institution may require written confirmation of an oral stop payment order to be made within 14 days of the consumer’s oral notification. If the financial institution requires a written confirmation, it must inform the consumer at the time of the oral stop payment order that written confirmation is required and provide the address to which the confirmation should be sent. If the consumer fails to provide written confirmation, the oral stop payment order ceases to be binding after 14 days.

Question 135

What notice must be provided to a consumer if a preauthorized transfer from a consumer’s account varies in amount from the previous transfer under the same authorization or the preauthorized amount?

Answer 135

Either the financial institution or the designated payee must send to the consumer a written notice, at least 10 days before the scheduled transfer date, of the amount and scheduled date of the transfer.

The consumer can elect to receive notice only if the amount is outside of an agreed upon range.

The bank is not in violation if the payee fails to provide sufficient notice.

Question 136

True or False:

A financial institution may make it a condition for an extension of credit that repayment will be by means of preauthorized EFT

Answer 136

False, Compulsory use is prohibited.

However, the only exception is credit extended under an overdraft credit plan or extended to maintain a specified minimum balance in the consumer’s account.

Question 137

A person who provides EFT services to a consumer but does not hold the consumer’s account is a ______ ______ if the person issues an access device that the consumer can use to access the account and no agreement exists between the person and the account-holding financial institution. Transfers initiated by a service provider are often
cleared through an _______ __________.

Answer 137

Service Provider

Automated Clearinghouse (ACH)

Question 138

What procedures are different regarding EFT of government benefits? (5)

Answer 138

• Govt agencies must comply with modified rules on the issuance of access devices, periodic statements, initial disclosures, liability for unauthorized use, and error resolution notices.
• Govt agencies must comply with pre-acquisition disclosure requirements as applicable to other prepaid accounts.

-They must also provide one of two statements: either a statement that the consumer does not have to accept the government benefit account and directing the consumer to ask about other ways to receive their payment, or
a statement that the consumer has several options to receive benefit payments, followed by a list of the available options, and directing the consumer to indicate which option the consumer chooses.

• Govt agencies must also comply with other disclosure and change in term requirements applicable to prepaid accounts.
• A government agency is deemed to be a “financial institution” subject to the regulation if directly or indirectly it issues an access device to a consumer for use in initiating an EFT of government benefits from an account, other than needs-testedbenefits in a program established under state or local law or administered by a state or local agency.

Question 139

Regarding issuance of access devices and addition of EFT services, what is governed by EFT (4) and what is governed by Reg Z (3)?

Answer 139

Reg E:
• The addition of the capability to initiate EFTs to accepted credit cards.
• The issuance of access devices (other than an access device for a prepaid account) that permits credit extensions (under a preexisting agreement between a consumer and financial institution) only when the consumer’s account is overdrawn or to maintain a specified minimum balance in the consumer’s account, or under an overdraft service.
• The addition of an overdraft service to an accepted access device.
• Generally, a consumer’s liability for an unauthorized EFT and investigation of errors.

Reg Z:
• The issuance of credit cards as defined in Regulation Z.
• The addition of a credit feature to a debit card or other access device, including an access device for a prepaid account that would make the access device a credit card.
• The issuance of dual debit/credit cards, except for access devices (other than a prepaid account access device) whose only credit feature is a pre-existing agreement to cover account overdrafts or to maintain a minimum account balance, or that are an overdraft service.

Question 140

Regarding Liability and error resolution provisions, what applies to regulation E (4) not TILA?

Answer 140

Reg E:
• an extension of credit that occurs under an agreement between the consumer and a financial institution to
extend credit when the consumer’s account is overdrawn, to maintain a specified minimum balance in the consumer’s account, or under an overdraft service, except with respect to a prepaid account

• with respect to a transaction that involves a covered separate credit feature and an asset feature on a prepaid account that are both accessible by a hybrid prepaid- credit card, as defined in, an extension of credit that is incident to an EFT that occurs when the hybrid prepaid-credit card accesses both funds in the asset feature and a credit extension from the credit feature with respect to a particular transaction;
• transactions that involve credit extended through a negative balance to the asset feature of a prepaid account and
• with respect to transactions involving a prepaid account and a non-covered separate credit feature Regulation E applies to transactions that access the prepaid account.

Question 141

For transactions involving access devices that also function as credit cards, liability and error resolution provisions will apply to Reg E or Reg Z depending on the transaction, how does it apply in the example below?

Assume a combined access device-credit card can access a credit feature that is not an overdraft credit feature (i.e., when the card is used as a credit card, the card does not first access any funds in the asset account but draws only on a separate credit feature subject to Regulation ____). If the card is stolen and used as a credit card, for example, when the card is used to draw cash advances directly from the credit line, only the liability limits and error resolution provisions of Regulation ____ will apply. If, however, the card is stolen and is used as an access device for example, for debit card purchases or cash withdrawals at an ATM from a checking account, only the liability limits and error resolution provisions of regulation ___ will apply.

Answer 141

Z
Z
E

Question 142

For transactions involving access devices that also function as credit cards, liability and error resolution provisions will apply to Reg E or Reg Z depending on the transaction, how does it apply in the example below?

Assume a combined access device-credit card that can access an overdraft credit feature (i.e., the credit feature is accessed only when the consumer uses the card to make purchases or other transactions for which there are insufficient or unavailable funds in the asset account). If the card is stolen and unauthorized transactions are made, regulation __ will apply to the unauthorized transactions funded entirely from the asset account. If the use of the card results in an extension of credit that is incident to an EFT that is partially funded by funds in the consumer’s asset account and partially by credit extended under the overdraft credit feature, the error resolution provisions of Regulation ___, apply in addition to the Regulation __ provisions, but the other liability limitations and error resolution provisions of Regulation __ do not. If an unauthorized transaction using the card is funded entirely by credit extended under the overdraft credit feature, the transaction is governed solely by the liability limitations and error resolution requirements of Regulation __.

Answer 142

E
Z
E
Z
Z

Question 143

Generally, what does subpart B of EFT govern regarding remittance transfers? (4)

Answer 143

Under Regulation E subpart B, remittance transfer providers generally must give consumers disclosures at certain stages of the remittance transfer process, and consumers have certain error resolution, cancellation, and refund rights. The requirements of subpart B apply to remittance transfer providers

Question 144

What is an agent as defined under subpart B?

Answer 144

authorized delegate, or person affiliated with a remittance transfer provider, when that person acts for a remittance transfer provider.

A person is not deemed a remittance transfer provider when it performs activities as an agent on behalf of a remittance transfer provider

Question 145

What is a business day under subpart B-remittance transfers?

Answer 145

Any day that the offices of a remittance transfer provider is open to the public for carrying on substantially all business functions.

Question 146

What is a remittance transfer?

Answer 146

Is an electronic transfer of funds requested by a consumer in a state to a designated recipient that is sent by a remittance transfer provider. The term applies whether or not the consumer holds an account and whether or not the transfer is an electronic fund transfer.

Generally, consumers in the United States who send money electronically to consumers or business recipients in foreign countries are sending remittance transfers.

Question 147

An electronic transfer of funds occurs when? (2)

remittance transfers

Answer 147

An electronic transfer of funds occurs when:

A. A provider makes an electronic book entry between different settlement accounts to make the remittance transfer.

B. A payment is made under a bill-payment service available to a consumer via computer or other electronic means, except in certain circumstances where a check, draft or similar paper instrument drawn on a consumer’s account under the bill-payment service is mailed abroad.

An electronic transfer of funds does not occur where a sender mails funds directly to a recipient, or funds are provided to a courier for delivery to a foreign country

Question 148

True or false:

Transactions of $15 or less and certain transactions in connection with securities and commodities transfers that are excluded from the definition of an EFT are not remittance transfers

Answer 148

True

Question 149

Remittance transfers include what types of transactions? (5)

Answer 149

A. Transfers in cash or by another method conducted through a money transmitter or a financial institution.

B. Consumer wire transfers conducted by a financial institution upon a sender’s request to wire money from
the sender’s account to a designated recipient.

C. An addition of funds to a prepaid card by a participant in a prepaid card program, such as a prepaid card issuer or its agent, that is directly engaged with the sender to add these funds, where the prepaid card is sent or was previously sent by a participant in the prepaid card program to a person in a foreign country, even if a sender retains the ability to withdraw such funds.

D. International ACH transactions sent by the sender’s financial institution at the sender’s request.

E. Online bill payments and other electronic transfers that a sender schedules in advance, including preauthorized remittance transfers, made by the sender’s financial institution at the sender’s request to a designated recipient

Question 150

What is the definition of a Sender under Subpart B?

Answer 150

is a consumer in a state, who requests a remittance transfer primarily for personal, family, or household purposes. For account-based transfers, the location of the consumer’s account will determine whether the consumer is located in a state. For transfers not made from an account that are requested by telephone or electronically, the remittance transfer provider may make the determination of whether a consumer is located in a state based on information provided by the consumer and any records associated with the consumer.

The commentary provides further guidance on the location of senders with respect to transfers from prepaid accounts; transfers from U.S. military installations abroad; when a transfer is for personal, family, or household purposes; and regarding transfers requested from non-consumer accounts

Question 151

What is a designated recipient under Subpart B?

Answer 151

Any person identified by the name provided by a sender to receive a remittance transfer at a location in a foreign country. A designated recipient can be either a natural person or an organization such as a corporation.

Similar to the definition of “sender,” for transfers to a designated recipient’s account, where funds are to be received depends on where the recipient’s account is located. The commentary provides further guidance on transfers to prepaid accounts (other than a prepaid account that is a payroll card account or government benefit account) and transfers to U.S. military installations abroad.

Question 152

What is a remittance transfer provider?

Answer 152

any person that provides remittance transfers for a consumer in the normal course of business, regardless of whether the consumer holds an account with such person.

Question 153

What is the safe harbor for for a person to not meet the definition of a Remittance transfer provider?

Answer 153

To meet the definition, the person would need to provide remittance transfers in the “normal course of business. “

The safe harbor is for a person that provided 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar year (total via all channels). Such a person is not providing in the normal course of business and is not subject to the rule’s requirements.

Question 154

What are covered third party fees?

Answer 154

means any fees that are imposed on the remittance transfer by a person other than the remittance transfer provider that are not non-covered third-party fees. Fees imposed on the remittance transfer include only those fees that are charged to the designated recipient and are specifically related to the remittance transfer.

Examples include fees imposed on a remittance transfer by intermediary institutions in connection with a wire transfer (sometimes referred to as “lifting fees”) and fees imposed on a remittance transfer by an agent of the provider at pick-up for receiving the transfer

Question 155

What are non-covered third party fees?

Answer 155

means any fees imposed by the designated recipient’s institution for receiving a remittance transfer into an account except if the institution acts as an agent of the remittance transfer provider.

For example, a fee imposed by the designated recipient’s institution for receiving an incoming transfer into an account is a non-covered third-party fee, if the institution is 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 account held by an Internet-based or mobile telephone company that is not a bank, savings association, credit union
or equivalent institution.

Question 156

What disclosures are required to be provided for a remittance transfer? (2)

Answer 156

• Prepayment disclosure when a transfer request is made, but prior to payment for the transfer.
• Receipt when payment is made for the transfer.

Question 157

What format must all EFT disclosures be provided in?

Answer 157

Clear and conspicuous and provided in a written format the consumer can keep. Electronic is permitted.

Question 158

When is a provider required to provide the prepayment disclosure for a remittance transfer?

Answer 158

When the sender requests the remittance transfer, but prior to payment for the transfer.

Question 159

What is required to be disclosed in the prepayment disclosure for remittance transfers? (7)

Answer 159

1. the amount to be transferred (transfer amount) (2 disclosures of this depending on currency),
2. front-end fees imposed by the provider and any taxes collected on the remittance transfer by the provider (transfer fees and transfer taxes),
3. total amount of the transaction (the sum of the transfer amount and front-end fees and taxes),
4. the exchange rate,
5. any covered- third-party fees (other fees),
6. the total amount to be received by the designated recipient (total amount of the transaction minus covered third-party fees), and
7. a statement that non-covered third-party fees or taxes collected on the remittance transfer by a third person may apply to the remittance transfer and result in the designated recipient receiving less than the amount disclosed. In this statement, a provider also may, but is not required, to disclose in the currency in which the funds will be received, any applicable non-covered third-party fees or taxes collected by a person other than the provider.

Question 160

What are the two transfer amount disclosures required to be included in the prepayment disclosure for a remittance transfer?

Answer 160

1. The transfer amount in the currency in which the sender funds the remittance transfer to show the calculation of the total amount of the transaction.
2. The transfer amount in the currency in which the funds will be made available to the designated recipient. This second transfer amount need not be disclosed if covered third-party fees are not imposed on the remittance transfer. The terms used to describe each transfer amount should be the same

Question 161

What fees and taxes are required to be disclosed in the prepayment disclosure for a remittance transfer?

What currency must they be disclosed in?

Answer 161

all fees imposed and all taxes collected on the remittance transfer by the provider, and include only those that are specifically related to the remittance transfer. For example, a provider must disclose any service fees imposed by an agent at the time of the transfer, and any state taxes collected on the remittance transfer.

Fees imposed and taxes collected on the remittance transfer by a provider must be disclosed in the currency in which the transaction is funded, as applicable. Taxes collected on the remittance transfer by the provider include taxes imposed on the remittance transfer by a state or other governmental body.

Question 162

For remittance transfers, if the recipient will receive funds in a currency other than than the currency in which the transfer is funded, what must the provider disclose?

Answer 162

The exchange rate the provider used, which they must round to their preferred decimal place.

Question 163

What are the requirements for the disclosure of covered third party fees on the prepayment disclosure of a remittance transfer?

Answer 163

Covered third-party fees must be disclosed in the currency in which the funds will be received by the designated recipient, using the applicable exchange rate, or an estimated exchange rate to the extent permitted, prior to any rounding of the exchange rate.

If a provider does not have specific knowledge regarding the currency in which the funds will be received, the provider may rely on a sender’s representation as to the currency in which funds will be received.

If a sender does not know the currency in which funds will be received, the provider may assume that the currency in which funds will be received is the currency in which the remittance transfer is funded

Question 164

What are the requirements for the disclosure of the amount received on the prepayment disclosure of a remittance transfer? (3)

Answer 164

The remittance transfer provider is required to disclose the amount that will be received by the designated recipient in the currency in which the funds will be received.

The amount received must reflect the exchange rate, all fees imposed and all taxes collected on the remittance transfer by the remittance transfer provider, as well as any covered third-party fees required to be disclosed.

The disclosed amount received must be reduced by the amount of any fees or taxes (except noncovered
third-party fees or taxes collected on the remittance transfer by a person other than the provider) imposed on the remittance transfer that affect the amount received even if that amount is imposed or itemized separately from the transaction amount.

Question 165

What is the required disclaimer that must be provided regarding non-covered third party fees and taxes collected by a person other than the provider of a remittance transfer?

Answer 165

The provider is required to include a disclaimer that noncovered third-party fees or taxes may apply to the remittance transfer if such taxes and fees apply to a particular transfer or the provider does not know whether they apply. This disclosure may only be provided to the extent applicable. The provider also has the option to disclose this amount if it is known or if a reasonable estimate can be made.

For example, if the designated recipient’s institution is an agent of the provider and thus, non-covered third-party fees cannot apply to the transfer, the provider must disclose all fees imposed on the remittance transfer and may not provide the disclaimer regarding non-covered third-party fees

Question 166

When must a provider of remittance transfers provide a receipt to the sender?

Answer 166

When the payment is made.

Question 167

What information must be disclosed as part of the receipt in a remittance transfer? (6)

Answer 167

All applicable information required in the pre-payment disclosure. Additionally:

A. the date of availability of the funds (date available);

B. the name and, if provided by the sender, the telephone number and/or address of the designated recipient
(recipient);

C. a statement about the sender’s error resolution and cancellation;

D. specified contact information for the remittance transfer provider; and

E. the transfer date for remittance transfers scheduled at least three business days in advance, or the first transfer in a series of preauthorized transfers.

-Statement that sender can contact state charter and CFPB for questions or complaints about the provider. (name of agency, tele, web address)

Question 168

What must be disclosed regarding the date funds will be available on a remittance transfer receipt?

Answer 168

The provider must disclose the date in the foreign country on which the funds will be available to the designated recipient, using the term “Date Available” or a substantially similar term.

If a provider does not know the exact date on which funds will be available, the provider may disclose the latest date on which the funds will be available.

The provider may also disclose that funds “may be available sooner” or use a substantially similar term to inform senders that funds may be available to the designated recipient on a date earlier than the date disclosed

Question 169

What is a cancellation disclosure regarding remittance transfers?

Answer 169

The provider may provide the three-business-day right to cancel notice (for transfers scheduled three or more business days before the transfer date) and the 30-minute right to cancel notice (for transfers scheduled fewer than three business days in advance), on the same disclosure, with a checkbox or other method to clearly designate the applicable cancellation period.

For transfers scheduled three or more business days before the transfer date, the cancellation disclosure should be phrased and formatted in such a way that it is clear to the sender which cancellation period is applicable to the date of transfer disclosed on the receipt

Question 170

What disclosure can a provider give in lieu of providing the pre-payment and receipt disclosures for remittance transfers?

When must they provide this disclosure?

Answer 170

They can provide a combined disclosure with all of the information typically included in both disclosures. They must provide this disclosure when the sender requests the transfer, but prior to payment for the transfer.

If this combined disclosure is provided and the sender completes the transfer, the remittance transfer provider must provide the sender with proof of payment when payment is made for the remittance transfer (this can be on the same piece of paper as the combined disclosure).

For one-time transfers scheduled at least five 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.

Question 171

Regarding remittance transfers, what must a provider disclose for error resolution and cancellations?

And when must they provide it?

Answer 171

A statement on this is provided on the remittance transfer receipt, but at the sender’s request, a remittance transfer provider is required promptly to provide a notice describing the sender’s error resolution and cancellation rights (long form notice).

For any remittance transfer scheduled by the sender at least three business days before the date of the
transfer, the description of the rights of the sender regarding cancellation must instead reflect the requirements of 12 CFR 1005.36(c)

Question 172

Regarding remittance transfers, what information must be grouped together on the prepayment and receipt disclosures? (2)

Answer 172

• Disclosures related to transfer amount, transfer fees and taxes imposed by the provider, and the total amount of the transaction generally must be grouped together.
• Similarly, disclosures related to the transfer amount in the currency to be made available to the designated recipient, covered third-party fees, taxes collected on the remittance by the provider, the total amount to be received by the designated recipient, and the disclaimer statement generally must be grouped together.

Information is grouped together if multiple disclosures are in close proximity to one another and a sender can reasonably calculate the total amount of the transaction and the amount that will be received by the designated recipient

Question 173

Can remittance transfer disclosures be combined with any other information?

Answer 173

No, they must be segregated from everything else and contain only information that is directly related to the disclosures.

Question 174

What does EFT say about foreign language disclosures for remittance transfers?

Answer 174

-generally all disclosures must be provided in English and in each foreign language used to advertise remittance transfer services at the office where a sender would conduct a transaction or assert an error. (web and telephone as well)

Question 175

Estimates may be provided in prepayment disclosures, receipts, or combined disclosures for transfers to certain countries if the remittance transfer provider meets what two conditions?

Answer 175

• The laws of the recipient country do not permit the provider to determine the exact amounts at the time of disclosure (ex: currency exchange is set by govt after remittance transfer is sent, or when the recipient receives the funds)
• The method by which transactions are made in the recipient country does not permit such determination. (ex: exchange rate is set by recipient country central bank after provider sends transfer)

Question 176

What countries are on the safe harbor list for using estimates in remittance transfers? (5)

Answer 176

• Aruba
• Brazil
• China
• Ethiopia
• Libya

Question 177

In the following example, what is allowed to be estimated in the disclosures:

Sender schedules a wire transfer to be sent from the sender’s bank account denominated in U.S. dollars but to be paid to the recipient in Euro.

(5 things)

Answer 177

Since the sender scheduled the transfer to fix the amount in the currency in which the transfer will be received, not which it is funded, the following can be estimated:

• exchange rate
• transfer amount
• covered third party fees (when exchange rate is estimated and affects such fees)
• front end fees or taxes
• total amount to recipient

Question 178

An error under subpart B includes what? (5)

Answer 178

A. Generally, an incorrect amount paid by a sender in connection with a remittance transfer;

B. A computational or bookkeeping error made by the remittance transfer provider relating to the remittance transfer;

C. The failure, generally, to make available to a designated recipient the amount of currency required to be disclosed and stated in the disclosure provided to the sender unless the disclosure stated an estimate of the amount paid and the difference results from application of the actual exchange rate, fees, and taxes, rather than any estimated amount;

D. The failure, generally, to make funds available to a designated recipient by the date of availability stated in the disclosure provided to the sender; or

E. The sender’s request for documentation required or for additional information or clarification concerning a remittance transfer, including a request a sender makes to determine whether an error exists.

Question 179

What is an error due to incorrect amount of currency paid to sender?

Remittance transfers.

Answer 179

This type of error covers circumstances in which a sender pays an amount that differs from the total amount of the transaction, including fees imposed in connection with the transfer, stated in the receipt or combined disclosure provided.

However, there is no error if the disclosure appropriately stated an estimate of the amount paid by the sender and the difference results from application of the actual exchange rate, fees, and taxes, rather than any estimated amounts

Question 180

What is an error due to incorrect amount of currency received?

Remittance transfers.

What are the three exceptions to this error?

Answer 180

This type of error covers circumstances in which the designated recipient receives an amount of currency that differs from the amount of currency identified on the disclosures provided to the sender. It also covers circumstances in which the remittance transfer provider transmits an amount that differs from the amount requested by the sender. (ex: exchange rate other than disclosed rate is applied to transfer). There are three general exceptions to this.

There is no error if:

A. the disclosure appropriately, stated an estimate of the amount of currency to be received and the difference results from application of the actual exchange rate, fees, and taxes, rather than any estimated amounts, or

B. the failure was caused by extraordinary circumstances outside the remittance transfer provider’s control; or

C. the difference results from the application of non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider and the provider provided the required disclaimer.

Question 181

What is an error due to failure to make funds available by disclosed date of availability?

Remittance Transfers

Answer 181

This error generally covers disputes about the failure to make remittance transfer funds available to a designated recipient by the disclosed date of availability. Examples include late or non-delivery of a remittance transfer, delivery of funds to the wrong account, the fraudulent pick-up of a remittance transfer in a foreign country by a person other than the designated recipient, and the recipient agent or institution’s retention of the remittance transfer, instead of making the funds available to the designated recipient.

Question 182

Regarding errors with remittance transfers due to failure to make funds available by disclosed date of availability.

There is no error if funds were not made available by the disclosed date due to: (4)

Answer 182

• Extraordinary circumstances outside the providers control
• Delays related to a necessary investigation or other special action by the remittance transfer provider or a third party as required by the provider’s fraud screening procedures or in accordance with the Bank Secrecy Act, Office of Foreign Assets Control requirements, or similar laws or requirements; or
• The remittance transfer was made with fraudulent intent by the sender or any person acting in concert with the sender (i.e., friendly fraud); or
• The sender provided the remittance transfer provider an incorrect account number or recipient institution identifier for the designated recipient’s account or institution (additional conditions must be met)

Question 183

What should the remittance transfer provider do in the following situation?

The sender provided the remittance transfer provider an incorrect account number or recipient institution identifier for the designated recipient’s account or institution (the transfer was already processed and sent)? (5)

Answer 183

1. the remittance provider can demonstrate that the sender provided an incorrect account number or recipient institution identifier to the provider in connection with the remittance transfer;
2. the provider used reasonable available means prior to or when sending the transfer to verify (for recipient institution identifier errors only) that the recipient institution identifier provided by the sender corresponded to the recipient institution name provided by the sender;
3. the provider provided notice to the sender (prior to payment for the remittance transfer) that, in the event the sender provided an incorrect account number or recipient institution identifier, the sender could lose the transfer amount.
4. the incorrect account number or recipient institution identifier resulted in the deposit of the remittance transfer into a customer’s account that is not the designated recipient’s account; and
5. the provider promptly used reasonable efforts to recover the amount that was to be received by the
   designated recipient

Question 184

What issues are not considered errors under Subpart B? (4)

Answer 184

The following are not errors:

A. An inquiry about the status of a remittance transfer except where the funds from the transfer were not made available to a designated recipient by the disclosed date of availability;

B. A request for information for tax or other recordkeeping purposes;

C. A change requested by the designated recipient that the remittance transfer provider or others involved in the remittance transfer decide to accommodate; or

D. A change in the amount or type of currency received by the designated recipient from the amount or type of currency stated in the disclosure provided to the sender if the remittance transfer provider relied on information provided by the sender

Question 185

If a consumer believes there is a remittance transfer error, when must they notify the provider for the notice to be considered timely?

Answer 185

Within 180 days of the disclosed date of availability of the remittance transfer.

Or if the notice is based on documentation, additional information, or clarification provided by the remittance transfer provider, then notice is timely if it is received by the remittance transfer provider the later of:

A. 180 days after the disclosed date of availability of the remittance transfer, or

B. 60 days after the provider sent the documentation, information, or clarification that had been requested

Question 186

How can remittance transfer errors be reported?

And what must be included in the content of the notice? (4)

Answer 186

Errors may be reported orally or in writing. The notice of error is effective so long as the remittance transfer provider is able to identify:

A. The sender’s name and telephone number or address (or email address)

B. The recipient’s name and if known, telephone number and address;

C. The remittance transfer to which the notice of error applies; and

D. Why the sender believes an error exists and if possible, the type, date, and amount of the error, except for errors involving requests for documentation, additional information or clarification.

Question 187

Is a remittance transfer provider required to comply with error resolution requirements if any notice of error is received outside of the specified timeframes?

Answer 187

NO!

A remittance transfer provider is not required to comply with the error resolution requirements for any notice of error from a sender that is received more than 180 days from the disclosed date of availability of the remittance transfer or, if applicable, more than 60 days after a provider sent documentation, additional information, or clarification requested by the sender

Question 188

What are the error resolution procedures that must be followed after a remittance transfer provider receives notice of error from a sender? (3)

Answer 188

• Promptly investigate and determine if an error occurred within 90 days of receiving a notice of error.
• Report the results (orally or in writing) of the investigation within 3 business days after completing investigation and must include notice of any remedies available for correcting any error that the provider determines has occurred.
• If the provider determines that no error occurred or a different error occurred, the provider must give a written explanation of the findings, and note the sender’s right to request the documents on which the provider relied upon in making its determination.

Question 189

If the remittance transfer provider determines an error (as defined in subpart B) occurred and the error relates to:

A. an incorrect amount paid by the sender,

B. a computational or bookkeeping error made by the remittance transfer provider, or

C. failure to make the amount of currency stated in the disclosures available to the designated recipient,

the provider must either:

Answer 189

A. refund the amount of funds provided by the sender in connection with a remittance transfer which was not properly transmitted, or the amount appropriate to resolve the error; or

B. make available to the designated recipient, the amount appropriate to resolve the error without additional cost to the sender or the designated recipient

Question 190

What is the required remedy where the failure to make funds available by the disclosed date of availability occurred due to incorrect or insufficient information by the sender? (2)

Remittance transfer errors

What about in all other instances of failure to make funds available by the disclosed date of availability? (2)

Answer 190

• Provider must refund the sender the amount of funds that was not properly transmitted, or amount appropriate to resolve the error and any fees/taxes paid by the sender, within 3 business days of providing the written explanation of findings.
• With agreement the provider can apply the funds to a new transfer rather than refund. They can deduct any fees or taxes required of the new transfer except for its own fees. This is treated as a new remittance transfer and the provider is required to provide new disclosures.

In all other instances the provider must either:

1. Refund to the sender, the amount of funds which was not properly transmitted or the amount appropriate to
   resolve the error; or
2. Make available to the designated recipient the amount appropriate to resolve the error without additional cost to the sender or to the designated recipient; and Refund to the sender any fees imposed and, to the extent not prohibited by law, taxes collected on the remittance transfer

Question 191

What is the remedy for an incorrect amount paid on a remittance transfer error?

Answer 191

If an error relates to the payment of an incorrect amount, the sender may request a refund of the amount necessary to resolve the error or request that the remittance transfer provider make the amount necessary to resolve the error available to the designated recipient at no additional cost

Question 192

What is the remedy if funds were not available by disclosed date for a remittance transfer?

Answer 192

If the remittance transfer provider determines an error related to failure to make funds available by the disclosed date occurred, it must correct the error and refund any fees imposed by the provider or a third party involved in sending the transfer, such as an intermediary bank involved in sending a wire transfer or the institution from which the funds are picked up (unless the sender provided incorrect or insufficient information to the remittance transfer provider in connection with the remittance transfer)

Question 193

True or false:

A provider can charge for error resolution regarding remittance transfers.

Answer 193

False:

If an error occurred, whether as alleged or in a different amount or manner, the remittance transfer provider may not impose a charge related to any aspect of the error resolution process (including charges for documentation or investigation)

Question 194

What procedures must a provider follow if they determine no error occurred on a remittance transfer?

Answer 194

If the remittance transfer provider determines that no error occurred or that an error occurred in a manner or amount different from that described by the sender, its report of the results of the investigation must include a written explanation of the provider’s findings and shall note the sender’s right to request the documents on which it relied in making its determination. The explanation should also address the specific complaint of the sender. Upon the sender’s request, the remittance transfer provider must also promptly provide copies of the documents on which it relied to make its error determination

Question 195

What procedures must a remittance transfer provider follow if they determine a error different from that alleged occurred?

Answer 195

If a remittance transfer provider determines that an error occurred in a manner or amount different from that described by the sender, it must comply with the requirements of both 12 CFR 1005.33(c) (concerning the investigation) and (d) (procedures if remittance transfer provider determines no error or different error occurred), as applicable. The provider may give the notice of correction and the explanation separately or in a combined form

Question 196

Does a remittance transfer provider have any additional procedures they must follow if after making an error determination, the sender reasserts the error with another notice?

Answer 196

A remittance transfer provider that has fully complied with the error resolution requirements of this section generally has no further responsibilities should the sender later reassert the same error, except in the case of an error asserted by the sender following receipt of additional information requested from the provider

Question 197

What procedures must a remittance transfer provider follow if a sender withdrawals their error?

Answer 197

The remittance transfer provider has no further error resolution responsibilities if the sender voluntarily withdraws the notice alleging an error. A sender who has withdrawn an allegation of error has the right to reassert the allegation unless the remittance transfer provider had already complied with all of the error resolution requirements before the allegation was withdrawn.

The sender must do so, however, within the original 180-day period from the disclosed date of availability or, if applicable, the 60-day period for a notice of error based on documentation or clarification that the sender previously requested

Question 198

True or false:

A remittance transfer provider that holds the sender’s account may have error obligations under both remittance transfer error procedures and standard EFT error resolution procedures.

Answer 198

True

Question 199

What error resolution provisions should the provider follow in the following example:

A sender asserts a remittance transfer error with the remittance transfer provider that holds the sender’s account, but the error is not an error under EFT error resolution procedures (such as an omission of an EFT on a periodic statement).

Answer 199

The remittance transfer error resolution provisions under 1005.11 exclusively apply to the error.

Question 200

What error resolution provisions should the provider follow in the following example:

A sender asserts an error under standard EFT error resolution procedures with the remittance transfer provider that also holds the sender’s account. The error is also considered an error under remittance transfer error procedures (such as when the amount the sender requested to be deducted and sent for the remittance transfer differs from the amount that was actually deducted and sent).

Answer 200

The error exclusively falls under standard EFT error resolution procedures.

Question 201

What compliance program requirements are included in subpart B for remittance transfer providers?

Answer 201

A remittance transfer provider must develop and maintain written policies and procedures that are designed to ensure compliance with the error resolution requirements applicable to remittance transfers.

Policies and procedures must address the retention of records related to error investigations.

Question 202

Can a sender cancel a remittance transfer?

If so when?

Answer 202

Except for certain remittance transfers scheduled in advance, a remittance transfer provider generally must comply 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 sender makes payment in connection with the remittance transfer if:

A. The request to cancel enables the provider to identify the sender’s name and address or telephone number and the particular transfer to be cancelled; and

B. The transferred funds have not been picked up by the designated recipient or deposited into an account of the designated recipient

Question 203

What is the required content of the cancellation notice for a remittance transfer?

Answer 203

A request to cancel a remittance transfer is valid so long as the remittance transfer provider is able to identify the remittance transfer in question

Question 204

If a sender cancels a remittance transfer according to requirements, what are the procedures for providing the sender a refund?

Answer 204

If a sender provides a timely request to cancel a remittance transfer, a remittance transfer provider must, within three business days of receiving the request, refund all funds provided by the sender in connection with the remittance transfer, including any fees and, to the extent not prohibited by law, taxes that have been imposed for the transfer, whether the fee or tax was assessed by the provider or a third party, such as an intermediary institution, the agent or bank in the recipient country, or a state or other governmental body

Question 205

Which party is ultimately responsible for violations: an agent or a remittance transfer provider?

Answer 205

The remittance transfer provider is strictly liable for a violation by an agent, when such agent acts on its behalf.

Question 206

What are the timing requirements for remittance transfer disclosures, when the remittance transfer is a one time transfer scheduled in advance? (3)

Answer 206

For one-time transfers scheduled five or more business days in advance or for the first in a series of transfers authorized in advance to recur at substantially regular intervals (preauthorized remittance transfers), the remittance transfer provider must provide either a pre-payment disclosure and a receipt or a combined disclosure at the time the sender requests the transfer but prior to payment.

If any of the disclosures provided contain estimates, the provider must mail or deliver an additional receipt no later than one business day after the date of the transfer.

If the transfer involves the transfer of funds from the sender’s account held by the provider, this additional receipt may be provided on or with the next periodic statement for that account, or within 30 days after the date of the transfer if a periodic statement is not provided.

Question 207

What are the disclosure requirements for subsequent preauthorized remittance transfers? (After sender has previously sent a preauthorized transfer, or is in a series of transfers, but is not the first in the series). (4)

Answer 207

• For each subsequent preauthorized remittance transfer, the provider must provide an updated receipt if any of the information (other than temporal disclosures) on the most recent receipt is no longer accurate for reasons other than as permitted in the estimates provisions
• If the updated receipt is mailed no later than ten business days or delivered by hand or electronically no later than five business days before the scheduled date of the transfer, the provider is deemed to have provided the disclosure within a reasonable time
• The provider must deliver to the sender a receipt no later than one business day after the date of the transfer. This is not required if an updated receipt was provided in advance.
• If the remittance transfer involves a provider who also has access to the sender’s account, a receipt may be provided on or with the next periodic statement for the account or within 30 days after the date of transfer if no periodic statement is provided.

Question 208

At the request of the sender, a remittance transfer provider can cancel any remittance transfer scheduled at least 3 business days in advance if the request to cancel contains what? (2)

Answer 208

if the request to cancel:

A. Enables the provider to identify the sender’s name and address or telephone number and the particular transfer to be cancelled; and

B. Is received by the provider at least three business days before the scheduled date of the remittance transfer

For transfers scheduled less than three business days before the date of transfer the 30 minute cancellation deadline applies.

Question 209

For any subsequent transfer in a series of preauthorized remittance transfers, the provider must disclose what? (3)

When must these disclosures be provided?

Answer 209

A. the date of the subsequent transfer using the term “Future Transfer Date” or a substantially similar term (this must be on the receipt provided for the initial transfer in the series);

B. a statement of the sender’s cancellation rights; and

C. the name, telephone number(s), and website of the remittance transfer provider

These must be provided not less than 5 business days prior to subsequent transfer. They can be provided as a separate disclosure, or with any other disclosure required under Subpart B related to the same series of transfers.

Question 210

What are the record retention requirements for reg E?

Answer 210

Any person subject to the EFTA and Regulation E must maintain evidence of compliance with the EFTA and Regulation E for at least two years from the date the disclosures are required to be made or action is required to be taken.