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#1180916 - 05/12/09 12:58 PM Reg E and online banking
Random Offline
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Joined: Jun 2008
Posts: 287
Does Reg E protect online banking transactions? Specifically, if someone accessed an account through online banking without authorization and transfered money out of an account, would Reg E apply? Thanks!

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eBanking / Technology
#1181209 - 05/12/09 03:14 PM Re: Reg E and online banking Random
lmaizel Offline
Joined: Jan 2004
Posts: 90
From the commentary to Reg E
Section 205.2 Definitions

2(h) Electronic Terminal 1. Point-of-sale (POS) payments initiated by telephone. Because the term electronic terminal excludes a telephone operated by a consumer, a financial institution need not provide a terminal receipt when:

i. A consumer uses a debit card at a public telephone to pay for the call.

ii. A consumer initiates a transfer by a means analogous in function to a telephone, such as by home banking equipment or a facsimile machine.

2. POS terminals. A POS terminal that captures data electronically, for debiting or crediting to a consumer's asset account, is an electronic terminal for purposes of Regulation E even if no access device is used to initiate the transaction. (See 205.9 for receipt requirements.)

3. Teller-operated terminals. A terminal or other computer equipment operated by an employee of a financial institution is not an electronic terminal for purposes of the regulation. However, transfers initiated at such terminals by means of a consumer's access device (using the consumer's PIN, for example) are EFTs and are subject to other requirements of the regulation. If an access device is used only for identification purposes or for determining the account balance, the transfers are not EFTs for purposes of the regulation.

We had a problem related to unauthorized online bill payments. I realize this is not exactly what you asked about. According to the Reg E commentary below (see vi.)coverage for bill pay depends upon your disclosure to the customer. Our online banking currently does not describe the method we will use to faciliate the payment. We're fixing that.

[i]3(b) Electronic Fund Transfer

Paragraph 3(b)(1) Definition
1. Fund transfers covered. The term electronic fund transfer includes:

i. A deposit made at an ATM or other electronic terminal (including a deposit in cash or by check) provided a specific agreement exists between the financial institution and the consumer for EFTs to or from the account to which the deposit is made.

ii. A transfer sent via ACH. For example, social security benefits under the U.S. Treasury's direct-deposit program are covered, even if the listing of payees and payment amounts reaches the account-holding institution by means of a computer printout from a correspondent bank.

iii. A preauthorized transfer credited or debited to an account in accordance with instructions contained on magnetic tape, even if the financial institution holding the account sends or receives a composite check.

iv. A transfer from the consumer's account resulting from a debit-card transaction at a merchant location, even if no electronic terminal is involved at the time of the transaction, if the consumer's asset account is subsequently debited for the amount of the transfer.

v. A transfer via ACH where a consumer has provided a check to enable the merchant or other payee to capture the routing, account, and serial numbers to initiate the transfer, whether the check is blank, partially completed, or fully completed and signed; whether the check is presented at POS or is mailed to a merchant or other payee or lockbox and later converted to an EFT; or whether the check is retained by the consumer, the merchant or other payee, or the payee's financial institution.

vi. A payment made by a bill payer under a bill-payment service available to a consumer via computer or other electronic means, unless the terms of the bill-payment service explicitly state that all payments, or all payments to a particular payee or payees, will be solely by check, draft, or similar paper instrument drawn on the consumer's account, and the payee or payees that will be paid in this manner are identified to the consumer.[/i]

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#1181448 - 05/12/09 05:17 PM Re: Reg E and online banking lmaizel
Andy_Z Offline
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Joined: Oct 2000
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Most bill payment plans I have seen do not issue checks from the consumers account.

There isn't much difference between a card access and hacking online banking, except the daily limit.

Banks need to remind consumers to protect logon information and their computers in general, to help prevent keyloggers and malware that defeats your best security measures.
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