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Small Bank Exclusion for Pre-Authorized Transfers

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Question: 
Reg. E contains a small bank limited exclusion for pre-authorized transfers. We still offer a passbook savings account that allows only direct deposit of payroll. There is specific staff commentary to 205.9 indicating a statement is not required in this instance. Can the argument be made that the direct deposit is a pre-authorized transfer so as a small bank we are excluded from the error resolution notice requirement?
Answer: 

Direct deposit is perhaps the oldest form of preauthorized transfer to a deposit account. If your institution's total assets are below the $100 million mark, you would not have to comply with any of the Reg E rules on those direct deposits other than those listed in 205.3(c)(7).

First published on BankersOnline.com 7/4/11

First published on 07/04/2011

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