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#2282824 - 03/30/23 02:56 PM Reg E Stop Payment
burkemi Offline
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Would like some opinions, please.

Our operations group is arguing against the timing requirements of stop payment orders in Reg E regarding the cancelation of an automatic transfer to pay a loan payment. The argument is that a revocation and stop payment are not the same thing, revocation is not a defined term in Reg E, so it doesn't apply. The auto pay revocation form we use requires written notice 30 days prior to a payment. The pertinent pieces of Reg E have been pointed out. CFPB articles have been cited. But their argument remains the same.

If it makes any difference, this is referring to an internal transfer within the bank. John Customer authorizes us to debit his account (held with us) to pay his loan payment (also held with us) each month. John now wants to revoke that authorization.

Any help to offer?
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#2282825 - 03/30/23 03:12 PM Re: Reg E Stop Payment burkemi
Inherent_Risk Offline
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1005.3(c) Exclusions from coverage. The term “electronic fund transfer” does not include:
[...]
(5) Automatic transfers by account-holding institution. Any transfer of funds under an agreement between a consumer and a financial institution which provides that the institution will initiate individual transfers without a specific request from the consumer:

(i) Between a consumer's accounts within the financial institution;

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#2282828 - 03/30/23 03:30 PM Re: Reg E Stop Payment burkemi
rlcarey Online
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Galveston, TX
"The auto pay revocation form we use requires written notice 30 days prior to a payment.

FWIW: That is a ridiculously long time and would not be surprised to think it might be a UDAAP. Customarily that is usually about 3 business days.
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#2282829 - 03/30/23 03:37 PM Re: Reg E Stop Payment burkemi
burkemi Offline
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Thank you for the citation, and I realize these aren't defined as EFTs per Reg E. Still - maybe it does answer my quandary to some degree. I'm trying to apply Reg E stop payment logic to a situation not covered by the reg. I still can't help but feel that 30 days lead time is unreasonable. A customer would rarely be able to stop the next payment.
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#2282830 - 03/30/23 03:39 PM Re: Reg E Stop Payment burkemi
burkemi Offline
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Thanks Randy!
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#2282834 - 03/30/23 05:08 PM Re: Reg E Stop Payment burkemi
Inherent_Risk Offline
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While Reg E doesn't apply, UDAAP certainly would, especially if the delay caused a fee or other hardship. If I told you 10 days before my payment was scheduled not to pull it, and then you pull it any ways, and it causes an overdraft, or I'm not able to pay rent, or anything else bad happens. I would complain to your regulator, and you'd be in a very hard position to defend that.

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