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#2248331 - 01/28/21 08:45 PM Subject to Reg. E claim?
DZ Offline
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Joined: Jul 2014
Posts: 12
Would a bill pay check be subject to Reg. E? Fraudster got into customer's online banking and advanced money from HELOC into customer's checking account. Then, an online bill pay from the customer's checking was completed where a check was cut and mailed out. Bank did a late return of the check and fraud department at the bank the check was sent to has not responded. Just trying to figure out liability of the bill pay check.

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eBanking / Technology
#2248333 - 01/28/21 08:50 PM Re: Subject to Reg. E claim? DZ
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,016
Illinois
The answer really depends on your EFT disclosures:

See the commentary to 1005.3(b)(1) - Definition of an Electronic Funds Transfer

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.

Whether or not Reg E applies if you paid an item that your customer did not authorized, it will at the very least be governed by your online banking terms and conditions and your deposit contract.

Your customer also has a valid Reg Z claim for the unauthorized advance from the HELOC so if you must follow the billing error resolution procedures in 1026.13.
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#2248406 - 01/29/21 08:35 PM Re: Subject to Reg. E claim? DZ
madukes Offline
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madukes
Joined: Jul 2009
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Flyers Country
There is another option which might be available to you. If the depositing bank disputes the late return (they have I believe 60 days from the date they get the return to dispute it); you could possibly file a WIC adjustment claim through the fed for an unauthorized remotely created check. You customer will fill out an affidavit that they did not authorize that payment and then submit the adjustment through the fedline.

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#2248413 - 01/29/21 09:06 PM Re: Subject to Reg. E claim? DZ
BrianC Offline
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BrianC
Joined: Nov 2004
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Illinois
That won't work here madukes. The ability to return a remotely create check apply when the bank of first deposit or its customer makes the remotely created checks. A bill payment check is created by the drawee bank based on instructions received from its customer via its online banking platform.
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#2248414 - 01/29/21 09:13 PM Re: Subject to Reg. E claim? BrianC
madukes Offline
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madukes
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Flyers Country
thanks Brian!

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