Regulation Covering Internet Banking Bill Pay
Answer by John Burnett, BOL Guru Guru Bio
Question: What regulation covers internet banking bill pay?
Answer: Reg E may apply to bill pay transactions if the account is held by a consumer. [Comment 1(vi) to paragraph 205.3(b)(1)]
If your bill pay product creates paper checks drawn on the consumer's account for all or selected payees, and you disclose that fact (and describe which payees get that kind of check), Reg E won't apply to the transactions paid in that way. However, if you fail to disclose that checks will be drawn on the customer's account (or which payees will receive such checks), you can't take advantage of that exception. Payments completed by a charge to the customer's account, and a check payment drawn on a separate central bill pay account (whether your bank's account or an account of a third-party vendor), and payments completed electronically are all subject to Reg E.
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