Request for Comment on a Proposal to Amend Regulation E (Electronic Fund Transfer) - District Notice

Board Of Governors

Description

ll★KFederal Reserve Bank of Dallas2200 N. PEARL ST.DALLAS, TX 75201-2272September 22, 2004Notice 04-64TO: The Chief Executive Officer of eachfinancial institution and others concernedin the Eleventh Federal Reserve DistrictSUBJECTRequest for Comment on a Proposal to Amend Regulation E(Electronic Fund Transfer)DETAILSThe Board of Governors of the Federal Reserve System has requested publiccomment on a proposal to amend Regulation E, which implements the Electronic Fund TransferAct. The proposal would also revise the official staff commentary to the regulation. Thecommentary interprets the requirements of Regulation E to facilitate compliance primarily byfinancial institutions that offer electronic fund transfer services to consumers.Proposed revisions to the regulation would address its coverage of electronic checkconversion services and those providing the services. Among other things, persons, such asmerchants and other payees, that make electronic check conversion services available toconsumers would have to obtain a consumer’s authorization for the electronic fund transfer. Inaddition, the regulation would be revised to provide that payroll card accounts establisheddirectly or indirectly by an employer on behalf of a consumer for the purpose of providingsalary, wages, or other employee compensation on a recurring basis are accounts covered byRegulation E. Proposed commentary revisions would provide guidance on preauthorizedtransfers, ...

Informations

• Publié par: Orgio
• Nombre de lectures: 90
• Langue: English

Extrait

FederalReserve Bank of Dallas

2200 N. PEARL ST.
DALLAS, TX 75201-2272

September 22, 2004

TO:
The Chief Executive Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District

SUBJECT

Request for Comment on a Proposal to Amend Regulation E
(
Electronic Fund Transfer
)

DETAILS

Notice 04-64

The Board of Governors of the Federal Reserve System has requested public
comment on a proposal to amend Regulation E, which implements the Electronic Fund Transfer
Act. The proposal would also revise the official staff commentary to the regulation. The
commentary interprets the requirements of Regulation E to facilitate compliance primarily by
financial institutions that offer electronic fund transfer services to consumers.

Proposed revisions to the regulation would address its coverage of electronic check
conversion services and those providing the services. Among other things, persons, such as
merchants and other payees, that make electronic check conversion services available to
consumers would have to obtain a consumer’s authorization for the electronic fund transfer. In
addition, the regulation would be revised to provide that payroll card accounts established
directly or indirectly by an employer on behalf of a consumer for the purpose of providing
salary, wages, or other employee compensation on a recurring basis are accounts covered by
Regulation E. Proposed commentary revisions would provide guidance on preauthorized
transfers, additional electronic check conversion issues, error resolution, and other matters.

The Board must receive comments by November 19, 2004. Please address comments
to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office [phone]; El Paso Branch
Intrastate
[phone],
Interstate
[phone];
Houston Branch
Intrastate
[phone],
Interstate
[phone]; San Antonio Branch
Intrastate
[phone].

-- 2

and Constitution Avenue, N.W., Washington, DC 20551. Also, you may mail comments elec-
tronically to
[e-mail]
. All comments should refer to Docket No. R-
.0121

The public can also view and submit comments on proposals by the Board and other
federal agencies from the
www.regulations.gov
web site.

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MORE INFORMATION

For more information, please contact Eugene Coy, [phone], or Diane van
Gelder, [phone], Banking Supervision Department. Paper copies of this notice or previ-
ous Federal Reserve Bank notices can be printed from our web site at
www.dallasfed.org/
banking/notices/index.html
.

69955Proposed Rules

Federal Register
Vol. 69, No. 180
Friday, September 17, 2004

Washington area and at the Board of institutions and persons subject to the
Governors is subject to delay, please Act. 15 U.S.C. 1593m(d)(1). The
consider submitting your comments by commentary is updated periodically, as
e-mail to necessary, to address significant
[e-mail]
, or questions that arise.
faxing them to the Office of the
II. Summary of Proposed Revisions
Secretary at 202–452–3819 or 202–452–
3102. Members of the public may
Electronic Check Conversion
FEDERAL RESERVE SYSTEM
inspect comments in room MP–500 in In an electronic check conversion (or
the Board’s Martin Building between 9 ‘‘ECK’’) transaction, a consumer
12 CFR Part 205
a.m. and 5 p.m. on weekdays pursuant provides a check to a payee and
[Regulation E; Docket No. R–1210]
to section 261.12, except as provided in information from the check is used to
section 261.14, of the Board’s Rules initiate a one-time EFT from the
Electronic Fund Transfers
Regarding the Availability of consumer’s account. Specifically, the
Information, 12 CFR 261.12 and 261.14.payee electronically scans and captures
AGENCY
:
Board of Governors of the
FORFURTHERINFORMATIONCONTACT
:
Ky the MICR-encoding on the check for the
Federal Reserve System.Tran-Trong, Senior Attorney, or Daniel routing, account, and serial numbers,
ACTION
:
Proposed rule; official staff G. Lonergan, David A. Stein, Natalie E. and enters the amount to be debited
interpretation. Taylor or John C. Wood, Counsels, from the consumer’s asset account. The
Division of Consumer and Community EFTA expressly provides that
SUMMARY
:
The Board is publishing for Affairs, Board of Governors of the transactions originated by check, draft,
comment a proposal to amend Federal Reserve System, Washington, or similar paper instrument are not
Regulation E, which implements the DC 20551, at (202) 452–2412 or (202) governed by the Act. In response to an
Electronic Fund Transfer Act. The 452–3667. For users of industry request that the Board clarify
proposal would also revise the official Telecommunications Device for the Deaf EFTA coverage of ECK transactions, the
staff commentary to the regulation. The (TDD) only, contact (202) 263–4869.Board’s March 2001 amendments to the
commentary interprets the requirements
SUPPLEMENTARYINFORMATION
:
Official Staff Commentary to Regulation
of Regulation E to facilitate compliance
primarily by financial institutions that
I. Background
E established a bright-line test for the
regulation’s coverage of these
offer electronic fund transfer services to The Electronic Fund Transfer Act transactions.
See
66 FR 15187 (March
consumers. (EFTA) (15 U.S.C. 1693
et seq.
), enacted 16, 2001).
Proposed revisions to the regulation in 1978, provides a basic framework The staff commentary provides that
would address its coverage of electronic establishing the rights, liabilities, and electronic check conversion transactions
check conversion services and those responsibilities of participants in are covered by the EFTA and Regulation
providing the services. Among other electronic fund transfer (EFT) systems. E if the consumer authorizes the
things, persons, such as merchants and The EFTA is implemented by the transaction as an EFT. This is the case
other payees, that make electronic check Board’s Regulation E (12 CFR part 205). regardless of whether the check
conversion services available to Examples of types of transfers covered conversion occurs at point-of-sale
consumers would have to obtain a by the act and regulation include (‘‘POS’’) or in an accounts receivable
consumer’s authorization for the transfers initiated through an automated conversion (‘‘ARC’’) transaction where
electronic fund transfer. In addition, the teller machine (ATM), point-of-sale the consumer mails a fully completed
regulation would be revised to provide (POS) terminal, automated and signed check to the payee that is
that payroll card accounts established clearinghouse (ACH), telephone bill-converted to an EFT. The commentary
directly or indirectly by an employer on payment plan, or remote banking provides that a consumer authorizes an
behalf of a consumer for the purpose of service. The act and regulation require EFT if notice that the transaction will be
providing salary, wages, or other disclosure of terms and conditions of an processed as an EFT is provided to the
employee compensation on a recurring EFT service; documentation of consumer and the consumer completes
basis are accounts covered by electronic transfers by means of the transaction.
Regulation E. Proposed commentary terminal receipts and periodic account Since issuing the March 2001
revisions would provide guidance on activity statements; limitations on commentary update, several issues have
preauthorized transfers, additional consumer liability for unauthorized arisen relating to electronic check
electronic check conversion issues, error transfers; procedures for error conversion transactions in general, and
resolution, and other matters.resolution; and certain rights related to ARC transactions in particular.
DATES
:
Comments must be received on preauthorized EFTs. Further, the act and Concerns have been raised about the
or before November 19, 2004.regulation also prescribe restrictions on uniformity and adequacy of some of the
ADDRESSES
:
Comments, which should the unsolicited issuance of ATM cards notices provided to consumers about
refer to Docket No. R–1210, may be and other access devices. ECK transactions. Some in the industry
mailed to Jennifer J. Johnson, Secretary, The Official Staff Commentary (12 would like the flexibility to obtain a
Board of Governors of the Federal CFR part 205 (Supp. I)) is designed to consumer’s authorization to process a
Reserve System, 20th Street and facilitate compliance and provide transaction as an EFT