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#2250452 - 03/12/21 12:55 AM Regulation E vs. EFT Disclosure
SO Offline
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Does the bank's EFT disclosure supersede Regulation E?

For example, if the bank has in their EFT disclosure that if the customer gives their debit card information to someone who is not an account owner, then the bank is not liable.

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#2250453 - 03/12/21 02:00 AM Re: Regulation E vs. EFT Disclosure SO
BrianC Offline
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Does the bank's EFT disclosure supersede Regulation E?

No, it cannot. The EFT disclosure is based on the liability limitations as stated in the regulation. There is a reason our regulators gave us model language for the EFT disclosure in Appendix A.

If your disclosure imposes greater liability on the consumer than the regulation permits, you could find yourself with a UDAP violation, a civil money penalty and customer restitution. This point is further illustrated in the commentary to 1005.6(b).

3. Limits on liability. The extent of the consumer's liability is determined solely by the consumer's promptness in reporting the loss or theft of an access device. Similarly, no agreement between the consumer and an institution may impose greater liability on the consumer for an unauthorized transfer than the limits provided in Regulation E.

Now to your specific example: When determining if a customer's error claim meets the definition of an unauthorized EFT, consder the definition in 1005.2(m)(1).

(m) “Unauthorized electronic fund transfer” means an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. The term does not include an electronic fund transfer initiated:

(1) By a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized;


So if I give my card to my son and tell him to get $20 from the ATM and he stops at Gamestop and goes on a shopping spree, Reg E says I am liable. However, simply giving my card to someone else does not automatically make me liable for anything that happens. If, on the way to the ATM, my careless son drops my card on the street and someone else uses it to go on a shopping spree, then the transaction(s) by some unknown perpetaitor are considered unauthorized. Giving my card to my son did not authorized Joe Thief to use it so your proposed clause that giving my card information to a non-account owner automatically meaning I am liable does not comply with Reg E requirements.
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#2250934 - 03/19/21 10:10 PM Re: Regulation E vs. EFT Disclosure SO
Andy_Z Offline
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The bank could make alterations more favorable to a consumer, but cannot be less favorable than the law/reg requires. Zero liability is an example of being more favorable. But the bank has no authority to place more of a burden on a consumer than the law allows.
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#2251462 - 03/30/21 03:16 PM Re: Regulation E vs. EFT Disclosure SO
Saintsfan Offline
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In Brian's example where the cardholder gave his card to his son to get $20 from the ATM, do you both agree that if the card is returned to the Dad but later the son takes the card without Dad's permission, any transactions made without permission are unauthorized?

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#2251464 - 03/30/21 03:25 PM Re: Regulation E vs. EFT Disclosure SO
rlcarey Online
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In that case - the son stole the card from his dad - he did not just exceed his authority.
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#2251567 - 03/31/21 04:10 PM Re: Regulation E vs. EFT Disclosure SO
John Burnett Offline
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I agree with Randy. Regardless of what the regulation suggests, the authority ended when the cardholder regained control of the card, and the later lifting of the card, even by the same person that previously had authority to use it, is a theft and Dad is covered by the protections against unauthorized EFTs.
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