Although it hasn't yet hit the
Federal Register, the FRB yesterday announced their adoption of a final rule revising the Official Staff Commentary to Regulation E. The link below takes you to the press release, which includes a link to the official FRB document.
http://www.federalreserve.gov/boarddocs/press/boardacts/2001/20010313/default.htm This follows up on proposals floated on June 29, 2001 (65 FR 40061) dealing with coverage of transactions involving electronic check conversions, computer-initiated bill payments, and authorizations of recurring payments. There are several modifications to the language originally proposed, although most are cosmetic.
To risk a summary --
- Transactions in which a merchant uses a consumers blank, partially completed, or completed check to initiate a one-time ACH debit from the consumer's account (check conversion at POS), are subject to Reg. E. Ditto for lockbox check conversions.
- ACH debits resulting from electronic re-presentment of a check are excluded from Reg. E coverage
- ACH fee debits for such representments would be covered if authorized by the consumer.
- Computer-initiated payments (bill payments) are covered, unless the agreement specifically states that all payments are to be made by paper instrument (or specifically identifies payments that will be made by paper instrument).
- Authorizations for recurring payments -- language added to conform the regulation to e-sign requirements. For example, the authorization copy to be retained by the customer can be electronic.
- Other clarifying language has been added concerning periodic statement requirements, definition of electronic terminal, timing of disclosures, and compulsory use.
- There was no clarification on the issue of aggregation services and how Regulation E applies to them.
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John Burnett
Cape Cod Bank and Trust