What exactly does a bank need to do regarding the amendments to Regulation E?

You need to incorporate the fact that ECK transactions are covered under Reg E into your initial Reg E disclosures. Notice to existing customers is also required. However, the notice is not the same notice that must be provided by merchants, unless your bank converts checks into ECKs. (Some banks convert consumer loan payments made by checks drawn on other banks into ECKs, in which case the bank would be a "merchant" for the purpose of the new Reg E disclosures.)

The notice that a bank must provide has to do with the fact that ECK transactions are covered under Reg E. Even if the wording in your current agreement could apply to ECK transactions, you need to make it clear to your new and existing account holders that ECK transactions are covered if it is not already spelled out in your current disclosures.

Page 25 of the Final Rule states, in part, "...institutions will have until the mandatory compliance date of January 1, 2007 to revise their initial disclosures to reflect ECK transactions, and to provide new disclosures to existing customers if necessary." (The "if necessary" part seems to refer to institutions that have not already done so.)

I hope this helps.

The amendment also included a change relating to stop payments on electronic transactions. We need to be able to block all ACH debits from a specified originator when requested to do so by a consumer (not just a one-time stop). This info was passed down to me to develop appropriate stop payment form and bank procedure by January 2007. But, I haven't heard any 'talk' on it so I'm wondering if I'm the only one that seems concerned on how to make this happen based on our system's capabilities. I put a few posting out over the past few months which didn't receive any replies.

If you issue cards under the Visa or MasterCard brand, you can subscribe to either of their stop-payment services. There is a small fee to list the account but it meets the regulatory requirement. On old-school ATM cards, you are obligated to create your own solution.

Has there been model language published on the notices to existing customers? We have updated our Reg E initial disclosures but have not notified existing customers. We do not convert checks to ACH items, so I do not believe we are required to give any additional disclosures. Am I off-base?

NeverEndingSupport - I'm with you. I think this is a sleeper issue that is going to be a big deal. I don't know if our system can even do this. But, even if our systems can't block future recurring transactions before they hit the customer's account, we are still responsible for making this happen somehow!

We'll probably take advantage of the option of not having to block the future transactions if they don't provide us with a copy of the revocation within 14 days. But, even so, someone is going to have to monitor to process. And, of course, if they do provide a copy of the revocation within 14 days we have to do it anyway.

David Grodsky offers a good suggestion if the recurring transactions are MasterCard or Visa problems. Another method may be to go the expense of "hot-listing" the card. If they are ACH items, you will need to monitor, and send back any that come through as "authorization revoked." If the Originator persists in submitting items, that's a NACHA rules violation.

BUMP

If you status the card as "HOT", transactions may still be posted. The reason being (from what I was told by the processor) is that the merchant had prior authorization or the transaction falls below a floor limit (no authorization required). These are things to discuss with your processor/vendor.