I am having some difficulty coming up with a firm conclusion on Reg. E and whether a transaction is an unauthorized eft or not. If a customer had a preauthorized transfer set up with Company xyz, but subsequently revoked such authorization at the company level, meaning they did not contact their financial institution at all, is this in unauthorized eft under Reg. E if Company xyz continues to withdraw money? It seems to me that it would be, but the piece I am having trouble with is what if they have no evidence to provide to the financial institution saying they revoked authorization? Couldn't this be an are ripe for abuse otherwise? Does the customer have to prove they revoked with Company xyz?

If a customer had a preauthorized transfer set up with Company xyz, but subsequently revoked such authorization at the company level, meaning they did not contact their financial institution at all, is this in unauthorized eft under Reg. E if Company xyz continues to withdraw money?

What would contacting their financial institution do? They notify the company and then if the company does not stop they notify the financial institution.


It seems to me that it would be, but the piece I am having trouble with is what if they have no evidence to provide to the financial institution saying they revoked authorization?

And what would this be? A copy of the letter they mailed or a recording of the phone call?

I was referring to the Reg. E piece about Consumer's right to to stop payment [12 CFR 1005.10(c)] and associated Official Interpretation.

REVOCATION OF AUTHORIZATION.
Once a financial institution has been notified that the consumer's authorization is no longer valid, it must block all future payments for the particular debit transmitted by the designated payee-originator. But see comment 10(c)-3. The institution may not wait for the payee-originator to terminate the automatic debits. The institution may confirm that the consumer has informed the payee-originator of the revocation (for example, by requiring a copy of the consumer's revocation as written confirmation to be provided within 14 days of an oral notification). If the institution does not receive the required written confirmation within the 14-day period, it may honor subsequent debits to the account.

They may go that route, but they are under no obligation to do so. Plus, that process is not usually free.