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#930 - 03/14/01 09:37 PM Regulation E Commentary updated
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
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

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John S. Burnett
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General Discussion
#931 - 08/26/03 04:07 PM Re: Regulation E Commentary updated
Anonymous
Unregistered

Quote:

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.




What would be considered a lockbox check conversion?

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#932 - 08/26/03 04:55 PM Re: Regulation E Commentary updated
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Under NACHA rules, a lockbox or anyone handling consumer accounts receivable payments can, with certain controls and notices to the consumers, convert checks received into ACH debits of the ARC type. The consumer receives an ACH debit to the account that includes the name of the payee, the amount, the check number and date.

The consumer isn't given any choice (other than, I suppose, not doing business with the vendor in the future, making cash payments in person or using money orders). Getting the notice (with the bill) and sending the payment check constitutes authorization of the ACH item.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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