Need some help to determine if these cards are covered under Reg E for the following senario.

Several check cashing operators across this nation offer their non banking customers a stored value card as an alternative for cash.

Company "A" produces the cards and manages the funds for each card. This company "A" maintains one dda account with our bank that represents the balance from all issued stored value cards. Company "A" maintains the accounting for each individual stored value card. The accounting includes: name, address and balance.

We do not know who has what card nor their balance. However, our name and phone number is on the card.

If this is covered under Reg E, the initial disclosure is easy. We just give each check cashing location a supply to hand out. But how do we mail periodic statements to individuals when we do not know any information? Error notifications would be an additional problem.

Another post will have to address the laundering and CIP issues.

My comments below reflect my opinion. The Fed hasn't yet issued anything finally definitive on stored value cards, although they tried several years back.

I believe these products fall within the definitions of Regulation E. But the financial institution responsible for compliance here is not your bank (you don't hold the account of the consumer, and you are not providing access to that account). It's the company that issues the cards and does the accounting that is the Reg. E financial institution here, and they must do the Reg. E statements, error resolution, initial disclosures, etc.

Now, if all of this is being done in your bank's name and the issuing company is acting as your contractor/agent, you're back in the Reg. E seat, but you'll rely on the contractor to take care of statements. You'll also have to rely on them to provide you with error resolution support. Perhaps this is why your bank's name and number are on the cards?

With your bank's name and number on the cards, you're setting up an expectation on the part of the cardholders that your bank is the "go to" party, even if a legal analysis determines that Reg. E won't apply to you.

I agree with John. Commonly the cards are covered under Reg. E when they are rechargeable by you.

In this case they may believe they are your customer and you are their bank. You may also have FDIC coverage issues here.

I would ensure competent counsel has or will review this program. It may be covered in a contract the company has with the consumer, as to what your role is. Review that as well.