If the consumer's delay in notifying the financial institution was due to extenuating circumstances, the institution shall extend the times specified above to a reasonable period. The institution may disclose that daily withdrawal limitations apply and need not disclose that the limitations may not always be in force (such as during periods when its ATMs are off-line). What rights do I have? 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. Security limitations. (1) General rule. 1. 12 CFR 205.6 - Liability of consumer for unauthorized transfers. - GovRegs 1. Please help us keep BankersOnline FREE to all banking professionals. For example, the consumer's card is stolen on Monday and the consumer learns of the theft that same day. If the use of the card results in an extension of credit that is incident to an electronic fund transfer where the transaction is funded partially by funds in the consumers asset account and partially by credit extended under the overdraft credit feature, the error resolution provisions of Regulation Z, 12 CFR 1026.13(d) and (g), apply in addition to the Regulation E provisions, but the other liability limit and error resolution provisions of Regulation Z do not. The consumer reports the theft on Friday. Consumer Liability: The accountability put on consumers to not act in a negligent way. 3. The Electronic Code of Federal Regulations (eCFR) is a continuously updated online version of the CFR. (ii) There is adequate provision for state enforcement. See interpretation of 12(a) Relation to Truth in Lending in Supplement I. If an unauthorized transaction appears on your statement, but you did not lose your card, security code, or PIN or had any of them stolen, you should still notify your bank or credit union right away. 1. 1. If a periodic statement shows an unauthorized transfer made with a lost or stolen debit card, the consumer must notify the financial institution within 60 calendar days after the periodic statement was sent; otherwise, the consumer faces unlimited liability for all unauthorized transfers made after the 60-day period. The extent of the consumer's liability is determined solely by the consumer's promptness in reporting the loss or theft of an access device. Restrictions on certain deposit accounts. (ii) The consumer may notify the institution in person, by telephone, or in writing. 1005.17 Requirements for overdraft services. If you work for a Federal agency, use this drafting i. BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. The second tier of liability is $500. You report your card's loss after someone uses it. If state law or an agreement between the consumer and the financial institution imposes less liability than is provided by this section, the consumer's liability shall not exceed the amount imposed under the state law or agreement. If the bank or credit union determines that the transactions were in fact authorized, it must provide you with written notice before taking the money that was credited to you during the investigation out of your account. Debtors have been known to sell or otherwise transfer assets subject to a security interest without the knowledge of the secured party. Consumer liability for unauthorized use of an account. 1005.9 Receipts at electronic terminals; periodic statements. CFPB provides additional guidance on "Unauthorized Electronic Fund 76 FR 81023, Dec. 27, 2011, unless otherwise noted. If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur . This is an automated process for B. For example, Regulation D of the Board of Governors of the Federal Reserve System (12 CFR part 204) restricts the number of payments to third parties that may be made from a money market deposit account; an institution that does not execute fund transfers in excess of those limits must disclose the restriction as a limitation on the frequency of EFTs. A state law that is inconsistent may be preempted even if the Bureau has not issued a determination. Appendix A to Part 1005 Model Disclosure Clauses and Forms, Appendix C to Part 1005 Issuance of Official Interpretations, Comment for 1005.4 General Disclosure Requirements; Jointly Offered Services, Comment for 1005.5 Issuance of Access Devices, Comment for 1005.6 Liability of Consumer for Unauthorized Transfers, Comment for 1005.8 Change-in-Terms Notice; Error Resolution Notice, Comment for 1005.9 Receipts at Electronic Terminals; Periodic Statements, Comment for 1005.10 Preauthorized Transfers, Comment for 1005.11 Procedures for Resolving Errors, Comment for 1005.12 Relation to Other Laws, Comment for 1005.13 Administrative Enforcement; Record Retention, Comment for 1005.14 Electronic Fund Transfer Service Provider Not Holding Consumer's Account, Comment for 1005.15 Electronic Fund Transfer of Government Benefits, Comment for 1005.17 Requirements for Overdraft Services, Comment for 1005.18 Requirements for Financial Institutions Offering Prepaid Accounts, Comment for 1005.19 Internet Posting of Prepaid Account Agreements, Comment for 1005.20 Requirements for Gift Cards and Gift Certificates, Comment for 1005.30 - Remittance Transfer Definitions, Comment for 1005.33 - Procedures for Resolving Errors, Comment for 1005.34 - Procedures for Cancellation and Refund of Remittance Transfers, Comment for 1005.36 - Transfers Scheduled Before the Date of Transfer, Comment for Appendix A - Model Disclosure Clauses and Forms. (D) With respect to transactions involving a prepaid account and a non-covered separate credit feature as defined in Regulation Z, 12 CFR 1026.61, transactions that access the prepaid account, as applicable. 1. For example, if the transaction solely involves an extension of credit, and does not access funds in a consumer asset account, such as a checking account or prepaid account, the liability limitations and error resolution requirements of Regulation Z apply. If a financial institution chooses to impose zero liability for unauthorized EFTs, it need not provide the liability disclosures. If you are asked to follow up in writing and you do not do so within ten business days, the bank or credit union is not required to temporarily credit your account during the course of its investigation. If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period. If the consumer fails to notify the financial institution within two business days after learning of the loss or theft of the access device, the consumer's liability shall not exceed the lesser of $500 or the sum of: (i) $50 or the amount of unauthorized transfers that occur within the two business days, whichever is less; and. 1 CFR 1.1 The maximum you might be responsible for is $50. Title 12 was last amended 6/23/2023. Preauthorized transfers. (b) Limitations on amount of liability. It is not legal advice or regulatory guidance. 1005.6 Liability of consumer for unauthorized transfers. A separate drafting site 1005.9 Receipts at electronic terminals; periodic statements. What you're responsible for depends on how quickly you reported it. (a) A consumer shall be liable for any unauthorized electronic fund transfers or a series of transfers arising from a single loss or theft of the access device only if the access device is an accepted access device, the liability is not in excess of fifty dollars, the issuer of such access device gives adequate notice to . Unlimited liability applies. Nonetheless, under 15 U.S.C. Electronic Fund Transfers FAQs - Consumer Financial Protection Bureau E, 61 FR 19669, May 2, 1996, unless otherwise noted. Similarly, no agreement between the consumer and an institution may impose greater liability on the consumer for an unauthorized transfer than the limits provided in Regulation E. 1. In extenuating circumstances, like lengthy travel or hospitalization that keeps you from notifying the bank within the time allowed, the notification periods above must be extended. 1005.17 Requirements for overdraft services. 1005.4 General disclosure requirements; jointly offered services. Review of Regulation E - Electronic Fund Transfers, Part 4 Consumer No liability imposed by financial institution. Regulation Z governs the addition of a covered separate credit feature as that term is defined in Regulation Z, 12 CFR 1026.61, to an existing access device for a prepaid account. (2) Standards for determination. A consumer shall be liable for any unauthorized electronic fund transfer involving the account of such consumer only if the card or other means of access utilized for such transfer was an accepted card or other meanas 1 of access and if the issuer of such card, code, or other means of access has provided a means whereby the user of such card, co. 1005.34 Procedures for cancellation and refund of remittance transfers. iii. C. In the same situation, assume the card is stolen and used both as an access device for the checking account and as a credit card; for example, the thief makes some purchases using the card to access funds in the checking account and other purchases using the card as a credit card. Notice to a financial institution is considered given when a consumer takes reasonable steps to provide the institution with the pertinent account information. 1005.18 Requirements for financial institutions offering prepaid accounts. If the consumer fails to notify the financial institution within two business days after learning of the loss or theft of the access device, the consumer's liability shall not exceed the lesser of $500 or the sum of: (i) $50 or the amount of unauthorized transfers that occur within the two business days, whichever is less; and. (i) Notice to a financial institution is given when a consumer takes steps reasonably necessary to provide the institution with the pertinent information, whether or not a particular employee or agent of the institution actually receives the information. The limitations on your liability for unauthorized transactions described above generally apply to all electronic fund transfers. is available with paragraph structure matching the official CFR To take advantage of the longer time periods for resolving errors under 1005.11(c)(3) (for new accounts as defined in Regulation CC of the Board of Governors of the Federal Reserve System (12 CFR part 229), transfers initiated outside the United States, or transfers resulting from POS debit-card transactions), a financial institution must have disclosed these longer time periods. This content is from the eCFR and is authoritative but unofficial. Assuming that Saturday is a business day and Sunday is not, the two business day period begins on Saturday and expires at 11:59 p.m. on Monday, not at the end of the financial institution's business day on Monday. Section 1602(e) of this title, referred to in subsec. Unauthorized Transfer: Any transfer from a consumer's account that occurs without the consumer's permission, and from which the consumer receives no benefit, is considered unauthorized Access Device: Examples include a card, access code (like a PIN), or any other device that provides access to a consumer's account.
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