81020 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

1Public Law 111–203,124 Stat. 1376 (2010). 

2The Dodd-Frank Act section 1029, generally 

excludes from this transfer of authority, subject to 

certain exceptions, any rulemaking authority over a 

motor vehicle dealer that is predominantly engaged 

in the sale and servicing of motor vehicles, the 

leasing and servicing of motor vehicles, or both. See 

also Dodd-Frank Act, sections 1002(12)(C), 1084(3) 

(Board retains rulemaking authority with respect to 

section 920 of EFTA, dealing with debit card 

interchange fees, network arrangements, and 

routing restrictions);12 CFR Part 235. 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1005 

[Docket No. CFPB–2011–0021] 

RIN 3170–AA06 

Electronic Fund Transfers (Regulation 

E) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: Title X of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) 

transferred rulemaking authority for a 

number of consumer financial 

protection laws from seven Federal 

agencies to the Bureau of Consumer 

Financial Protection (Bureau) as of July 

21, 2011. The Bureau is in the process 

of republishing the regulations 

implementing those laws with technical 

and conforming changes to reflect the 

transfer of authority and certain other 

changes made by the Dodd-Frank Act. 

In light of the transfer of the Board of 

Governors of the Federal Reserve 

System’s (Board’s) rulemaking authority 

for the Electronic Fund Transfer Act 

(EFTA) to the Bureau, the Bureau is 

publishing for public comment an 

interim final rule establishing a new 

Regulation E (Electronic Fund 

Transfers). This interim final rule does 

not impose any new substantive 

obligations on persons subject to the 

existing Regulation E, previously 

published by the Board. 

DATES: This interim final rule is 

effective December 30, 2011. Comments 

must be received on or before February 

27, 2012. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2011– 

0021 or RIN 3170–AA06, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1500 

Pennsylvania Avenue NW., (Attn: 1801 

L Street), Washington, DC 20220. 

• Hand Delivery/Courier in Lieu of 

Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20006. 

All submissions must include the 

agency name and docket number or 

Regulatory Information Number (RIN) 

for this rulemaking. In general, all 

comments received will be posted 

without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20006, on official 

business days between the hours of 

10 a.m. and 5 p.m. Eastern Time. You 

can make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: 

Gregory Evans or Jane Gao, Office of 

Regulations, at (202) 435–7700. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Electronic Fund Transfer Act (15 

U.S.C. 1693 et seq.) (EFTA), enacted in 

1978, provides a basic framework 

establishing the rights, liabilities, and 

responsibilities of participants in 

electronic fund transfer (EFT) systems. 

Historically, the EFTA was 

implemented in Regulation E of the 

Board of Governors of the Federal 

Reserve System (Board), 12 CFR Part 

205. The Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(Dodd-Frank Act) 1 amended a number 

of consumer financial protection laws, 

including the EFTA. In addition to 

various substantive amendments, the 

Dodd-Frank Act generally transferred 

the Board’s rulemaking authority for the 

EFTA to the Bureau of Consumer 

Financial Protection (Bureau), effective 

July 21, 2011.2 See sections 1061 and 

1084 of the Dodd-Frank Act. Pursuant to 

the Dodd-Frank Act and EFTA, as 

amended, the Bureau is publishing for 

public comment an interim final rule 

establishing a new Regulation E 

(Electronic Fund Transfers), 12 CFR Part 

1005, implementing the EFTA. 

II. Summary of the Interim Final Rule 

A. General 

The interim final rule substantially 

duplicates the Board’s Regulation E as 

the Bureau’s new Regulation E, 12 CFR 

Part 1005, making only certain nonsubstantive, technical, formatting, and 

stylistic changes. To minimize any 

potential confusion, the Bureau is 

preserving the numbering of the Board’s 

Regulation E, other than the new part 

number. While this interim final rule 

generally incorporates the Board’s 

existing regulatory text, appendices 

(including model forms and clauses), 

and supplements, the rule has been 

edited as necessary to reflect 

nomenclature and other technical 

amendments required by the DoddFrank Act. Notably, this interim final 

rule does not impose any new 

substantive obligations on regulated 

entities. 

B. Specific Changes 

The Bureau has made certain 

nomenclature and other non-substantive 

changes consistently throughout 

Regulation E. References to the Board 

and its administrative structure have 

been replaced with references to the 

Bureau. Conforming edits have been 

made to internal cross-references, as 

well as addresses or other contact 

information. Conforming edits have also 

been made to reflect the scope of the 

Bureau’s authority pursuant to the 

EFTA, as amended by the Dodd-Frank 

Act. Historical references that are no 

longer applicable, and references to 

effective dates that have passed, have 

been removed as appropriate. In 

addition, certain changes have been 

made to the text of the Board’s 

Regulation E to conform to current 

codification standards of the Code of 

Federal Regulations. For example, 

previously undesignated paragraphs in 

the regulation and the official 

commentary have been enumerated. 

The Bureau is eliminating three 

provisions of Regulation E that are no 

longer applicable and renumbering one 

section that is affected by this deletion. 

The deleted provisions include the 

following: 

• Section 1005.3(b)(2)(iii), which expired 

December 31, 2009. What would have been 

§ 1005.3(b)(2)(iv) was renumbered 

1005.3(b)(2)(iii). 

• Section 1005.3(b)(3)(iii), which expired 

December 31, 2007. 

• Section 1005.16(d), which provided a 

technical exemption for certain automated 

teller machines through December 31, 2004. 

What would have been § 1005.16(e) was 

renumbered 1005.16(d). 

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Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 81021 

3Public Law 111–203, section 1061(a)(1). 

Effective on the designated transfer date, the Bureau 

is also granted ‘‘all powers and duties’’ vested in 

each of the Federal agencies, relating to the 

consumer financial protection functions, on the day 

before the designated transfer date. Until this and 

other interim final rules take effect, existing 

regulations for which rulemaking authority 

transferred to the Bureau continue to govern 

persons covered by this rule. See 76 FR 43569 (July 

21, 2011). 

4Public Law 111–203, section 1002(14) (defining 

‘‘Federal consumer financial law’’ to include the 

‘‘enumerated consumer laws’’); id. Section 1002(12) 

(defining ‘‘enumerated consumer laws’’ to include 

the EFTA, except with respect to section 920 of the 

EFTA). 

5Section 1066 of the Dodd-Frank Act grants the 

Secretary of the Treasury interim authority to 

perform certain functions of the Bureau. Pursuant 

to that authority, Treasury is publishing this interim 

final rule on behalf of the Bureau. 

6 15 U.S.C. 1693b. 

7 5 U.S.C. 551 et seq. 

8 5 U.S.C. 553(b), (c). 

9 5 U.S.C. 553(b)(3)(A), (B). 

10This interim final rule is one of 14 companion 

rulemakings that together restate and recodify the 

implementing regulations under 14 existing 

consumer financial laws (part III.C, below, lists the 

14 laws involved). In the interest of proper 

coordination of this overall regulatory framework, 

which includes numerous cross-references among 

some of the regulations, the Bureau is establishing 

the same effective date of December 30, 2011 for 

those rules published on or before that date and 

Continued 

The Bureau is also eliminating 

Appendix B, entitled ‘‘Federal 

Enforcement Agencies,’’ because it was 

designed to be informational only and is 

unnecessary for the implementation of 

the EFTA, as amended. 

Moreover, the Bureau is revising Form 

A–9, Model Consent Form for Overdraft 

Services, in Appendix A to the Bureau’s 

new Regulation E. The revised Form A– 

9 is, however, identical to the Board’s 

version in substance. The only revision 

was to modernize the spelling of 

‘‘website’’ (in place of ‘‘Web site’’) to 

parallel a stylistic change the Bureau is 

making in the corresponding regulatory 

text of §§ 1005.18 and 1005.20. This 

change does not necessitate any revision 

to standard forms that institutions may 

use in reliance on Model Form A–9 

because the term, ‘‘website,’’ appears in 

the model form within brackets, 

indicating that the institution is to 

replace the placeholder with its own 

website address. Thus, neither 

‘‘website’’ nor ‘‘website’’ appears in 

overdraft services consent forms 

actually delivered to consumers. 

Finally, the Bureau is updating 

references to the EFTA by correcting 

statutory citations to the EFTA in cases 

where the numbering of the Act was 

altered by section 1084 of the DoddFrank Act. These updated references 

occur in the following provisions of 

Regulation E: 

• Section 1005.3(c)(5) 

• Section 1005.3(c)(7) 

• Section 1005.12(c)(2) 

• Section 1005.13(b)(2) 

• Section 1005.20(h)(2) 

• Appendix C—Official Interpretations 

III. Legal Authority 

A. Rulemaking Authority 

The Bureau is issuing this interim 

final rule pursuant to its authority under 

the EFTA and the Dodd-Frank Act. 

Effective July 21, 2011, section 1061 of 

the Dodd-Frank Act transferred to the 

Bureau the ‘‘consumer financial 

protection functions’’ previously vested 

in certain other Federal agencies. The 

term ‘‘consumer financial protection 

function’’ is defined to include ‘‘all 

authority to prescribe rules or issue 

orders or guidelines pursuant to any 

Federal consumer financial law, 

including performing appropriate 

functions to promulgate and review 

such rules, orders, and guidelines.’’ 3

The EFTA is a Federal consumer 

financial law, except with respect to 

section 920 of the EFTA, dealing with 

debit card interchange fees, network 

arrangements, and routing restrictions.4

Accordingly, effective July 21, 2011, the 

authority of the Board to issue 

regulations pursuant to the EFTA 

transferred to the Bureau.5

EFTA section 904(a) authorizes the 

Bureau to prescribe regulations 

necessary to carry out the purposes of 

the title. The express purposes of the 

EFTA, as amended by the Dodd-Frank 

Act, are to establish ‘‘the rights, 

liabilities, and responsibilities of 

participants in electronic fund and 

remittance transfer systems’’ and to 

provide ‘‘individual consumer rights.’’ 

EFTA section 902(b), 15 U.S.C. 1693. 

EFTA section 904(c), as amended by the 

Dodd-Frank Act, further provides that 

regulations prescribed by the Bureau 

may contain any classifications, 

differentiations, or other provisions, and 

may provide for such adjustments or 

exceptions for any class of electronic 

fund transfers or remittance transfers 

that the Bureau deems necessary or 

proper to effectuate the purposes of the 

title, to prevent circumvention or 

evasion, or to facilitate compliance.6

B. Authority To Issue an Interim Final 

Rule Without Prior Notice and Comment 

The Administrative Procedure Act 

(APA) 7 generally requires public notice 

and an opportunity to comment before 

promulgation of regulations.8 The APA 

provides exceptions to notice-andcomment procedures, however, where 

an agency for good cause finds that such 

procedures are impracticable, 

unnecessary, or contrary to the public 

interest or when a rulemaking relates to 

agency organization, procedure, and 

practice.9 The Bureau finds that there is 

good cause to conclude that providing 

notice and opportunity for comment 

would be unnecessary and contrary to 

the public interest under these 

circumstances. In addition, substantially 

all the changes made by this interim 

final rule, which were necessitated by 

the Dodd-Frank Act’s transfer of EFTA 

authority from the Board to the Bureau, 

relate to agency organization, procedure, 

and practice and are thus exempt from 

the APA’s notice-and-comment 

requirements. 

The Bureau’s good cause findings are 

based on the following considerations. 

As an initial matter, the Board’s existing 

regulation was a result of notice-andcomment rulemaking to the extent 

required. Moreover, the interim final 

rule published today does not impose 

any new, substantive obligations on 

regulated entities. Rather, the interim 

final rule makes only non-substantive, 

technical changes to the existing text of 

the regulation, such as renumbering, 

changing internal cross-references, 

replacing appropriate nomenclature to 

reflect the transfer of authority to the 

Bureau, and changing the address for 

filing applications and notices. Given 

the technical nature of these changes, 

and the fact that the interim final rule 

does not impose any additional 

substantive requirements on covered 

entities, an opportunity for prior public 

comment is unnecessary. In addition, 

recodifying the Board’s regulation to 

reflect the transfer of authority to the 

Bureau will help facilitate compliance 

with the EFTA and its implementing 

regulation, and the new regulation will 

help reduce uncertainty regarding the 

applicable regulatory framework. Using 

notice-and-comment procedures would 

delay this process and thus be contrary 

to the public interest. 

The APA generally requires that rules 

be published not less than 30 days 

before their effective dates. See 5 U.S.C. 

553(d). As with the notice and comment 

requirement, however, the APA allows 

an exception when ‘‘otherwise provided 

by the agency for good cause found and 

published with the rule.’’ 5 U.S.C. 

553(d)(3). The Bureau finds that there is 

good cause for providing less than 30 

days notice here. A delayed effective 

date would harm consumers and 

regulated entities by needlessly 

perpetuating discrepancies between the 

amended statutory text and the 

implementing regulation, thereby 

hindering compliance and prolonging 

uncertainty regarding the applicable 

regulatory framework.10

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81022 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

making those published thereafter (if any) effective 

immediately. 

11Section 1022(b)(2)(A) of the Dodd-Frank Act 

addresses the consideration of the potential benefits 

and costs of regulation to consumers and covered 

persons, including the potential reduction of access 

by consumers to consumer financial products or 

services; the impact on depository institutions and 

credit unions with $10 billion or less in total assets 

as described in section 1026 of the Dodd-Frank Act; 

and the impact on consumers in rural areas. Section 

1022(b)(2)(B) requires that the Bureau ‘‘consult with 

the appropriate prudential regulators or other 

Federal agencies prior to proposing a rule and 

during the comment process regarding consistency 

with prudential, market, or systemic objectives 

administered by such agencies.’’ The manner and 

extent to which these provisions apply to interim 

final rules and to benefits, costs, and impacts that 

are compelled by statutory changes rather than 

discretionary Bureau action is unclear. 

Nevertheless, to inform this rulemaking more fully, 

the Bureau performed the described analyses and 

consultations. 

12The fourteen laws implemented by this and its 

companion rulemakings are: the Consumer Leasing 

Act, the Electronic Fund Transfer Act (except with 

respect to section 920 of that Act), the Equal Credit 

Opportunity Act, the Fair Credit Reporting Act 

(except with respect to sections 615(e) and 628 of 

that act), the Fair Debt Collection Practices Act, 

Subsections (b) through (f) of section 43 of the 

Federal Deposit Insurance Act, sections 502 through 

509 of the Gramm-Leach-Bliley Act (except for 

section 505 as it applies to section 501(b)), the 

Home Mortgage Disclosure Act, the Real Estate 

Settlement Procedures Act, the S.A.F.E. Mortgage 

Licensing Act, the Truth in Lending Act, the Truth 

in Savings Act, section 626 of the Omnibus 

Appropriations Act, 2009, and the Interstate Land 

Sales Full Disclosure Act. 

13 In light of the technical but voluminous nature 

of this recodification project, the Bureau focused 

the consultation process on a representative sample 

of the recodified regulations, while making 

information on the other regulations available. The 

Bureau expects to conduct differently its future 

consultations regarding substantive rulemakings. 

14 5 U.S.C. 601 et seq. 

15 5 U.S.C. 603, 604. 

16 5 U.S.C. 609. 

17 5 U.S.C. 603(a), 604(a); 5 U.S.C. 553(b)(B). 

18 5 U.S.C. 609(b). 

In addition, delaying the effective 

date of the interim final rule for 30 days 

would provide no practical benefit to 

regulated entities in this context and in 

fact could operate to their detriment. As 

discussed above, the interim final rule 

published today does not impose any 

new, substantive obligations on 

regulated entities. Instead, the rule 

makes only non-substantive, technical 

changes to the existing text of the 

regulation. Thus, regulated entities that 

are already in compliance with the 

existing rules will not need to modify 

business practices as a result of this 

rule. 

C. Section 1022(b)(2) of the Dodd-Frank 

Act 

In developing the interim final rule, 

the Bureau has conducted an analysis of 

potential benefits, costs, and impacts.11

The Bureau believes that the interim 

final rule will benefit consumers and 

covered persons by updating and 

recodifying Regulation E to reflect the 

transfer of authority to the Bureau and 

certain other changes mandated by the 

Dodd-Frank Act. This will help 

facilitate compliance with the EFTA and 

its implementing regulation and help 

reduce any uncertainty regarding the 

applicable regulatory framework. The 

interim final rule will not impose any 

new substantive obligations on 

consumers or covered persons and it is 

not expected to have any impact on 

consumers’ access to consumer financial 

products and services. 

Although not required by the interim 

final rule, covered entities may incur 

some costs in updating compliance 

manuals and related materials to reflect 

the new numbering and other technical 

changes reflected in the new Regulation 

E. The Bureau has worked to reduce any 

such burden by preserving the existing 

numbering to the extent possible and 

believes that such costs will likely be 

minimal. These changes could be 

handled in the short term by providing 

a short, standalone summary alerting 

users to the changes and in the long 

term could be combined with other 

updates at the covered person’s 

convenience. The Bureau intends to 

continue investigating the possible costs 

to affected entities of updating manuals 

and related materials to reflect these 

changes and solicits comments on this 

and other issues discussed in this 

section. 

The interim final rule will have no 

unique impact on depository 

institutions or credit unions with $10 

billion or less in assets as described in 

section 1026(a) of the Dodd-Frank Act. 

Also, the interim final rule will have no 

unique impact on rural consumers. 

In undertaking the process of 

recodifying Regulation E, as well as 

regulations implementing thirteen other 

existing consumer financial laws,12 the 

Bureau consulted the Federal Deposit 

Insurance Corporation, the Office of the 

Comptroller of the Currency, the 

National Credit Union Administration, 

the Board of Governors of the Federal 

Reserve System, the Federal Trade 

Commission, and the Department of 

Housing and Urban Development, 

including with respect to consistency 

with any prudential, market, or systemic 

objectives that may be administered by 

such agencies.13 The Bureau also has 

consulted with the Office of 

Management and Budget for technical 

assistance. The Bureau expects to have 

further consultations with the 

appropriate Federal agencies during the 

comment period. 

IV. Request for Comment 

Although notice and comment 

rulemaking procedures are not required, 

the Bureau invites comments on this 

notice. Commenters are specifically 

encouraged to identify any technical 

issues raised by the rule. The Bureau is 

also seeking comment in response to a 

notice published at 76 FR 75825 (Dec. 

5, 2011) concerning its efforts to identify 

priorities for streamlining regulations 

that it has inherited from other Federal 

agencies to address provisions that are 

outdated, unduly burdensome, or 

unnecessary. 

V. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit organizations.14

The RFA generally requires an agency to 

conduct an initial regulatory flexibility 

analysis (IRFA) and a final regulatory 

flexibility analysis (FRFA) of any rule 

subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities.15

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required.16

The IRFA and FRFA requirements 

described above apply only where a 

notice of proposed rulemaking is 

required,17 and the panel requirement 

applies only when a rulemaking 

requires an IRFA.18 As discussed above 

in part III, a notice of proposed 

rulemaking is not required for this 

rulemaking. 

In addition, as discussed above, this 

interim final rule has only a minor 

impact on entities subject to Regulation 

E. The rule imposes no new, substantive 

obligations on covered entities. 

Accordingly, the undersigned certifies 

that this interim final rule will not have 

a significant economic impact on a 

substantial number of small entities. 

VI. Paperwork Reduction Act 

The Bureau may not conduct or 

sponsor, and a respondent is not 

required to respond to, an information 

collection unless it displays a currently 

valid Office of Management and Budget 

(OMB) control number. This rule 

contains information collection 

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Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 81023 

requirements under the Paperwork 

Reduction Act (PRA), which have been 

previously approved by OMB under the 

following OMB control number issued 

to the Board, and the PRA burden for 

which is unchanged by this rule: OMB 

Control No(s). 7100–0200. There are no 

new information collection 

requirements in this interim final rule. 

The Bureau’s OMB control number for 

this information collection is: 3170– 

0014. 

List of Subjects in 12 CFR Part 1005 

Banks, Banking, Consumer protection, 

Credit unions, Electronic fund transfers, 

National banks, Reporting and 

recordkeeping requirements, Savings 

Associations. 

Authority and Issuance 

For the reasons set forth above, the 

Bureau of Consumer Financial 

Protection adds part 1005 to Chapter X 

in Title 12 of the Code of Federal 

Regulations to read as follows: 

PART 1005—ELECTRONIC FUND 

TRANSFERS (REGULATION E) 

Sec. 

1005.1 Authority and purpose. 

1005.2 Definitions. 

1005.3 Coverage. 

1005.4 General disclosure requirements; 

jointly offered services. 

1005.5 Issuance of access devices. 

1005.6 Liability of consumer for 

unauthorized transfers. 

1005.7 Initial disclosures. 

1005.8 Change in terms notice; error 

resolution notice. 

1005.9 Receipts at electronic terminals; 

periodic statements. 

1005.10 Preauthorized transfers. 

1005.11 Procedures for resolving errors. 

1005.12 Relation to other laws. 

1005.13 Administrative enforcement; 

record retention. 

1005.14 Electronic fund transfer service 

provider not holding consumer’s 

account. 

1005.15 Electronic fund transfer of 

government benefits. 

1005.16 Disclosures at automated teller 

machines. 

1005.17 Requirements for overdraft 

services. 

1005.18 Requirements for financial 

institutions offering payroll card 

accounts. 

1005.20 Requirements for gift cards and gift 

certificates. 

Appendix A to Part 1005—Model Disclosure 

Clauses and Forms 

Appendix B to Part 1005—[Reserved] 

Appendix C to Part 1005—Issuance of 

Official Interpretations 

Supplement I to Part 1005—Official 

Interpretations 

Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 

1693b. 

§ 1005.1 Authority and purpose. 

(a) Authority. The regulation in this 

part, known as Regulation E, is issued 

by the Bureau of Consumer Financial 

Protection (Bureau) pursuant to the 

Electronic Fund Transfer Act (15 U.S.C. 

1693 et seq.). The information-collection 

requirements have been approved by the 

Office of Management and Budget under 

44 U.S.C. 3501 et seq. and have been 

assigned OMB No. 3170–0014. 

(b) Purpose. This part carries out the 

purposes of the Electronic Fund 

Transfer Act, which establishes the 

basic rights, liabilities, and 

responsibilities of consumers who use 

electronic fund transfer services and of 

financial institutions that offer these 

services. The primary objective of the 

Act and this part is the protection of 

individual consumers engaging in 

electronic fund transfers. 

§ 1005.2 Definitions. 

For purposes of this part, the 

following definitions apply: 

(a)(1) ‘‘Access device’’ means a card, 

code, or other means of access to a 

consumer’s account, or any combination 

thereof, that may be used by the 

consumer to initiate electronic fund 

transfers. 

(2) An access device becomes an 

‘‘accepted access device’’ when the 

consumer: 

(i) Requests and receives, or signs, or 

uses (or authorizes another to use) the 

access device to transfer money between 

accounts or to obtain money, property, 

or services; 

(ii) Requests validation of an access 

device issued on an unsolicited basis; or 

(iii) Receives an access device in 

renewal of, or in substitution for, an 

accepted access device from either the 

financial institution that initially issued 

the device or a successor. 

(b)(1) ‘‘Account’’ means a demand 

deposit (checking), savings, or other 

consumer asset account (other than an 

occasional or incidental credit balance 

in a credit plan) held directly or 

indirectly by a financial institution and 

established primarily for personal, 

family, or household purposes. 

(2) The term includes a ‘‘payroll card 

account’’ which is an account that is 

directly or indirectly established 

through an employer and to which 

electronic fund transfers of the 

consumer’s wages, salary, or other 

employee compensation (such as 

commissions), are made on a recurring 

basis, whether the account is operated 

or managed by the employer, a thirdparty payroll processor, a depository 

institution or any other person. For 

rules governing payroll card accounts, 

see § 1005.18. 

(3) The term does not include an 

account held by a financial institution 

under a bona fide trust agreement. 

(c) ‘‘Act’’ means the Electronic Fund 

Transfer Act (Title IX of the Consumer 

Credit Protection Act, 15 U.S.C. 1693 et 

seq.). 

(d) ‘‘Business day’’ means any day on 

which the offices of the consumer’s 

financial institution are open to the 

public for carrying on substantially all 

business functions. 

(e) ‘‘Consumer’’ means a natural 

person. 

(f) ‘‘Credit’’ means the right granted 

by a financial institution to a consumer 

to defer payment of debt, incur debt and 

defer its payment, or purchase property 

or services and defer payment therefor. 

(g) ‘‘Electronic fund transfer’’ is 

defined in § 1005.3. 

(h) ‘‘Electronic terminal’’ means an 

electronic device, other than a 

telephone operated by a consumer, 

through which a consumer may initiate 

an electronic fund transfer. The term 

includes, but is not limited to, point-ofsale terminals, automated teller 

machines (ATMs), and cash dispensing 

machines. 

(i) ‘‘Financial institution’’ means a 

bank, savings association, credit union, 

or any other person that directly or 

indirectly holds an account belonging to 

a consumer, or that issues an access 

device and agrees with a consumer to 

provide electronic fund transfer 

services, other than a person excluded 

from coverage of this part by section 

1029 of the Consumer Financial 

Protection Act of 2010, Title X of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 

111–203, 124 Stat. 1376. 

(j) ‘‘Person’’ means a natural person or 

an organization, including a 

corporation, government agency, estate, 

trust, partnership, proprietorship, 

cooperative, or association. 

(k) ‘‘Preauthorized electronic fund 

transfer’’ means an electronic fund 

transfer authorized in advance to recur 

at substantially regular intervals. 

(l) ‘‘State’’ means any state, territory, 

or possession of the United States; the 

District of Columbia; the 

Commonwealth of Puerto Rico; or any 

political subdivision of the thereof in 

this paragraph (l). 

(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: 

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81024 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

(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; 

(2) With fraudulent intent by the 

consumer or any person acting in 

concert with the consumer; or 

(3) By the financial institution or its 

employee. 

§ 1005.3 Coverage. 

(a) General. This part applies to any 

electronic fund transfer that authorizes 

a financial institution to debit or credit 

a consumer’s account. Generally, this 

part applies to financial institutions. For 

purposes of §§ 1005.3(b)(2) and (3), 

1005.10(b), (d), and (e), 1005.13, and 

1005.20 this part applies to any person, 

other than a person excluded from 

coverage of this part by section 1029 of 

the Consumer Financial Protection Act 

of 2010, Title X of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act, Public Law 111–203, 124 Stat. 

1376. 

(b) Electronic fund transfer. (1) 

Definition. The term ‘‘electronic fund 

transfer’’ means any transfer of funds 

that is initiated through an electronic 

terminal, telephone, computer, or 

magnetic tape for the purpose of 

ordering, instructing, or authorizing a 

financial institution to debit or credit a 

consumer’s account. The term includes, 

but is not limited to: 

(i) Point-of-sale transfers; 

(ii) Automated teller machine 

transfers; 

(iii) Direct deposits or withdrawals of 

funds; 

(iv) Transfers initiated by telephone; 

and 

(v) Transfers resulting from debit card 

transactions, whether or not initiated 

through an electronic terminal. 

(2) Electronic fund transfer using 

information from a check. (i) This part 

applies where a check, draft, or similar 

paper instrument is used as a source of 

information to initiate a one-time 

electronic fund transfer from a 

consumer’s account. The consumer 

must authorize the transfer. 

(ii) The person initiating an electronic 

fund transfer using the consumer’s 

check as a source of information for the 

transfer must provide a notice that the 

transaction will or may be processed as 

an electronic fund transfer, and obtain 

a consumer’s authorization for each 

transfer. A consumer authorizes a onetime electronic fund transfer (in 

providing a check to a merchant or other 

payee for the MICR encoding, that is, 

the routing number of the financial 

institution, the consumer’s account 

number and the serial number) when 

the consumer receives notice and goes 

forward with the underlying 

transaction. For point-of-sale transfers, 

the notice must be posted in a 

prominent and conspicuous location, 

and a copy thereof, or a substantially 

similar notice, must be provided to the 

consumer at the time of the transaction. 

(iii) A person may provide notices 

that are substantially similar to those set 

forth in Appendix A–6 to comply with 

the requirements of this paragraph 

(b)(2). 

(3) Collection of returned item fees via 

electronic fund transfer.(i) General. The 

person initiating an electronic fund 

transfer to collect a fee for the return of 

an electronic fund transfer or a check 

that is unpaid, including due to 

insufficient or uncollected funds in the 

consumer’s account, must obtain the 

consumer’s authorization for each 

transfer. A consumer authorizes a onetime electronic fund transfer from his or 

her account to pay the fee for the 

returned item or transfer if the person 

collecting the fee provides notice to the 

consumer stating that the person may 

electronically collect the fee, and the 

consumer goes forward with the 

underlying transaction. The notice must 

state that the fee will be collected by 

means of an electronic fund transfer 

from the consumer’s account if the 

payment is returned unpaid and must 

disclose the dollar amount of the fee. If 

the fee may vary due to the amount of 

the transaction or due to other factors, 

then, except as otherwise provided in 

paragraph (b)(3)(ii) of this section, the 

person collecting the fee may disclose, 

in place of the dollar amount of the fee, 

an explanation of how the fee will be 

determined. 

(ii) Point-of-sale transactions. If a fee 

for an electronic fund transfer or check 

returned unpaid may be collected 

electronically in connection with a 

point-of-sale transaction, the person 

initiating an electronic fund transfer to 

collect the fee must post the notice 

described in paragraph (b)(3)(i) of this 

section in a prominent and conspicuous 

location. The person also must either 

provide the consumer with a copy of the 

posted notice (or a substantially similar 

notice) at the time of the transaction, or 

mail the copy (or a substantially similar 

notice) to the consumer’s address as 

soon as reasonably practicable after the 

person initiates the electronic fund 

transfer to collect the fee. If the amount 

of the fee may vary due to the amount 

of the transaction or due to other factors, 

the posted notice may explain how the 

fee will be determined, but the notice 

provided to the consumer must state the 

dollar amount of the fee if the amount 

can be calculated at the time the notice 

is provided or mailed to the consumer. 

(c) Exclusions from coverage. The 

term ‘‘electronic fund transfer’’ does not 

include: 

(1) Checks. Any transfer of funds 

originated by check, draft, or similar 

paper instrument; or any payment made 

by check, draft, or similar paper 

instrument at an electronic terminal. 

(2) Check guarantee or authorization. 

Any transfer of funds that guarantees 

payment or authorizes acceptance of a 

check, draft, or similar paper instrument 

but that does not directly result in a 

debit or credit to a consumer’s account. 

(3) Wire or other similar transfers. 

Any transfer of funds through Fedwire 

or through a similar wire transfer system 

that is used primarily for transfers 

between financial institutions or 

between businesses. 

(4) Securities and commodities 

transfers. Any transfer of funds the 

primary purpose of which is the 

purchase or sale of a security or 

commodity, if the security or 

commodity is: 

(i) Regulated by the Securities and 

Exchange Commission or the 

Commodity Futures Trading 

Commission; 

(ii) Purchased or sold through a 

broker-dealer regulated by the Securities 

and Exchange Commission or through a 

futures commission merchant regulated 

by the Commodity Futures Trading 

Commission; or 

(iii) Held in book-entry form by a 

Federal Reserve Bank or Federal agency. 

(5) Automatic transfers by accountholding 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; 

(ii) From a consumer’s account to an 

account of a member of the consumer’s 

family held in the same financial 

institution; or 

(iii) Between a consumer’s account 

and an account of the financial 

institution, except that these transfers 

remain subject to § 1005.10(e) regarding 

compulsory use and sections 916 and 

917 of the Act regarding civil and 

criminal liability. 

(6) Telephone-initiated transfers. Any 

transfer of funds that: 

(i) Is initiated by a telephone 

communication between a consumer 

and a financial institution making the 

transfer; and 

(ii) Does not take place under a 

telephone bill-payment or other written 

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plan in which periodic or recurring 

transfers are contemplated. 

(7) Small institutions. Any 

preauthorized transfer to or from an 

account if the assets of the accountholding financial institution were $100 

million or less on the preceding 

December 31. If assets of the accountholding institution subsequently exceed 

$100 million, the institution’s 

exemption for preauthorized transfers 

terminates one year from the end of the 

calendar year in which the assets exceed 

$100 million. Preauthorized transfers 

exempt under this paragraph (c)(7) 

remain subject to § 1005.10(e) regarding 

compulsory use and sections 916 and 

917 of the Act regarding civil and 

criminal liability. 

§ 1005.4 General disclosure requirements; 

jointly offered services. 

(a)(1) Form of disclosures. Disclosures 

required under this part shall be clear 

and readily understandable, in writing, 

and in a form the consumer may keep, 

except as otherwise provided in this 

part. The disclosures required by this 

part may be provided to the consumer 

in electronic form, subject to 

compliance with the consumer-consent 

and other applicable provisions of the 

Electronic Signatures in Global and 

National Commerce Act (E-Sign Act) (15 

U.S.C. 7001 et seq.). A financial 

institution may use commonly accepted 

or readily understandable abbreviations 

in complying with the disclosure 

requirements of this part. 

(2) Foreign language disclosures. 

Disclosures required under this part 

may be made in a language other than 

English, provided that the disclosures 

are made available in English upon the 

consumer’s request. 

(b) Additional information; 

disclosures required by other laws. A 

financial institution may include 

additional information and may 

combine disclosures required by other 

laws (such as the Truth in Lending Act 

(15 U.S.C. 1601 et seq.) or the Truth in 

Savings Act (12 U.S.C. 4301 et seq.) 

with the disclosures required by this 

part. 

(c) Multiple accounts and account 

holders.(1) Multiple accounts. A 

financial institution may combine the 

required disclosures into a single 

statement for a consumer who holds 

more than one account at the 

institution. 

(2) Multiple account holders. For joint 

accounts held by two or more 

consumers, a financial institution need 

provide only one set of the required 

disclosures and may provide them to 

any of the account holders. 

(d) Services offered jointly. Financial 

institutions that provide electronic fund 

transfer services jointly may contract 

among themselves to comply with the 

requirements that this part imposes on 

any or all of them. An institution need 

make only the disclosures required by 

§§ 1005.7 and 1005.8 that are within its 

knowledge and within the purview of 

its relationship with the consumer for 

whom it holds an account. 

§ 1005.5 Issuance of access devices. 

(a) Solicited issuance. Except as 

provided in paragraph (b) of this 

section, a financial institution may issue 

an access device to a consumer only: 

(1) In response to an oral or written 

request for the device; or 

(2) As a renewal of, or in substitution 

for, an accepted access device whether 

issued by the institution or a successor. 

(b) Unsolicited issuance. A financial 

institution may distribute an access 

device to a consumer on an unsolicited 

basis if the access device is: 

(1) Not validated, meaning that the 

institution has not yet performed all the 

procedures that would enable a 

consumer to initiate an electronic fund 

transfer using the access device; 

(2) Accompanied by a clear 

explanation that the access device is not 

validated and how the consumer may 

dispose of it if validation is not desired; 

(3) Accompanied by the disclosures 

required by § 1005.7, of the consumer’s 

rights and liabilities that will apply if 

the access device is validated; and 

(4) Validated only in response to the 

consumer’s oral or written request for 

validation, after the institution has 

verified the consumer’s identity by a 

reasonable means. 

§ 1005.6 Liability of consumer for 

unauthorized transfers. 

(a) Conditions for liability. A 

consumer may be held liable, within the 

limitations described in paragraph (b) of 

this section, for an unauthorized 

electronic fund transfer involving the 

consumer’s account only if the financial 

institution has provided the disclosures 

required by § 1005.7(b)(1), (2), and (3). 

If the unauthorized transfer involved an 

access device, it must be an accepted 

access device and the financial 

institution must have provided a means 

to identify the consumer to whom it was 

issued. 

(b) Limitations on amount of liability. 

A consumer’s liability for an 

unauthorized electronic fund transfer or 

a series of related unauthorized transfers 

shall be determined as follows: 

(1) Timely notice given. If the 

consumer notifies the financial 

institution within two business days 

after learning of the loss or theft of the 

access device, the consumer’s liability 

shall not exceed the lesser of $50 or the 

amount of unauthorized transfers that 

occur before notice to the financial 

institution. 

(2) Timely notice not given. If the 

consumer fails to notify the financial 

institution within two business days 

after learning of the loss or theft of the 

access device, the consumer’s liability 

shall not exceed the lesser of $500 or the 

sum of: 

(i) $50 or the amount of unauthorized 

transfers that occur within the two 

business days, whichever is less; and 

(ii) The amount of unauthorized 

transfers that occur after the close of two 

business days and before notice to the 

institution, provided the institution 

establishes that these transfers would 

not have occurred had the consumer 

notified the institution within that twoday period. 

(3) Periodic statement; timely notice 

not given. A consumer must report an 

unauthorized electronic fund transfer 

that appears on a periodic statement 

within 60 days of the financial 

institution’s transmittal of the statement 

to avoid liability for subsequent 

transfers. If the consumer fails to do so, 

the consumer’s liability shall not exceed 

the amount of the unauthorized 

transfers that occur after the close of the 

60 days and before notice to the 

institution, and that the institution 

establishes would not have occurred 

had the consumer notified the 

institution within the 60-day period. 

When an access device is involved in 

the unauthorized transfer, the consumer 

may be liable for other amounts set forth 

in paragraphs (b)(1) or (b)(2) of this 

section, as applicable. 

(4) Extension of time limits. If the 

consumer’s delay in notifying the 

financial institution was due to 

extenuating circumstances, the 

institution shall extend the times 

specified above to a reasonable period. 

(5) Notice to financial institution. (i) 

Notice to a financial institution is given 

when a consumer takes steps reasonably 

necessary to provide the institution with 

the pertinent information, whether or 

not a particular employee or agent of the 

institution actually receives the 

information. 

(ii) The consumer may notify the 

institution in person, by telephone, or in 

writing. 

(iii) Written notice is considered 

given at the time the consumer mails the 

notice or delivers it for transmission to 

the institution by any other usual 

means. Notice may be considered 

constructively given when the 

institution becomes aware of 

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81026 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

circumstances leading to the reasonable 

belief that an unauthorized transfer to or 

from the consumer’s account has been 

or may be made. 

(6) Liability under state law or 

agreement. If state law or an agreement 

between the consumer and the financial 

institution imposes less liability than is 

provided by this section, the consumer’s 

liability shall not exceed the amount 

imposed under the state law or 

agreement. 

§ 1005.7 Initial disclosures. 

(a) Timing of disclosures. A financial 

institution shall make the disclosures 

required by this section at the time a 

consumer contracts for an electronic 

fund transfer service or before the first 

electronic fund transfer is made 

involving the consumer’s account. 

(b) Content of disclosures. A financial 

institution shall provide the following 

disclosures, as applicable: 

(1) Liability of consumer. A summary 

of the consumer’s liability, under 

§ 1005.6 or under state or other 

applicable law or agreement, for 

unauthorized electronic fund transfers. 

(2) Telephone number and address. 

The telephone number and address of 

the person or office to be notified when 

the consumer believes that an 

unauthorized electronic fund transfer 

has been or may be made. 

(3) Business days. The financial 

institution’s business days. 

(4) Types of transfers; limitations. The 

type of electronic fund transfers that the 

consumer may make and any limitations 

on the frequency and dollar amount of 

transfers. Details of the limitations need 

not be disclosed if confidentiality is 

essential to maintain the security of the 

electronic fund transfer system. 

(5) Fees. Any fees imposed by the 

financial institution for electronic fund 

transfers or for the right to make 

transfers. 

(6) Documentation. A summary of the 

consumer’s right to receipts and 

periodic statements, as provided in 

§ 1005.9 of this part, and notices 

regarding preauthorized transfers as 

provided in § 1005.10(a) and (d). 

(7) Stop payment. A summary of the 

consumer’s right to stop payment of a 

preauthorized electronic fund transfer 

and the procedure for placing a stoppayment order, as provided in 

§ 1005.10(c). 

(8) Liability of institution. A summary 

of the financial institution’s liability to 

the consumer under section 910 of the 

Act for failure to make or to stop certain 

transfers. 

(9) Confidentiality. The circumstances 

under which, in the ordinary course of 

business, the financial institution may 

provide information concerning the 

consumer’s account to third parties. 

(10) Error resolution. A notice that is 

substantially similar to Model Form A– 

3 as set out in Appendix A of this part 

concerning error resolution. 

(11) ATM fees. A notice that a fee may 

be imposed by an automated teller 

machine operator as defined in 

§ 1005.16(a)(1), when the consumer 

initiates an electronic fund transfer or 

makes a balance inquiry, and by any 

network used to complete the 

transaction. 

(c) Addition of electronic fund 

transfer services. If an electronic fund 

transfer service is added to a consumer’s 

account and is subject to terms and 

conditions different from those 

described in the initial disclosures, 

disclosures for the new service are 

required. 

§ 1005.8 Change in terms notice; error 

resolution notice. 

(a) Change in terms notice. (1) Prior 

notice required. A financial institution 

shall mail or deliver a written notice to 

the consumer, at least 21 days before the 

effective date, of any change in a term 

or condition required to be disclosed 

under § 1005.7(b) of this part if the 

change would result in: 

(i) Increased fees for the consumer; 

(ii) Increased liability for the 

consumer; 

(iii) Fewer types of available 

electronic fund transfers; or 

(iv) Stricter limitations on the 

frequency or dollar amount of transfers. 

(2) Prior notice exception. A financial 

institution need not give prior notice if 

an immediate change in terms or 

conditions is necessary to maintain or 

restore the security of an account or an 

electronic fund transfer system. If the 

institution makes such a change 

permanent and disclosure would not 

jeopardize the security of the account or 

system, the institution shall notify the 

consumer in writing on or with the next 

regularly scheduled periodic statement 

or within 30 days of making the change 

permanent. 

(b) Error resolution notice. For 

accounts to or from which electronic 

fund transfers can be made, a financial 

institution shall mail or deliver to the 

consumer, at least once each calendar 

year, an error resolution notice 

substantially similar to the model form 

set forth in Appendix A of this part 

(Model Form A–3). Alternatively, an 

institution may include an abbreviated 

notice substantially similar to the model 

form error resolution notice set forth in 

Appendix A of this part (Model Form 

A–3), on or with each periodic 

statement required by § 1005.9(b). 

§ 1005.9 Receipts at electronic terminals; 

periodic statements. 

(a) Receipts at electronic terminals— 

General. Except as provided in 

paragraph (e) of this section, a financial 

institution shall make a receipt available 

to a consumer at the time the consumer 

initiates an electronic fund transfer at an 

electronic terminal. The receipt shall set 

forth the following information, as 

applicable: 

(1) Amount. The amount of the 

transfer. A transaction fee may be 

included in this amount, provided the 

amount of the fee is disclosed on the 

receipt and displayed on or at the 

terminal. 

(2) Date. The date the consumer 

initiates the transfer. 

(3) Type. The type of transfer and the 

type of the consumer’s account(s) to or 

from which funds are transferred. The 

type of account may be omitted if the 

access device used is able to access only 

one account at that terminal. 

(4) Identification. A number or code 

that identifies the consumer’s account 

or accounts, or the access device used 

to initiate the transfer. The number or 

code need not exceed four digits or 

letters to comply with the requirements 

of this paragraph (a)(4). 

(5) Terminal location. The location of 

the terminal where the transfer is 

initiated, or an identification such as a 

code or terminal number. Except in 

limited circumstances where all 

terminals are located in the same city or 

state, if the location is disclosed, it shall 

include the city and state or foreign 

country and one of the following: 

(i) The street address; or 

(ii) A generally accepted name for the 

specific location; or 

(iii) The name of the owner or 

operator of the terminal if other than the 

account-holding institution. 

(6) Third party transfer. The name of 

any third party to or from whom funds 

are transferred. 

(b) Periodic statements. For an 

account to or from which electronic 

fund transfers can be made, a financial 

institution shall send a periodic 

statement for each monthly cycle in 

which an electronic fund transfer has 

occurred; and shall send a periodic 

statement at least quarterly if no transfer 

has occurred. The statement shall set 

forth the following information, as 

applicable: 

(1) Transaction information. For each 

electronic fund transfer occurring 

during the cycle: 

(i) The amount of the transfer; 

(ii) The date the transfer was credited 

or debited to the consumer’s account; 

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(iii) The type of transfer and type of 

account to or from which funds were 

transferred; 

(iv) For a transfer initiated by the 

consumer at an electronic terminal 

(except for a deposit of cash or a check, 

draft, or similar paper instrument), the 

terminal location described in 

paragraph (a)(5) of this section; and 

(v) The name of any third party to or 

from whom funds were transferred. 

(2) Account number. The number of 

the account. 

(3) Fees. The amount of any fees 

assessed against the account during the 

statement period for electronic fund 

transfers, the right to make transfers, or 

account maintenance. 

(4) Account balances. The balance in 

the account at the beginning and at the 

close of the statement period. 

(5) Address and telephone number for 

inquiries. The address and telephone 

number to be used for inquiries or 

notice of errors, preceded by ‘‘Direct 

inquiries to’’ or similar language. The 

address and telephone number provided 

on an error resolution notice under 

§ 1005.8(b) given on or with the 

statement satisfies this requirement. 

(6) Telephone number for 

preauthorized transfers. A telephone 

number the consumer may call to 

ascertain whether preauthorized 

transfers to the consumer’s account have 

occurred, if the financial institution 

uses the telephone-notice option under 

§ 1005.10(a)(1)(iii). 

(c) Exceptions to the periodic 

statement requirement for certain 

accounts. (1) Preauthorized transfers to 

accounts. For accounts that may be 

accessed only by preauthorized transfers 

to the account the following rules apply: 

(i) Passbook accounts. For passbook 

accounts, the financial institution need 

not provide a periodic statement if the 

institution updates the passbook upon 

presentation or enters on a separate 

document the amount and date of each 

electronic fund transfer since the 

passbook was last presented. 

(ii) Other accounts. For accounts 

other than passbook accounts, the 

financial institution must send a 

periodic statement at least quarterly. 

(2) Intra-institutional transfers. For an 

electronic fund transfer initiated by the 

consumer between two accounts of the 

consumer in the same institution, 

documenting the transfer on a periodic 

statement for one of the two accounts 

satisfies the periodic statement 

requirement. 

(3) Relationship between paragraphs 

(c)(1) and (2) of this section. An account 

that is accessed by preauthorized 

transfers to the account described in 

paragraph (c)(1) of this section and by 

intra-institutional transfers described in 

paragraph (c)(2) of this section, but by 

no other type of electronic fund 

transfers, qualifies for the exceptions 

provided by paragraph (c)(1) of this 

section. 

(d) Documentation for foreigninitiated transfers. The failure by a 

financial institution to provide a 

terminal receipt for an electronic fund 

transfer or to document the transfer on 

a periodic statement does not violate 

this part if: 

(1) The transfer is not initiated within 

a state; and 

(2) The financial institution treats an 

inquiry for clarification or 

documentation as a notice of error in 

accordance with § 1005.11. 

(e) Exception for receipts in smallvalue transfers. A financial institution is 

not subject to the requirement to make 

available a receipt under paragraph (a) 

of this section if the amount of the 

transfer is $15 or less. 

§ 1005.10 Preauthorized transfers. 

(a) Preauthorized transfers to 

consumer’s account. (1) Notice by 

financial institution. When a person 

initiates preauthorized electronic fund 

transfers to a consumer’s account at 

least once every 60 days, the accountholding financial institution shall 

provide notice to the consumer by: 

(i) Positive notice. Providing oral or 

written notice of the transfer within two 

business days after the transfer occurs; 

or 

(ii) Negative notice. Providing oral or 

written notice, within two business days 

after the date on which the transfer was 

scheduled to occur, that the transfer did 

not occur; or 

(iii) Readily-available telephone line. 

Providing a readily available telephone 

line that the consumer may call to 

determine whether the transfer occurred 

and disclosing the telephone number on 

the initial disclosure of account terms 

and on each periodic statement. 

(2) Notice by payor. A financial 

institution need not provide notice of a 

transfer if the payor gives the consumer 

positive notice that the transfer has been 

initiated. 

(3) Crediting. A financial institution 

that receives a preauthorized transfer of 

the type described in paragraph (a)(1) of 

this section shall credit the amount of 

the transfer as of the date the funds for 

the transfer are received. 

(b) Written authorization for 

preauthorized transfers from 

consumer’s account. Preauthorized 

electronic fund transfers from a 

consumer’s account may be authorized 

only by a writing signed or similarly 

authenticated by the consumer. The 

person that obtains the authorization 

shall provide a copy to the consumer. 

(c) Consumer’s right to stop payment. 

(1) Notice. A consumer may stop 

payment of a preauthorized electronic 

fund transfer from the consumer’s 

account by notifying the financial 

institution orally or in writing at least 

three business days before the 

scheduled date of the transfer. 

(2) Written confirmation. The 

financial institution may require the 

consumer to give written confirmation 

of a stop-payment order within 14 days 

of an oral notification. An institution 

that requires written confirmation shall 

inform the consumer of the requirement 

and provide the address where 

confirmation must be sent when the 

consumer gives the oral notification. An 

oral stop-payment order ceases to be 

binding after 14 days if the consumer 

fails to provide the required written 

confirmation. 

(d) Notice of transfers varying in 

amount. (1) Notice. When a 

preauthorized electronic fund transfer 

from the consumer’s account will vary 

in amount from the previous transfer 

under the same authorization or from 

the preauthorized amount, the 

designated payee or the financial 

institution shall send the consumer 

written notice of the amount and date of 

the transfer at least 10 days before the 

scheduled date of transfer. 

(2) Range. The designated payee or 

the institution shall inform the 

consumer of the right to receive notice 

of all varying transfers, but may give the 

consumer the option of receiving notice 

only when a transfer falls outside a 

specified range of amounts or only 

when a transfer differs from the most 

recent transfer by more than an agreedupon amount. 

(e) Compulsory use. (1) Credit. No 

financial institution or other person may 

condition an extension of credit to a 

consumer on the consumer’s repayment 

by preauthorized electronic fund 

transfers, except for credit extended 

under an overdraft credit plan or 

extended to maintain a specified 

minimum balance in the consumer’s 

account. 

(2) Employment or government 

benefit. No financial institution or other 

person may require a consumer to 

establish an account for receipt of 

electronic fund transfers with a 

particular institution as a condition of 

employment or receipt of a government 

benefit. 

§ 1005.11 Procedures for resolving errors. 

(a) Definition of error. (1) Types of 

transfers or inquiries covered. The term 

‘‘error’’ means: 

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81028 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

(i) An unauthorized electronic fund 

transfer; 

(ii) An incorrect electronic fund 

transfer to or from the consumer’s 

account; 

(iii) The omission of an electronic 

fund transfer from a periodic statement; 

(iv) A computational or bookkeeping 

error made by the financial institution 

relating to an electronic fund transfer; 

(v) The consumer’s receipt of an 

incorrect amount of money from an 

electronic terminal; 

(vi) An electronic fund transfer not 

identified in accordance with § 1005.9 

or § 1005.10(a); or 

(vii) The consumer’s request for 

documentation required by § 1005.9 or 

§ 1005.10(a) or for additional 

information or clarification concerning 

an electronic fund transfer, including a 

request the consumer makes to 

determine whether an error exists under 

paragraphs (a)(1)(i) through (vi) of this 

section. 

(2) Types of inquiries not covered. 

The term ‘‘error’’ does not include: 

(i) A routine inquiry about the 

consumer’s account balance; 

(ii) A request for information for tax 

or other recordkeeping purposes; or 

(iii) A request for duplicate copies of 

documentation. 

(b) Notice of error from consumer. (1) 

Timing; contents. A financial institution 

shall comply with the requirements of 

this section with respect to any oral or 

written notice of error from the 

consumer that: 

(i) Is received by the institution no 

later than 60 days after the institution 

sends the periodic statement or provides 

the passbook documentation, required 

by § 1005.9, on which the alleged error 

is first reflected; 

(ii) Enables the institution to identify 

the consumer’s name and account 

number; and 

(iii) Indicates why the consumer 

believes an error exists and includes to 

the extent possible the type, date, and 

amount of the error, except for requests 

described in paragraph (a)(1)(vii) of this 

section. 

(2) Written confirmation. A financial 

institution may require the consumer to 

give written confirmation of an error 

within 10 business days of an oral 

notice. An institution that requires 

written confirmation shall inform the 

consumer of the requirement and 

provide the address where confirmation 

must be sent when the consumer gives 

the oral notification. 

(3) Request for documentation or 

clarifications. When a notice of error is 

based on documentation or clarification 

that the consumer requested under 

paragraph (a)(1)(vii) of this section, the 

consumer’s notice of error is timely if 

received by the financial institution no 

later than 60 days after the institution 

sends the information requested. 

(c) Time limits and extent of 

investigation. (1) Ten-day period. A 

financial institution shall investigate 

promptly and, except as otherwise 

provided in this paragraph (c), shall 

determine whether an error occurred 

within 10 business days of receiving a 

notice of error. The institution shall 

report the results to the consumer 

within three business days after 

completing its investigation. The 

institution shall correct the error within 

one business day after determining that 

an error occurred. 

(2) Forty-five day period. If the 

financial institution is unable to 

complete its investigation within 10 

business days, the institution may take 

up to 45 days from receipt of a notice 

of error to investigate and determine 

whether an error occurred, provided the 

institution does the following: 

(i) Provisionally credits the 

consumer’s account in the amount of 

the alleged error (including interest 

where applicable) within 10 business 

days of receiving the error notice. If the 

financial institution has a reasonable 

basis for believing that an unauthorized 

electronic fund transfer has occurred 

and the institution has satisfied the 

requirements of § 1005.6(a), the 

institution may withhold a maximum of 

$50 from the amount credited. An 

institution need not provisionally credit 

the consumer’s account if: 

(A) The institution requires but does 

not receive written confirmation within 

10 business days of an oral notice of 

error; or 

(B) The alleged error involves an 

account that is subject to Regulation T 

of the Board of Governors of the Federal 

Reserve System (Securities Credit by 

Brokers and Dealers, 12 CFR part 220); 

(ii) Informs the consumer, within two 

business days after the provisional 

crediting, of the amount and date of the 

provisional crediting and gives the 

consumer full use of the funds during 

the investigation; 

(iii) Corrects the error, if any, within 

one business day after determining that 

an error occurred; and 

(iv) Reports the results to the 

consumer within three business days 

after completing its investigation 

(including, if applicable, notice that a 

provisional credit has been made final). 

(3) Extension of time periods. The 

time periods in paragraphs (c)(1) and 

(c)(2) of this section are extended as 

follows: 

(i) The applicable time is 20 business 

days in place of 10 business days under 

paragraphs (c)(1) and (2) of this section 

if the notice of error involves an 

electronic fund transfer to or from the 

account within 30 days after the first 

deposit to the account was made. 

(ii) The applicable time is 90 days in 

place of 45 days under paragraph (c)(2) 

of this section, for completing an 

investigation, if a notice of error 

involves an electronic fund transfer that: 

(A) Was not initiated within a state; 

(B) Resulted from a point-of-sale debit 

card transaction; or 

(C) Occurred within 30 days after the 

first deposit to the account was made. 

(4) Investigation. With the exception 

of transfers covered by § 1005.14 of this 

part, a financial institution’s review of 

its own records regarding an alleged 

error satisfies the requirements of this 

section if: 

(i) The alleged error concerns a 

transfer to or from a third party; and 

(ii) There is no agreement between the 

institution and the third party for the 

type of electronic fund transfer 

involved. 

(d) Procedures if financial institution 

determines no error or different error 

occurred. In addition to following the 

procedures specified in paragraph (c) of 

this section, the financial institution 

shall follow the procedures set forth in 

this paragraph (d) if it determines that 

no error occurred or that an error 

occurred in a manner or amount 

different from that described by the 

consumer: 

(1) Written explanation. The 

institution’s report of the results of its 

investigation shall include a written 

explanation of the institution’s findings 

and shall note the consumer’s right to 

request the documents that the 

institution relied on in making its 

determination. Upon request, the 

institution shall promptly provide 

copies of the documents. 

(2) Debiting provisional credit. Upon 

debiting a provisionally credited 

amount, the financial institution shall: 

(i) Notify the consumer of the date 

and amount of the debiting; 

(ii) Notify the consumer that the 

institution will honor checks, drafts, or 

similar instruments payable to third 

parties and preauthorized transfers from 

the consumer’s account (without charge 

to the consumer as a result of an 

overdraft) for five business days after 

the notification. The institution shall 

honor items as specified in the notice, 

but need honor only items that it would 

have paid if the provisionally credited 

funds had not been debited. 

(e) Reassertion of error. A financial 

institution that has fully complied with 

the error resolution requirements has no 

further responsibilities under this 

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section should the consumer later 

reassert the same error, except in the 

case of an error asserted by the 

consumer following receipt of 

information provided under paragraph 

(a)(1)(vii) of this section. 

§ 1005.12 Relation to other laws. 

(a) Relation to Truth in Lending. (1) 

The Electronic Fund Transfer Act and 

this part govern: 

(i) The addition to an accepted credit 

card, as defined in Regulation Z (12 CFR 

1026.12, comment 12–2), of the 

capability to initiate electronic fund 

transfers; 

(ii) The issuance of an access device 

that permits credit extensions (under a 

preexisting agreement between a 

consumer and a financial institution) 

only when the consumer’s account is 

overdrawn or to maintain a specified 

minimum balance in the consumer’s 

account, or under an overdraft service, 

as defined in § 1005.17(a) of this part; 

(iii) The addition of an overdraft 

service, as defined in § 1005.17(a), to an 

accepted access device; and 

(iv) A consumer’s liability for an 

unauthorized electronic fund transfer 

and the investigation of errors involving 

an extension of credit that occurs under 

an agreement between the consumer 

and a financial institution to extend 

credit when the consumer’s account is 

overdrawn or to maintain a specified 

minimum balance in the consumer’s 

account, or under an overdraft service, 

as defined in § 1005.17(a). 

(2) The Truth in Lending Act and 

Regulation Z (12 CFR part 1026), which 

prohibit the unsolicited issuance of 

credit cards, govern: 

(i) The addition of a credit feature to 

an accepted access device; and 

(ii) Except as provided in paragraph 

(a)(1)(ii) of this section, the issuance of 

a credit card that is also an access 

device. 

(b) Preemption of inconsistent state 

laws. (1) Inconsistent requirements. The 

Bureau shall determine, upon its own 

motion or upon the request of a state, 

financial institution, or other interested 

party, whether the Act and this part 

preempt state law relating to electronic 

fund transfers, or dormancy, inactivity, 

or service fees, or expiration dates in the 

case of gift certificates, store gift cards, 

or general-use prepaid cards. 

(2) Standards for determination. State 

law is inconsistent with the 

requirements of the Act and this part if 

state law: 

(i) Requires or permits a practice or 

act prohibited by the Federal law; 

(ii) Provides for consumer liability for 

unauthorized electronic fund transfers 

that exceeds the limits imposed by the 

Federal law; 

(iii) Allows longer time periods than 

the Federal law for investigating and 

correcting alleged errors, or does not 

require the financial institution to credit 

the consumer’s account during an error 

investigation in accordance with 

§ 1005.11(c)(2)(i) of this part; or 

(iv) Requires initial disclosures, 

periodic statements, or receipts that are 

different in content from those required 

by the Federal law except to the extent 

that the disclosures relate to consumer 

rights granted by the state law and not 

by the Federal law. 

(c) State exemptions (1) General rule. 

Any state may apply for an exemption 

from the requirements of the Act or this 

part for any class of electronic fund 

transfers within the state. The Bureau 

shall grant an exemption if it determines 

that: 

(i) Under state law the class of 

electronic fund transfers is subject to 

requirements substantially similar to 

those imposed by the Federal law; and 

(ii) There is adequate provision for 

state enforcement. 

(2) Exception. To assure that the 

Federal and state courts continue to 

have concurrent jurisdiction, and to aid 

in implementing the Act: 

(i) No exemption shall extend to the 

civil liability provisions of section 916 

of the Act; and 

(ii) When the Bureau grants an 

exemption, the state law requirements 

shall constitute the requirements of the 

Federal law for purposes of section 916 

of the Act, except for state law 

requirements not imposed by the 

Federal law. 

§ 1005.13 Administrative enforcement; 

record retention. 

(a) Enforcement by Federal agencies. 

Compliance with this part is enforced in 

accordance with section 918 of the Act. 

(b) Record retention. (1) Any person 

subject to the Act and this part shall 

retain evidence of compliance with the 

requirements imposed by the Act and 

this part for a period of not less than 

two years from the date disclosures are 

required to be made or action is 

required to be taken. 

(2) Any person subject to the Act and 

this part having actual notice that it is 

the subject of an investigation or an 

enforcement proceeding by its 

enforcement agency, or having been 

served with notice of an action filed 

under sections 910, 916, or 917(a) of the 

Act, shall retain the records that pertain 

to the investigation, action, or 

proceeding until final disposition of the 

matter unless an earlier time is allowed 

by court or agency order. 

§ 1005.14 Electronic fund transfer service 

provider not holding consumer’s account. 

(a) Provider of electronic fund transfer 

service. A person that provides an 

electronic fund transfer service to a 

consumer but that does not hold the 

consumer’s account is subject to all 

requirements of this part if the person: 

(1) Issues a debit card (or other access 

device) that the consumer can use to 

access the consumer’s account held by 

a financial institution; and 

(2) Has no agreement with the 

account-holding institution regarding 

such access. 

(b) Compliance by service provider. In 

addition to the requirements generally 

applicable under this part, the service 

provider shall comply with the 

following special rules: 

(1) Disclosures and documentation. 

The service provider shall give the 

disclosures and documentation required 

by §§ 1005.7, 1005.8, and 1005.9 of this 

part that are within the purview of its 

relationship with the consumer. The 

service provider need not furnish the 

periodic statement required by 

§ 1005.9(b) if the following conditions 

are met: 

(i) The debit card (or other access 

device) issued to the consumer bears the 

service provider’s name and an address 

or telephone number for making 

inquiries or giving notice of error; 

(ii) The consumer receives a notice 

concerning use of the debit card that is 

substantially similar to the notice 

contained in Appendix A of this part; 

(iii) The consumer receives, on or 

with the receipts required by 

§ 1005.9(a), the address and telephone 

number to be used for an inquiry, to 

give notice of an error, or to report the 

loss or theft of the debit card; 

(iv) The service provider transmits to 

the account-holding institution the 

information specified in § 1005.9(b)(1), 

in the format prescribed by the 

automated clearinghouse (ACH) system 

used to clear the fund transfers; 

(v) The service provider extends the 

time period for notice of loss or theft of 

a debit card, set forth in § 1005.6(b)(1) 

and (2), from two business days to four 

business days after the consumer learns 

of the loss or theft; and extends the time 

periods for reporting unauthorized 

transfers or errors, set forth in 

§§ 1005.6(b)(3) and 1005.11(b)(1)(i), 

from 60 days to 90 days following the 

transmittal of a periodic statement by 

the account-holding institution. 

(2) Error resolution. (i) The service 

provider shall extend by a reasonable 

time the period in which notice of an 

error must be received, specified in 

§ 1005.11(b)(1)(i), if a delay resulted 

from an initial attempt by the consumer 

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to notify the account-holding 

institution. 

(ii) The service provider shall disclose 

to the consumer the date on which it 

initiates a transfer to effect a provisional 

credit in accordance with 

§ 1005.11(c)(2)(ii). 

(iii) If the service provider determines 

an error occurred, it shall transfer funds 

to or from the consumer’s account, in 

the appropriate amount and within the 

applicable time period, in accordance 

with § 1005.11(c)(2)(i). 

(iv) If funds were provisionally 

credited and the service provider 

determines no error occurred, it may 

reverse the credit. The service provider 

shall notify the account-holding 

institution of the period during which 

the account-holding institution must 

honor debits to the account in 

accordance with § 1005.11(d)(2)(ii). If an 

overdraft results, the service provider 

shall promptly reimburse the accountholding institution in the amount of the 

overdraft. 

(c) Compliance by account-holding 

institution. The account-holding 

institution need not comply with the 

requirements of the Act and this part 

with respect to electronic fund transfers 

initiated through the service provider 

except as follows: 

(1) Documentation. The accountholding institution shall provide a 

periodic statement that describes each 

electronic fund transfer initiated by the 

consumer with the access device issued 

by the service provider. The accountholding institution has no liability for 

the failure to comply with this 

requirement if the service provider did 

not provide the necessary information; 

and 

(2) Error resolution. Upon request, the 

account-holding institution shall 

provide information or copies of 

documents needed by the service 

provider to investigate errors or to 

furnish copies of documents to the 

consumer. The account-holding 

institution shall also honor debits to the 

account in accordance with 

§ 1005.11(d)(2)(ii). 

§ 1005.15 Electronic fund transfer of 

government benefits. 

(a) Government agency subject to 

regulation. (1) A government agency is 

deemed to be a financial institution for 

purposes of the Act and this part if 

directly or indirectly it issues an access 

device to a consumer for use in 

initiating an electronic fund transfer of 

government benefits from an account, 

other than needs-tested benefits in a 

program established under state or local 

law or administered by a state or local 

agency. The agency shall comply with 

all applicable requirements of the Act 

and this part, except as provided in this 

section. 

(2) For purposes of this section, the 

term ‘‘account’’ means an account 

established by a government agency for 

distributing government benefits to a 

consumer electronically, such as 

through automated teller machines or 

point-of-sale terminals, but does not 

include an account for distributing 

needs-tested benefits in a program 

established under state or local law or 

administered by a state or local agency. 

(b) Issuance of access devices. For 

purposes of this section, a consumer is 

deemed to request an access device 

when the consumer applies for 

government benefits that the agency 

disburses or will disburse by means of 

an electronic fund transfer. The agency 

shall verify the identity of the consumer 

receiving the device by reasonable 

means before the device is activated. 

(c) Alternative to periodic statement. 

A government agency need not furnish 

the periodic statement required by 

§ 1005.9(b) if the agency makes available 

to the consumer: 

(1) The consumer’s account balance, 

through a readily available telephone 

line and at a terminal (such as by 

providing balance information at a 

balance-inquiry terminal or providing it, 

routinely or upon request, on a terminal 

receipt at the time of an electronic fund 

transfer); and 

(2) A written history of the 

consumer’s account transactions that is 

provided promptly in response to an 

oral or written request and that covers 

at least 60 days preceding the date of a 

request by the consumer. 

(d) Modified requirements. A 

government agency that does not 

furnish periodic statements, in 

accordance with paragraph (c) of this 

section, shall comply with the following 

special rules: 

(1) Initial disclosures. The agency 

shall modify the disclosures under 

§ 1005.7(b) by disclosing: 

(i) Account balance. The means by 

which the consumer may obtain 

information concerning the account 

balance, including a telephone number. 

The agency provides a notice 

substantially similar to the notice 

contained in paragraph A–5 in appendix 

A of this part. 

(ii) Written account history. A 

summary of the consumer’s right to 

receive a written account history upon 

request, in place of the periodic 

statement required by § 1005.7(b)(6), 

and the telephone number to call to 

request an account history. This 

disclosure may be made by providing a 

notice substantially similar to the notice 

contained in paragraph A–5 in appendix 

A of this part. 

(iii) Error resolution. A notice 

concerning error resolution that is 

substantially similar to the notice 

contained in paragraph A–5 in appendix 

A of this part, in place of the notice 

required by § 1005.7(b)(10). 

(2) Annual error resolution notice. 

The agency shall provide an annual 

notice concerning error resolution that 

is substantially similar to the notice 

contained in paragraph A–5 in appendix 

A, in place of the notice required by 

§ 1005.8(b). 

(3) Limitations on liability. For 

purposes of § 1005.6(b)(3), regarding a 

60-day period for reporting any 

unauthorized transfer that appears on a 

periodic statement, the 60-day period 

shall begin with transmittal of a written 

account history or other account 

information provided to the consumer 

under paragraph (c) of this section. 

(4) Error resolution. The agency shall 

comply with the requirements of 

§ 1005.11 of this part in response to an 

oral or written notice of an error from 

the consumer that is received no later 

than 60 days after the consumer obtains 

the written account history or other 

account information, under paragraph 

(c) of this section, in which the error is 

first reflected. 

§ 1005.16 Disclosures at automated teller 

machines. 

(a) Definition. ‘‘Automated teller 

machine operator’’ means any person 

that operates an automated teller 

machine at which a consumer initiates 

an electronic fund transfer or a balance 

inquiry and that does not hold the 

account to or from which the transfer is 

made, or about which an inquiry is 

made. 

(b) General. An automated teller 

machine operator that imposes a fee on 

a consumer for initiating an electronic 

fund transfer or a balance inquiry shall: 

(1) Provide notice that a fee will be 

imposed for providing electronic fund 

transfer services or a balance inquiry; 

and 

(2) Disclose the amount of the fee. 

(c) Notice requirement. To meet the 

requirements of paragraph (b) of this 

section, an automated teller machine 

operator must comply with the 

following: 

(1) On the machine. Post in a 

prominent and conspicuous location on 

or at the automated teller machine a 

notice that: 

(i) A fee will be imposed for providing 

electronic fund transfer services or for a 

balance inquiry; or 

(ii) A fee may be imposed for 

providing electronic fund transfer 

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services or for a balance inquiry, but the 

notice in this paragraph (c)(1)(ii) may be 

substituted for the notice in paragraph 

(c)(1)(i) of this section only if there are 

circumstances under which a fee will 

not be imposed for such services; and 

(2) Screen or paper notice. Provide 

the notice required by paragraphs (b)(1) 

and (2) of this section either by showing 

it on the screen of the automated teller 

machine or by providing it on paper, 

before the consumer is committed to 

paying a fee. 

(d) Imposition of fee. An automated 

teller machine operator may impose a 

fee on a consumer for initiating an 

electronic fund transfer or a balance 

inquiry only if 

(1) The consumer is provided the 

notices required under paragraph (c) of 

this section, and 

(2) The consumer elects to continue 

the transaction or inquiry after receiving 

such notices. 

§ 1005.17 Requirements for overdraft 

services. 

(a) Definition. For purposes of this 

section, the term ‘‘overdraft service’’ 

means a service under which a financial 

institution assesses a fee or charge on a 

consumer’s account held by the 

institution for paying a transaction 

(including a check or other item) when 

the consumer has insufficient or 

unavailable funds in the account. The 

term ‘‘overdraft service’’ does not 

include any payment of overdrafts 

pursuant to: 

(1) A line of credit subject to 

Regulation Z (12 CFR part 1026), 

including transfers from a credit card 

account, home equity line of credit, or 

overdraft line of credit; 

(2) A service that transfers funds from 

another account held individually or 

jointly by a consumer, such as a savings 

account; or 

(3) A line of credit or other 

transaction exempt from Regulation Z 

(12 CFR part 1026) pursuant to 12 CFR 

1026.3(d). 

(b) Opt-in requirement. (1) General. 

Except as provided under paragraph (c) 

of this section, a financial institution 

holding a consumer’s account shall not 

assess a fee or charge on a consumer’s 

account for paying an ATM or one-time 

debit card transaction pursuant to the 

institution’s overdraft service, unless 

the institution: 

(i) Provides the consumer with a 

notice in writing, or if the consumer 

agrees, electronically, segregated from 

all other information, describing the 

institution’s overdraft service; 

(ii) Provides a reasonable opportunity 

for the consumer to affirmatively 

consent, or opt in, to the service for 

ATM and one-time debit card 

transactions; 

(iii) Obtains the consumer’s 

affirmative consent, or opt-in, to the 

institution’s payment of ATM or onetime debit card transactions; and 

(iv) Provides the consumer with 

confirmation of the consumer’s consent 

in writing, or if the consumer agrees, 

electronically, which includes a 

statement informing the consumer of the 

right to revoke such consent. 

(2) Conditioning payment of other 

overdrafts on consumer’s affirmative 

consent. A financial institution shall 

not: 

(i) Condition the payment of any 

overdrafts for checks, ACH transactions, 

and other types of transactions on the 

consumer affirmatively consenting to 

the institution’s payment of ATM and 

one-time debit card transactions 

pursuant to the institution’s overdraft 

service; or 

(ii) Decline to pay checks, ACH 

transactions, and other types of 

transactions that overdraw the 

consumer’s account because the 

consumer has not affirmatively 

consented to the institution’s overdraft 

service for ATM and one-time debit card 

transactions. 

(3) Same account terms, conditions, 

and features. A financial institution 

shall provide to consumers who do not 

affirmatively consent to the institution’s 

overdraft service for ATM and one-time 

debit card transactions the same account 

terms, conditions, and features that it 

provides to consumers who 

affirmatively consent, except for the 

overdraft service for ATM and one-time 

debit card transactions. 

(c) Timing. (1) Existing account 

holders. For accounts opened prior to 

July 1, 2010, the financial institution 

must not assess any fees or charges on 

a consumer’s account on or after August 

15, 2010, for paying an ATM or onetime debit card transaction pursuant to 

the overdraft service, unless the 

institution has complied with 

§ 1005.17(b)(1) and obtained the 

consumer’s affirmative consent. 

(2) New account holders. For accounts 

opened on or after July 1, 2010, the 

financial institution must comply with 

§ 1005.17(b)(1) and obtain the 

consumer’s affirmative consent before 

the institution assesses any fee or charge 

on the consumer’s account for paying an 

ATM or one-time debit card transaction 

pursuant to the institution’s overdraft 

service. 

(d) Content and format. The notice 

required by paragraph (b)(1)(i) of this 

section shall be substantially similar to 

Model Form A–9 set forth in Appendix 

A of this part, include all applicable 

items in this paragraph, and may not 

contain any information not specified in 

or otherwise permitted by this 

paragraph. 

(1) Overdraft service. A brief 

description of the financial institution’s 

overdraft service and the types of 

transactions for which a fee or charge 

for paying an overdraft may be imposed, 

including ATM and one-time debit card 

transactions. 

(2) Fees imposed. The dollar amount 

of any fees or charges assessed by the 

financial institution for paying an ATM 

or one-time debit card transaction 

pursuant to the institution’s overdraft 

service, including any daily or other 

overdraft fees. If the amount of the fee 

is determined on the basis of the 

number of times the consumer has 

overdrawn the account, the amount of 

the overdraft, or other factors, the 

institution must disclose the maximum 

fee that may be imposed. 

(3) Limits on fees charged. The 

maximum number of overdraft fees or 

charges that may be assessed per day, 

or, if applicable, that there is no limit. 

(4) Disclosure of opt-in right. An 

explanation of the consumer’s right to 

affirmatively consent to the financial 

institution’s payment of overdrafts for 

ATM and one-time debit card 

transactions pursuant to the institution’s 

overdraft service, including the methods 

by which the consumer may consent to 

the service; and 

(5) Alternative plans for covering 

overdrafts. If the institution offers a line 

of credit subject to Regulation Z (12 CFR 

part 1026) or a service that transfers 

funds from another account of the 

consumer held at the institution to 

cover overdrafts, the institution must 

state that fact. An institution may, but 

is not required to, list additional 

alternatives for the payment of 

overdrafts. 

(6) Permitted modifications and 

additional content. If applicable, the 

institution may modify the content 

required by § 1005.17(d) to indicate that 

the consumer has the right to opt into, 

or opt out of, the payment of overdrafts 

under the institution’s overdraft service 

for other types of transactions, such as 

checks, ACH transactions, or automatic 

bill payments; to provide a means for 

the consumer to exercise this choice; 

and to disclose the associated returned 

item fee and that additional merchant 

fees may apply. The institution may also 

disclose the consumer’s right to revoke 

consent. For notices provided to 

consumers who have opened accounts 

prior to July 1, 2010, the financial 

institution may describe the 

institution’s overdraft service with 

respect to ATM and one-time debit card 

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81032 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

transactions with a statement such as 

‘‘After August 15, 2010, we will not 

authorize and pay overdrafts for the 

following types of transactions unless 

you ask us to (see below).’’ 

(e) Joint relationships. If two or more 

consumers jointly hold an account, the 

financial institution shall treat the 

affirmative consent of any of the joint 

consumers as affirmative consent for 

that account. Similarly, the financial 

institution shall treat a revocation of 

affirmative consent by any of the joint 

consumers as revocation of consent for 

that account. 

(f) Continuing right to opt in or to 

revoke the opt-in. A consumer may 

affirmatively consent to the financial 

institution’s overdraft service at any 

time in the manner described in the 

notice required by paragraph (b)(1)(i) of 

this section. A consumer may also 

revoke consent at any time in the 

manner made available to the consumer 

for providing consent. A financial 

institution must implement a 

consumer’s revocation of consent as 

soon as reasonably practicable. 

(g) Duration and revocation of opt-in. 

A consumer’s affirmative consent to the 

institution’s overdraft service is 

effective until revoked by the consumer, 

or unless the financial institution 

terminates the service. 

§ 1005.18 Requirements for financial 

institutions offering payroll card accounts. 

(a) Coverage. A financial institution 

shall comply with all applicable 

requirements of the Act and this part 

with respect to payroll card accounts 

except as provided in this section. 

(b) Alternative to periodic statements. 

(1) A financial institution need not 

furnish periodic statements required by 

§ 1005.9(b) if the institution makes 

available to the consumer: 

(i) The consumer’s account balance, 

through a readily available telephone 

line; 

(ii) An electronic history of the 

consumer’s account transactions, such 

as through a Web site, that covers at 

least 60 days preceding the date the 

consumer electronically accesses the 

account; and 

(iii) A written history of the 

consumer’s account transactions that is 

provided promptly in response to an 

oral or written request and that covers 

at least 60 days preceding the date the 

financial institution receives the 

consumer’s request. 

(2) The history of account transactions 

provided under paragraphs (b)(1)(ii) and 

(iii) of this section must include the 

information set forth in § 1005.9(b). 

(c) Modified requirements. A financial 

institution that provides information 

under paragraph (b) of this section, shall 

comply with the following: 

(1) Initial disclosures. The financial 

institution shall modify the disclosures 

under § 1005.7(b) by disclosing: 

(i) Account information. A telephone 

number that the consumer may call to 

obtain the account balance, the means 

by which the consumer can obtain an 

electronic account history, such as the 

address of a Web site, and a summary 

of the consumer’s right to receive a 

written account history upon request (in 

place of the summary of the right to 

receive a periodic statement required by 

§ 1005.7(b)(6)), including a telephone 

number to call to request a history. The 

disclosure required by this paragraph 

(c)(1)(i) may be made by providing a 

notice substantially similar to the notice 

contained in paragraph A–7(a) in 

appendix A of this part. 

(ii) Error resolution. A notice 

concerning error resolution that is 

substantially similar to the notice 

contained in paragraph A–7(b) in 

appendix A of this part, in place of the 

notice required by § 1005.7(b)(10). 

(2) Annual error resolution notice. 

The financial institution shall provide 

an annual notice concerning error 

resolution that is substantially similar to 

the notice contained in paragraph A– 

7(b) in appendix A of this part, in place 

of the notice required by § 1005.8(b). 

Alternatively, a financial institution 

may include on or with each electronic 

and written history provided in 

accordance with § 1005.18(b)(1), a 

notice substantially similar to the 

abbreviated notice for periodic 

statements contained in paragraph A– 

3(b) in appendix A of this part, modified 

as necessary to reflect the error 

resolution provisions set forth in this 

section. 

(3) Limitations on liability. (i) For 

purposes of § 1005.6(b)(3), the 60-day 

period for reporting any unauthorized 

transfer shall begin on the earlier of: 

(A) The date the consumer 

electronically accesses the consumer’s 

account under paragraph (b)(1)(ii) of 

this section, provided that the electronic 

history made available to the consumer 

reflects the transfer; or 

(B) The date the financial institution 

sends a written history of the 

consumer’s account transactions 

requested by the consumer under 

paragraph (b)(1)(iii) of this section in 

which the unauthorized transfer is first 

reflected. 

(ii) A financial institution may 

comply with paragraph (c)(3)(i) of this 

section by limiting the consumer’s 

liability for an unauthorized transfer as 

provided under § 1005.6(b)(3) for any 

transfer reported by the consumer 

within 120 days after the transfer was 

credited or debited to the consumer’s 

account. 

(4) Error resolution. (i) The financial 

institution shall comply with the 

requirements of § 1005.11 in response to 

an oral or written notice of an error from 

the consumer that is received by the 

earlier of: 

(A) Sixty days after the date the 

consumer electronically accesses the 

consumer’s account under paragraph 

(b)(1)(ii) of this section, provided that 

the electronic history made available to 

the consumer reflects the alleged error; 

or 

(B) Sixty days after the date the 

financial institution sends a written 

history of the consumer’s account 

transactions requested by the consumer 

under paragraph (b)(1)(iii) of this 

section in which the alleged error is first 

reflected. 

(ii) In lieu of following the procedures 

in paragraph (c)(4)(i) of this section, a 

financial institution complies with the 

requirements for resolving errors in 

§ 1005.11 if it investigates any oral or 

written notice of an error from the 

consumer that is received by the 

institution within 120 days after the 

transfer allegedly in error was credited 

or debited to the consumer’s account. 

§ 1005.20 Requirements for gift cards and 

gift certificates. 

(a) Definitions. For purposes of this 

section, except as excluded under 

paragraph (b), the following definitions 

apply: 

(1) ‘‘Gift certificate’’ means a card, 

code, or other device that is: 

(i) Issued on a prepaid basis primarily 

for personal, family, or household 

purposes to a consumer in a specified 

amount that may not be increased or 

reloaded in exchange for payment; and 

(ii) Redeemable upon presentation at 

a single merchant or an affiliated group 

of merchants for goods or services. 

(2) ‘‘Store gift card’’ means a card, 

code, or other device that is: 

(i) Issued on a prepaid basis primarily 

for personal, family, or household 

purposes to a consumer in a specified 

amount, whether or not that amount 

may be increased or reloaded, in 

exchange for payment; and 

(ii) Redeemable upon presentation at 

a single merchant or an affiliated group 

of merchants for goods or services. 

(3) ‘‘General-use prepaid card’’ means 

a card, code, or other device that is: 

(i) Issued on a prepaid basis primarily 

for personal, family, or household 

purposes to a consumer in a specified 

amount, whether or not that amount 

may be increased or reloaded, in 

exchange for payment; and 

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Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 81033 

(ii) Redeemable upon presentation at 

multiple, unaffiliated merchants for 

goods or services, or usable at 

automated teller machines. 

(4) ‘‘Loyalty, award, or promotional 

gift card’’ means a card, code, or other 

device that: 

(i) Is issued on a prepaid basis 

primarily for personal, family, or 

household purposes to a consumer in 

connection with a loyalty, award, or 

promotional program; 

(ii) Is redeemable upon presentation 

at one or more merchants for goods or 

services, or usable at automated teller 

machines; and 

(iii) Sets forth the following 

disclosures, as applicable: 

(A) A statement indicating that the 

card, code, or other device is issued for 

loyalty, award, or promotional 

purposes, which must be included on 

the front of the card, code, or other 

device; 

(B) The expiration date for the 

underlying funds, which must be 

included on the front of the card, code, 

or other device; 

(C) The amount of any fees that may 

be imposed in connection with the card, 

code, or other device, and the 

conditions under which they may be 

imposed, which must be provided on or 

with the card, code, or other device; and 

(D) A toll-free telephone number and, 

if one is maintained, a Web site, that a 

consumer may use to obtain fee 

information, which must be included on 

the card, code, or other device. 

(5) Dormancy or inactivity fee. The 

terms ‘‘dormancy fee’’ and ‘‘inactivity 

fee’’ mean a fee for non-use of or 

inactivity on a gift certificate, store gift 

card, or general-use prepaid card. 

(6) Service fee. The term ‘‘service fee’’ 

means a periodic fee for holding or use 

of a gift certificate, store gift card, or 

general-use prepaid card. A periodic fee 

includes any fee that may be imposed 

on a gift certificate, store gift card, or 

general-use prepaid card from time to 

time for holding or using the certificate 

or card. 

(7) Activity. The term ‘‘activity’’ 

means any action that results in an 

increase or decrease of the funds 

underlying a certificate or card, other 

than the imposition of a fee, or an 

adjustment due to an error or a reversal 

of a prior transaction. 

(b) Exclusions. The terms ‘‘gift 

certificate,’’ ‘‘store gift card,’’ and 

‘‘general-use prepaid card’’, as defined 

in paragraph (a) of this section, do not 

include any card, code, or other device 

that is: 

(1) Useable solely for telephone 

services; 

(2) Reloadable and not marketed or 

labeled as a gift card or gift certificate. 

For purposes of this paragraph (b)(2), 

the term ‘‘reloadable’’ includes a 

temporary non-reloadable card issued 

solely in connection with a reloadable 

card, code, or other device; 

(3) A loyalty, award, or promotional 

gift card; 

(4) Not marketed to the general 

public; 

(5) Issued in paper form only; or 

(6) Redeemable solely for admission 

to events or venues at a particular 

location or group of affiliated locations, 

or to obtain goods or services in 

conjunction with admission to such 

events or venues, either at the event or 

venue or at specific locations affiliated 

with and in geographic proximity to the 

event or venue. 

(c) Form of disclosures (1) Clear and 

conspicuous. Disclosures made under 

this section must be clear and 

conspicuous. The disclosures may 

contain commonly accepted or readily 

understandable abbreviations or 

symbols. 

(2) Format. Disclosures made under 

this section generally must be provided 

to the consumer in written or electronic 

form. Except for the disclosures in 

paragraphs (c)(3) and (h)(2) of this 

section, written and electronic 

disclosures made under this section 

must be in a retainable form. Only 

disclosures provided under paragraphs 

(c)(3) and (h)(2) may be given orally. 

(3) Disclosures prior to purchase. 

Before a gift certificate, store gift card, 

or general-use prepaid card is 

purchased, a person that issues or sells 

such certificate or card must disclose to 

the consumer the information required 

by paragraphs (d)(2), (e)(3), and (f)(1) of 

this section. The fees and terms and 

conditions of expiration that are 

required to be disclosed prior to 

purchase may not be changed after 

purchase. 

(4) Disclosures on the certificate or 

card. Disclosures required by 

paragraphs (a)(4)(iii), (d)(2), (e)(3), and 

(f)(2) of this section must be made on 

the certificate or card, or in the case of 

a loyalty, award, or promotional gift 

card, on the card, code, or other device. 

A disclosure made in an accompanying 

terms and conditions document, on 

packaging surrounding a certificate or 

card, or on a sticker or other label 

affixed to the certificate or card does not 

constitute a disclosure on the certificate 

or card. For an electronic certificate or 

card, disclosures must be provided 

electronically on the certificate or card 

provided to the consumer. An issuer 

that provides a code or confirmation to 

a consumer orally must provide to the 

consumer a written or electronic copy of 

the code or confirmation promptly, and 

the applicable disclosures must be 

provided on the written copy of the 

code or confirmation. 

(d) Prohibition on imposition of fees 

or charges. No person may impose a 

dormancy, inactivity, or service fee with 

respect to a gift certificate, store gift 

card, or general-use prepaid card, 

unless: 

(1) There has been no activity with 

respect to the certificate or card, in the 

one-year period ending on the date on 

which the fee is imposed; 

(2) The following are stated, as 

applicable, clearly and conspicuously 

on the gift certificate, store gift card, or 

general-use prepaid card: 

(i) The amount of any dormancy, 

inactivity, or service fee that may be 

charged; 

(ii) How often such fee may be 

assessed; and 

(iii) That such fee may be assessed for 

inactivity; and 

(3) Not more than one dormancy, 

inactivity, or service fee is imposed in 

any given calendar month. 

(e) Prohibition on sale of gift 

certificates or cards with expiration 

dates. No person may sell or issue a gift 

certificate, store gift card, or general-use 

prepaid card with an expiration date, 

unless: 

(1) The person has established 

policies and procedures to provide 

consumers with a reasonable 

opportunity to purchase a certificate or 

card with at least five years remaining 

until the certificate or card expiration 

date; 

(2) The expiration date for the 

underlying funds is at least the later of: 

(i) Five years after the date the gift 

certificate was initially issued, or the 

date on which funds were last loaded to 

a store gift card or general-use prepaid 

card; or 

(ii) The certificate or card expiration 

date, if any; 

(3) The following disclosures are 

provided on the certificate or card, as 

applicable: 

(i) The expiration date for the 

underlying funds or, if the underlying 

funds do not expire, that fact; 

(ii) A toll-free telephone number and, 

if one is maintained, a Web site that a 

consumer may use to obtain a 

replacement certificate or card after the 

certificate or card expires if the 

underlying funds may be available; and 

(iii) Except where a non-reloadable 

certificate or card bears an expiration 

date that is at least seven years from the 

date of manufacture, a statement, 

disclosed with equal prominence and in 

close proximity to the certificate or card 

expiration date, that: 

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81034 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

(A) The certificate or card expires, but 

the underlying funds either do not 

expire or expire later than the certificate 

or card, and; 

(B) The consumer may contact the 

issuer for a replacement card; and 

(4) No fee or charge is imposed on the 

cardholder for replacing the gift 

certificate, store gift card, or general-use 

prepaid card or for providing the 

certificate or card holder with the 

remaining balance in some other 

manner prior to the funds expiration 

date, unless such certificate or card has 

been lost or stolen. 

(f) Additional disclosure requirements 

for gift certificates or cards. The 

following disclosures must be provided 

in connection with a gift certificate, 

store gift card, or general-use prepaid 

card, as applicable: 

(1) Fee disclosures. For each type of 

fee that may be imposed in connection 

with the certificate or card (other than 

a dormancy, inactivity, or service fee 

subject to the disclosure requirements 

under paragraph (d)(2) of this section), 

the following information must be 

provided on or with the certificate or 

card: 

(i) The type of fee; 

(ii) The amount of the fee (or an 

explanation of how the fee will be 

determined); and 

(iii) The conditions under which the 

fee may be imposed. 

(2) Telephone number for fee 

information. A toll-free telephone 

number and, if one is maintained, a Web 

site, that a consumer may use to obtain 

information about fees described in 

paragraphs (d)(2) and (f)(1) of this 

section must be disclosed on the 

certificate or card. 

(g) Compliance dates. (1) Effective 

date for gift certificates, store gift cards, 

and general-use prepaid cards. Except 

as provided in paragraph (h) of this 

section, the requirements of this section 

apply to any gift certificate, store gift 

card, or general-use prepaid card sold to 

a consumer on or after August 22, 2010, 

or provided to a consumer as a 

replacement for such certificate or card. 

(2) Effective date for loyalty, award, or 

promotional gift cards. The 

requirements in paragraph (a)(4)(iii) of 

this section apply to any card, code, or 

other device provided to a consumer in 

connection with a loyalty, award, or 

promotional program if the period of 

eligibility for such program began on or 

after August 22, 2010. 

(h) Temporary exemption. (1) Delayed 

mandatory compliance date. For any 

gift certificate, store gift card, or generaluse prepaid card produced prior to 

April 1, 2010, the mandatory 

compliance date of the requirements of 

paragraphs (c)(3), (d)(2), (e)(1), (e)(3), 

and (f) of this section is January 31, 

2011, provided that an issuer of such 

certificate or card: 

(i) Complies with all other provisions 

of this section; 

(ii) Does not impose an expiration 

date with respect to the funds 

underlying such certificate or card; 

(iii) At the consumer’s request, 

replaces such certificate or card if it has 

funds remaining at no cost to the 

consumer; and 

(iv) Satisfies the requirements of 

paragraph (h)(2) of this section. 

(2) Additional disclosures. Issuers 

relying on the delayed effective date in 

§ 1005.20(h)(1) must disclose through 

in-store signage, messages during 

customer service calls, Web sites, and 

general advertising, that: 

(i) The underlying funds of such 

certificate or card do not expire; 

(ii) Consumers holding such 

certificate or card have a right to a free 

replacement certificate or card, which 

must be accompanied by the packaging 

and materials typically associated with 

such certificate or card; and 

(iii) Any dormancy, inactivity, or 

service fee for such certificate or card 

that might otherwise be charged will not 

be charged if such fees do not comply 

with section 916 of the Act. 

(3) Expiration of additional disclosure 

requirements. The disclosures in 

paragraph (h)(2) of this section: 

(i) Are not required to be provided on 

or after January 31, 2011, with respect 

to in-store signage and general 

advertising. 

(ii) Are not required to be provided on 

or after January 31, 2013, with respect 

to messages during customer service 

calls and Web sites. 

Appendix A to Part 1005—Model 

Disclosure Clauses and Forms 

A–1—Model Clauses for Unsolicited Issuance 

(§ 1005.5(b)(2)) 

A–2—Model Clauses for Initial Disclosures 

(§ 1005.7(b)) 

A–3—Model Forms for Error Resolution 

Notice (§§ 1005.7(b)(10) and 1005.8(b)) 

A–4—Model Form for Service-Providing 

Institutions (§ 1005.14(b)(1)(ii)) 

A–5—Model Forms for Government Agencies 

(§ 1005.15(d)(1) and (2)) 

A–6—Model Clauses for Authorizing OneTime Electronic Fund Transfers Using 

Information From a Check 

(§ 1005.3(b)(2)) 

A–7—Model Clauses for Financial 

Institutions Offering Payroll Card 

Accounts (§ 1005.18(c)) 

A–8—Model Clause for Electronic Collection 

of Returned Item Fees (§ 1005.3(b)(3)) 

A–9—Model Consent Form for Overdraft 

Services (§ 1005.17) 

A–1—Model Clauses for Unsolicited 

Issuance (§ 1005.5(b)(2)) 

(a) Accounts using cards. You cannot use 

the enclosed card to transfer money into or 

out of your account until we have validated 

it. If you do not want to use the card, please 

(destroy it at once by cutting it in half). 

[Financial institution may add validation 

instructions here.] 

(b) Accounts using codes. You cannot use 

the enclosed code to transfer money into or 

out of your account until we have validated 

it. If you do not want to use the code, please 

(destroy this notice at once). 

[Financial institution may add validation 

instructions here.] 

A–2—Model Clauses for Initial Disclosures 

(§ 1005.7(b)) 

(a) Consumer Liability (§ 1005.7(b)(1)). 

(Tell us AT ONCE if you believe your 

[card] [code] has been lost or stolen, or if you 

believe that an electronic fund transfer has 

been made without your permission using 

information from your check. Telephoning is 

the best way of keeping your possible losses 

down. You could lose all the money in your 

account (plus your maximum overdraft line 

of credit). If you tell us within 2 business 

days after you learn of the loss or theft of 

your [card] [code], you can lose no more than 

$50 if someone used your [card][code] 

without your permission.) 

If you do NOT tell us within 2 business 

days after you learn of the loss or theft of 

your [card] [code], and we can prove we 

could have stopped someone from using your 

[card] [code] without your permission if you 

had told us, you could lose as much as $500. 

Also, if your statement shows transfers that 

you did not make, including those made by 

card, code or other means, tell us at once. If 

you do not tell us within 60 days after the 

statement was mailed to you, you may not get 

back any money you lost after the 60 days if 

we can prove that we could have stopped 

someone from taking the money if you had 

told us in time. If a good reason (such as a 

long trip or a hospital stay) kept you from 

telling us, we will extend the time periods. 

(b) Contact in event of unauthorized 

transfer (§ 1005.7(b)(2)). If you believe your 

[card] [code] has been lost or stolen, call: 

[Telephone number] or write: [Name of 

person or office to be notified] [Address]. 

You should also call the number or write 

to the address listed above if you believe a 

transfer has been made using the information 

from your check without your permission. 

(c) Business days (§ 1005.7(b)(3)). For 

purposes of these disclosures, our business 

days are (Monday through Friday) (Monday 

through Saturday) (any day including 

Saturdays and Sundays). Holidays are (not) 

included. 

(d) Transfer types and limitations 

(§ 1005.7(b)(4)) (1) Account access. You may 

use your [card][code] to: 

(i) Withdraw cash from your [checking] [or] 

[savings] account. 

(ii) Make deposits to your [checking] [or] 

[savings] account. 

(iii) Transfer funds between your checking 

and savings accounts whenever you request. 

(iv) Pay for purchases at places that have 

agreed to accept the [card] [code]. 

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(v) Pay bills directly [by telephone] from 

your [checking] [or] [savings] account in the 

amounts and on the days you request. 

Some of these services may not be 

available at all terminals. 

(2) Electronic check conversion. You may 

authorize a merchant or other payee to make 

a one-time electronic payment from your 

checking account using information from 

your check to: 

(i) Pay for purchases. 

(ii) Pay bills. 

(3) Limitations on frequency of transfers.(i) 

You may make only [insert number, e.g., 3] 

cash withdrawals from our terminals each 

[insert time period, e.g., week]. 

(ii) You can use your telephone billpayment service to pay [insert number] bills 

each [insert time period] [telephone call]. 

(iii) You can use our point-of-sale transfer 

service for [insert number] transactions each 

[insert time period]. 

(iv) For security reasons, there are limits on 

the number of transfers you can make using 

our [terminals] [telephone bill-payment 

service] [point-of-sale transfer service]. 

(4) Limitations on dollar amounts of 

transfers (i) You may withdraw up to [insert 

dollar amount] from our terminals each 

[insert time period] time you use the [card] 

[code]. 

(ii) You may buy up to [insert dollar 

amount] worth of goods or services each 

[insert time period] time you use the [card] 

[code] in our point-of-sale transfer service. 

(e) Fees (§ 1005.7(b)(5)) (1) Per transfer 

charge. We will charge you [insert dollar 

amount] for each transfer you make using our 

[automated teller machines] [telephone billpayment service] [point-of-sale transfer 

service]. 

(2) Fixed charge. We will charge you 

[insert dollar amount] each [insert time 

period] for our [automated teller machine 

service] [telephone bill-payment service] 

[point-of-sale transfer service]. 

(3) Average or minimum balance charge. 

We will only charge you for using our 

[automated teller machines] [telephone billpayment service] [point-of-sale transfer 

service] if the [average] [minimum] balance 

in your [checking account] [savings account] 

[accounts] falls below [insert dollar amount]. 

If it does, we will charge you [insert dollar 

amount] each [transfer] [insert time period]. 

(f) Confidentiality (§ 1005.7(b)(9)). We will 

disclose information to third parties about 

your account or the transfers you make: 

(i) Where it is necessary for completing 

transfers, or 

(ii) In order to verify the existence and 

condition of your account for a third party, 

such as a credit bureau or merchant, or 

(iii) In order to comply with government 

agency or court orders, or 

(iv) If you give us your written permission. 

(g) Documentation (§ 1005.7(b)(6)) (1) 

Terminal transfers. You can get a receipt at 

the time you make any transfer to or from 

your account using one of our [automated 

teller machines] [or] [point-of-sale terminals]. 

(2) Preauthorized credits. If you have 

arranged to have direct deposits made to your 

account at least once every 60 days from the 

same person or company, (we will let you 

know if the deposit is [not] made.) [the 

person or company making the deposit will 

tell you every time they send us the money] 

[you can call us at (insert telephone number) 

to find out whether or not the deposit has 

been made]. 

(3) Periodic statements. You will get a 

[monthly] [quarterly] account statement 

(unless there are no transfers in a particular 

month. In any case you will get the statement 

at least quarterly). 

(4) Passbook account where the only 

possible electronic fund transfers are 

preauthorized credits. If you bring your 

passbook to us, we will record any electronic 

deposits that were made to your account 

since the last time you brought in your 

passbook. 

(h) Preauthorized payments (§ 1005.7(b) 

(6), (7) and (8); § 1005.10(d)) (1) Right to stop 

payment and procedure for doing so. If you 

have told us in advance to make regular 

payments out of your account, you can stop 

any of these payments. Here’s how: 

Call us at [insert telephone number], or 

write us at [insert address], in time for us to 

receive your request 3 business days or more 

before the payment is scheduled to be made. 

If you call, we may also require you to put 

your request in writing and get it to us within 

14 days after you call. (We will charge you 

[insert amount] for each stop-payment order 

you give.) 

(2) Notice of varying amounts. If these 

regular payments may vary in amount, [we] 

[the person you are going to pay] will tell 

you, 10 days before each payment, when it 

will be made and how much it will be. (You 

may choose instead to get this notice only 

when the payment would differ by more than 

a certain amount from the previous payment, 

or when the amount would fall outside 

certain limits that you set.) 

(3) Liability for failure to stop payment of 

preauthorized transfer. If you order us to stop 

one of these payments 3 business days or 

more before the transfer is scheduled, and we 

do not do so, we will be liable for your losses 

or damages. 

(i) Financial institution’s liability 

(§ 1005.7(b)(8)). If we do not complete a 

transfer to or from your account on time or 

in the correct amount according to our 

agreement with you, we will be liable for 

your losses or damages. However, there are 

some exceptions. We will not be liable, for 

instance: 

(1) If, through no fault of ours, you do not 

have enough money in your account to make 

the transfer. 

(2) If the transfer would go over the credit 

limit on your overdraft line. 

(3) If the automated teller machine where 

you are making the transfer does not have 

enough cash. 

(4) If the [terminal] [system] was not 

working properly and you knew about the 

breakdown when you started the transfer. 

(5) If circumstances beyond our control 

(such as fire or flood) prevent the transfer, 

despite reasonable precautions that we have 

taken. 

(6) There may be other exceptions stated in 

our agreement with you. 

(j) ATM fees (§ 1005.7(b)(11)). When you 

use an ATM not owned by us, you may be 

charged a fee by the ATM operator [or any 

network used] (and you may be charged a fee 

for a balance inquiry even if you do not 

complete a fund transfer). 

A–3—Model Forms for Error Resolution 

Notice (§§ 1005.7(b)(10) and 1005.8(b)) 

(a) Initial and annual error resolution 

notice (§§ 1005.7(b)(10) and 1005.8(b)). 

In Case of Errors or Questions About Your 

Electronic Transfers Telephone us at [insert 

telephone number] Write us at [insert 

address] [or email us at [insert email 

address]] as soon as you can, if you think 

your statement or receipt is wrong or if you 

need more information about a transfer listed 

on the statement or receipt. We must hear 

from you no later than 60 days after we sent 

the FIRST statement on which the problem 

or error appeared. 

(1) Tell us your name and account number 

(if any). 

(2) Describe the error or the transfer you 

are unsure about, and explain as clearly as 

you can why you believe it is an error or why 

you need more information. 

(3) Tell us the dollar amount of the 

suspected error. 

If you tell us orally, we may require that 

you send us your complaint or question in 

writing within 10 business days. 

We will determine whether an error 

occurred within 10 business days after we 

hear from you and will correct any error 

promptly. If we need more time, however, we 

may take up to 45 days to investigate your 

complaint or question. If we decide to do 

this, we will credit your account within 10 

business days for the amount you think is in 

error, so that you will have the use of the 

money during the time it takes us to 

complete our investigation. If we ask you to 

put your complaint or question in writing 

and we do not receive it within 10 business 

days, we may not credit your account. 

For errors involving new accounts, pointof-sale, or foreign-initiated transactions, we 

may take up to 90 days to investigate your 

complaint or question. For new accounts, we 

may take up to 20 business days to credit 

your account for the amount you think is in 

error. 

We will tell you the results within three 

business days after completing our 

investigation. If we decide that there was no 

error, we will send you a written 

explanation. You may ask for copies of the 

documents that we used in our investigation. 

(b) Error resolution notice on periodic 

statements (§ 1005.8(b)). 

In Case of Errors or Questions About Your 

Electronic Transfers Telephone us at [insert 

telephone number] or Write us at [insert 

address] as soon as you can, if you think your 

statement or receipt is wrong or if you need 

more information about a transfer on the 

statement or receipt. We must hear from you 

no later than 60 days after we sent you the 

FIRST statement on which the error or 

problem appeared. 

(1) Tell us your name and account number 

(if any). 

(2) Describe the error or the transfer you 

are unsure about, and explain as clearly as 

you can why you believe it is an error or why 

you need more information. 

(3) Tell us the dollar amount of the 

suspected error. 

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We will investigate your complaint and 

will correct any error promptly. If we take 

more than 10 business days to do this, we 

will credit your account for the amount you 

think is in error, so that you will have the 

use of the money during the time it takes us 

to complete our investigation. 

A–4—Model Form for Service-Providing 

Institutions (§ 1005.14(b)(1)(ii)) 

ALL QUESTIONS ABOUT 

TRANSACTIONS MADE WITH YOUR 

(NAME OF CARD) CARD MUST BE 

DIRECTED TO US (NAME OF SERVICE 

PROVIDER), AND NOT TO THE BANK OR 

OTHER FINANCIAL INSTITUTION WHERE 

YOU HAVE YOUR ACCOUNT. We are 

responsible for the [name of service] service 

and for resolving any errors in transactions 

made with your [name of card] card. 

We will not send you a periodic statement 

listing transactions that you make using your 

[name of card] card. The transactions will 

appear only on the statement issued by your 

bank or other financial institution. SAVE 

THE RECEIPTS YOU ARE GIVEN WHEN 

YOU USE YOUR [NAME OF CARD] CARD, 

AND CHECK THEM AGAINST THE 

ACCOUNT STATEMENT YOU RECEIVE 

FROM YOUR BANK OR OTHER FINANCIAL 

INSTITUTION. If you have any questions 

about one of these transactions, call or write 

us at [telephone number and address] [the 

telephone number and address indicated 

below]. 

IF YOUR [NAME OF CARD] CARD IS 

LOST OR STOLEN, NOTIFY US AT ONCE 

by calling or writing to us at [telephone 

number and address]. 

A–5—Model Forms for Government 

Agencies (§ 1005.15(d)(1) and (2)) 

(a) Disclosure by government agencies of 

information about obtaining account 

balances and account histories 

(§ 1005.15(d)(1)(i) and (ii)). 

You may obtain information about the 

amount of benefits you have remaining by 

calling [telephone number]. That information 

is also available [on the receipt you get when 

you make a transfer with your card at (an 

ATM)(a POS terminal)][when you make a 

balance inquiry at an ATM][when you make 

a balance inquiry at specified locations]. 

You also have the right to receive a written 

summary of transactions for the 60 days 

preceding your request by calling [telephone 

number]. [Optional: Or you may request the 

summary by contacting your caseworker.] 

(b) Disclosure of error resolution 

procedures for government agencies that do 

not provide periodic statements 

(§ 1005.15(d)(1)(iii) and (d)(2)). 

In Case of Errors or Questions About Your 

Electronic Transfers Telephone us at 

[telephone number] Write us at [insert 

address] [or email us at [insert email 

address]] as soon as you can, if you think an 

error has occurred in your [EBT][agency’s 

name for program] account. We must hear 

from you no later than 60 days after you learn 

of the error. You will need to tell us: 

• Your name and [case] [file] number. 

• Why you believe there is an error, and 

the dollar amount involved. 

• Approximately when the error took 

place. 

If you tell us orally, we may require that 

you send us your complaint or question in 

writing within 10 business days. 

We will determine whether an error 

occurred within 10 business days after we 

hear from you and will correct any error 

promptly. If we need more time, however, we 

may take up to 45 days to investigate your 

complaint or question. If we decide to do 

this, we will credit your account within 10 

business days for the amount you think is in 

error, so that you will have the use of the 

money during the time it takes us to 

complete our investigation. If we ask you to 

put your complaint or question in writing 

and we do not receive it within 10 business 

days, we may not credit your account. 

For errors involving new accounts, pointof-sale, or foreign-initiated transactions, we 

may take up to 90 days to investigate your 

complaint or question. For new accounts, we 

may take up to 20 business days to credit 

your account for the amount you think is in 

error. 

We will tell you the results within three 

business days after completing our 

investigation. If we decide that there was no 

error, we will send you a written 

explanation. You may ask for copies of the 

documents that we used in our investigation. 

If you need more information about our 

error resolution procedures, call us at 

[telephone number][the telephone number 

shown above]. 

A–6—Model Clauses for Authorizing OneTime Electronic Fund Transfers Using 

Information From a Check (§ 1005.3(b)(2)) 

(a) Notice About Electronic Check 

Conversion. 

When you provide a check as payment, 

you authorize us either to use information 

from your check to make a one-time 

electronic fund transfer from your account or 

to process the payment as a check 

transaction. 

(b) Alternative Notice About Electronic 

Check Conversion (Optional). 

When you provide a check as payment, 

you authorize us to use information from 

your check to make a one-time electronic 

fund transfer from your account. In certain 

circumstances, such as for technical or 

processing reasons, we may process your 

payment as a check transaction. 

[Specify other circumstances (at payee’s 

option).] 

(c) Notice For Providing Additional 

Information About Electronic Check 

Conversion. 

When we use information from your check 

to make an electronic fund transfer, funds 

may be withdrawn from your account as soon 

as the same day [you make] [we receive] your 

payment[, and you will not receive your 

check back from your financial institution]. 

A–7—Model Clauses for Financial 

Institutions Offering Payroll Card Accounts 

(§ 1005.18(c)) 

(a) Disclosure by financial institutions of 

information about obtaining account 

information for payroll card accounts. 

§ 1005.18(c)(1). 

You may obtain information about the 

amount of money you have remaining in 

your payroll card account by calling 

[telephone number]. This information, along 

with a 60-day history of account transactions, 

is also available online at [internet address]. 

You also have the right to obtain a 60-day 

written history of account transactions by 

calling [telephone number], or by writing us 

at [address]. 

(b) Disclosure of error-resolution 

procedures for financial institutions that 

provide alternative means of obtaining 

payroll card account information 

(§ 1005.18(c)(1)(ii) and (c)(2)). 

In Case of Errors or Questions About Your 

Payroll Card Account Telephone us at 

[telephone number] or Write us at [address] 

[or email us at [email address]] as soon as 

you can, if you think an error has occurred 

in your payroll card account. We must allow 

you to report an error until 60 days after the 

earlier of the date you electronically access 

your account, if the error could be viewed in 

your electronic history, or the date we sent 

the FIRST written history on which the error 

appeared. You may request a written history 

of your transactions at any time by calling us 

at [telephone number] or writing us at 

[address]. You will need to tell us: 

Your name and [payroll card account] 

number. 

Why you believe there is an error, and the 

dollar amount involved. 

Approximately when the error took place. 

If you tell us orally, we may require that 

you send us your complaint or question in 

writing within 10 business days. 

We will determine whether an error 

occurred within 10 business days after we 

hear from you and will correct any error 

promptly. If we need more time, however, we 

may take up to 45 days to investigate your 

complaint or question. If we decide to do 

this, we will credit your account within 10 

business days for the amount you think is in 

error, so that you will have the money during 

the time it takes us to complete our 

investigation. If we ask you to put your 

complaint or question in writing and we do 

not receive it within 10 business days, we 

may not credit your account. 

For errors involving new accounts, pointof-sale, or foreign-initiated transactions, we 

may take up to 90 days to investigate your 

complaint or question. For new accounts, we 

may take up to 20 business days to credit 

your account for the amount you think is in 

error. 

We will tell you the results within three 

business days after completing our 

investigation. If we decide that there was no 

error, we will send you a written 

explanation. 

You may ask for copies of the documents 

that we used in our investigation. 

If you need more information about our 

error-resolution procedures, call us at 

[telephone number] [the telephone number 

shown above] [or visit [internet address]]. 

A–8—Model Clause for Electronic Collection 

of Returned Item Fees (§ 1005.3(b)(3)) 

If your payment is returned unpaid, you 

authorize [us/name of person collecting the 

fee electronically] to make a one-time 

electronic fund transfer from your account to 

collect a fee of [$llll]. [If your payment 

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is returned unpaid, you authorize [us/name 

of person collecting the fee electronically] to 

make a one-time electronic fund transfer 

from your account to collect a fee. The fee 

will be determined [by]/[as follows]: 

[llll].] 

Appendix B to Part 1005—[Reserved] 

Appendix C to Part 1005—Issuance of 

Official Interpretations 

Official Interpretations 

Pursuant to section 916(d) of the Act, the 

Bureau has designated the Associate Director 

and other officials of the Division of 

Research, Markets, and Regulations as 

officials ‘‘duly authorized’’ to issue, at their 

discretion, official interpretations of this part. 

Except in unusual circumstances, such 

interpretations will not be issued separately 

but will be incorporated in an official 

commentary to this part, which will be 

amended periodically. 

Requests for Issuance of Official 

Interpretations 

A request for an official interpretation shall 

be in writing and addressed to the Bureau of 

Consumer Financial Protection, 1700 G Street 

NW., Washington, DC 20006. The request 

shall contain a complete statement of all 

relevant facts concerning the issue, including 

copies of all pertinent documents. 

Scope of Interpretations 

No interpretations will be issued approving 

financial institutions’ forms or statements. 

This restriction does not apply to forms or 

statements whose use is required or 

sanctioned by a government agency. 

Supplement I to Part 1005—Official 

Interpretations 

Section 1005.2 Definitions 

2(a) Access Device 

1. Examples. The term ‘‘access device’’ 

includes debit cards, personal identification 

numbers (PINs), telephone transfer and 

telephone bill payment codes, and other 

means that may be used by a consumer to 

initiate an electronic fund transfer (EFT) to 


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or from a consumer account. The term does 

not include magnetic tape or other devices 

used internally by a financial institution to 

initiate electronic transfers. 

2. Checks used to capture information. The 

term ‘‘access device’’ does not include a 

check or draft used to capture the Magnetic 

Ink Character Recognition (MICR) encoding 

to initiate a one-time automated 

clearinghouse (ACH) debit. For example, if a 

consumer authorizes a one-time ACH debit 

from the consumer’s account using a blank, 

partially completed, or fully completed and 

signed check for the merchant to capture the 

routing, account, and serial numbers to 

initiate the debit, the check is not an access 

device. (Although the check is not an access 

device under Regulation E, the transaction is 

nonetheless covered by the regulation. See 

comment 3(b)(1)–1.v.) 

2(b) Account 

1. Consumer asset account. The term 

‘‘consumer asset account’’ includes: 

i. Club accounts, such as vacation clubs. In 

many cases, however, these accounts are 

exempt from the regulation under 

§ 1005.3(c)(5) because all electronic transfers 

to or from the account have been 

preauthorized by the consumer and involve 

another account of the consumer at the same 

institution. 

ii. A retail repurchase agreement (repo), 

which is a loan made to a financial 

institution by a consumer that is 

collateralized by government or governmentinsured securities. 

2. Certain employment-related cards not 

covered. The term ‘‘payroll card account’’ 

does not include a card used solely to 

disburse incentive-based payments (other 

than commissions which can represent the 

primary means through which a consumer is 

paid), such as bonuses, which are unlikely to 

be a consumer’s primary source of salary or 

other compensation. The term also does not 

include a card used solely to make 

disbursements unrelated to compensation, 

such as petty cash reimbursements or travel 

per diem payments. Similarly, a payroll card 

account does not include a card that is used 

in isolated instances to which an employer 

typically does not make recurring payments, 

such as when providing final payments or in 

emergency situations when other payment 

methods are unavailable. However, all 

transactions involving the transfer of funds to 

or from a payroll card account are covered by 

the regulation, even if a particular transaction 

involves payment of a bonus, other incentivebased payment, or reimbursement, or the 

transaction does not represent a transfer of 

wages, salary, or other employee 

compensation. 

3. Examples of accounts not covered by 

Regulation E (12 CFR Part 1005) include: 

i. Profit-sharing and pension accounts 

established under a trust agreement, which 

are exempt under § 1005.2(b)(2). 

ii. Escrow accounts, such as those 

established to ensure payment of items such 

as real estate taxes, insurance premiums, or 

completion of repairs or improvements. 

iii. Accounts for accumulating funds to 

purchase U.S. savings bonds. 

Paragraph 2(b)(2) 

1. Bona fide trust agreements. The term 

‘‘bona fide trust agreement’’ is not defined by 

the Act or regulation; therefore, financial 

institutions must look to state or other 

applicable law for interpretation. 

2. Custodial agreements. An account held 

under a custodial agreement that qualifies as 

a trust under the Internal Revenue Code, 

such as an individual retirement account, is 

considered to be held under a trust 

agreement for purposes of Regulation E. 

2(d) Business Day 

1. Duration. A business day includes the 

entire 24-hour period ending at midnight, 

and a notice required by the regulation is 

effective even if given outside normal 

business hours. The regulation does not 

require, however, that a financial institution 

make telephone lines available on a 24-hour 

basis. 

2. Substantially all business functions. 

Substantially all business functions include 

both the public and the back-office 

operations of the institution. For example, if 

the offices of an institution are open on 

Saturdays for handling some consumer 

transactions (such as deposits, withdrawals, 

and other teller transactions), but not for 

performing internal functions (such as 

investigating account errors), then Saturday 

is not a business day for that institution. In 

this case, Saturday does not count toward the 

business-day standard set by the regulation 

for reporting lost or stolen access devices, 

resolving errors, etc. 

3. Short hours. A financial institution may 

determine, at its election, whether an 

abbreviated day is a business day. For 

example, if an institution engages in 

substantially all business functions until 

noon on Saturdays instead of its usual 3 p.m. 

closing, it may consider Saturday a business 

day. 

4. Telephone line. If a financial institution 

makes a telephone line available on Sundays 

for reporting the loss or theft of an access 

device, but performs no other business 

functions, Sunday is not a business day 

under the substantially all business functions 

standard. 

2(h) Electronic Terminal 

1. Point-of-sale (POS) payments initiated 

by telephone. Because the term ‘‘electronic 

terminal’’ excludes a telephone operated by 

a consumer, a financial institution need not 

provide a terminal receipt when: 

i. A consumer uses a debit card at a public 

telephone to pay for the call. 

ii. A consumer initiates a transfer by a 

means analogous in function to a telephone, 

such as by home banking equipment or a 

facsimile machine. 

2. POS terminals. A POS terminal that 

captures data electronically, for debiting or 

crediting to a consumer’s asset account, is an 

electronic terminal for purposes of 

Regulation E even if no access device is used 

to initiate the transaction. See § 1005.9 for 

receipt requirements. 

3. Teller-operated terminals. A terminal or 

other computer equipment operated by an 

employee of a financial institution is not an 

electronic terminal for purposes of the 

regulation. However, transfers initiated at 

such terminals by means of a consumer’s 

access device (using the consumer’s PIN, for 

example) are EFTs and are subject to other 

requirements of the regulation. If an access 

device is used only for identification 

purposes or for determining the account 

balance, the transfers are not EFTs for 

purposes of the regulation. 

2(k) Preauthorized Electronic Fund Transfer 

1. Advance authorization. A preauthorized 

electronic fund transfer under Regulation E is 

one authorized by the consumer in advance 

of a transfer that will take place on a 

recurring basis, at substantially regular 

intervals, and will require no further action 

by the consumer to initiate the transfer. In a 

bill-payment system, for example, if the 

consumer authorizes a financial institution to 

make monthly payments to a payee by means 

of EFTs, and the payments take place without 

further action by the consumer, the payments 

are preauthorized EFTs. In contrast, if the 

consumer must take action each month to 

initiate a payment (such as by entering 

instructions on a touch-tone telephone or 

home computer), the payments are not 

preauthorized EFTs. 

2(m) Unauthorized Electronic Fund Transfer 

1. Transfer by institution’s employee. A 

consumer has no liability for erroneous or 

fraudulent transfers initiated by an employee 

of a financial institution. 

2. Authority. If a consumer furnishes an 

access device and grants authority to make 

transfers to a person (such as a family 

member or co-worker) who exceeds the 

authority given, the consumer is fully liable 

for the transfers unless the consumer has 

notified the financial institution that 

transfers by that person are no longer 

authorized. 

3. Access device obtained through robbery 

or fraud. An unauthorized EFT includes a 

transfer initiated by a person who obtained 

the access device from the consumer through 

fraud or robbery. 

4. Forced initiation. An EFT at an ATM is 

an unauthorized transfer if the consumer has 

been induced by force to initiate the transfer. 

5. Reversal of direct deposits. The reversal 

of a direct deposit made in error is not an 

unauthorized EFT when it involves: 

i. A credit made to the wrong consumer’s 

account; 

ii. A duplicate credit made to a consumer’s 

account; or 

iii. A credit in the wrong amount (for 

example, when the amount credited to the 

consumer’s account differs from the amount 

in the transmittal instructions). 

Section 1005.3 Coverage 

3(a) General 

1. Accounts covered. The requirements of 

the regulation apply only to an account for 

which an agreement for EFT services to or 

from the account has been entered into 

between: 

i. The consumer and the financial 

institution (including an account for which 

an access device has been issued to the 

consumer, for example); 

ii. The consumer and a third party (for 

preauthorized debits or credits, for example), 

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when the account-holding institution has 

received notice of the agreement and the 

fund transfers have begun. 

2. Automated clearing house (ACH) 

membership. The fact that membership in an 

ACH requires a financial institution to accept 

EFTs to accounts at the institution does not 

make every account of that institution subject 

to the regulation. 

3. Foreign applicability. Regulation E 

applies to all persons (including branches 

and other offices of foreign banks located in 

the United States) that offer EFT services to 

residents of any state, including resident 

aliens. It covers any account located in the 

United States through which EFTs are offered 

to a resident of a state. This is the case 

whether or not a particular transfer takes 

place in the United States and whether or not 

the financial institution is chartered in the 

United States or a foreign country. The 

regulation does not apply to a foreign branch 

of a U.S. bank unless the EFT services are 

offered in connection with an account in a 

state as defined in § 1005.2(l). 

3(b) Electronic Fund Transfer 

3(b)(1) Definition 

1. Fund transfers covered. The term 

‘‘electronic fund transfer’’ includes: 

i. A deposit made at an ATM or other 

electronic terminal (including a deposit in 

cash or by check) provided a specific 

agreement exists between the financial 

institution and the consumer for EFTs to or 

from the account to which the deposit is 

made. 

ii. A transfer sent via ACH. For example, 

social security benefits under the U.S. 

Treasury’s direct-deposit program are 

covered, even if the listing of payees and 

payment amounts reaches the accountholding institution by means of a computer 

printout from a correspondent bank. 

iii. A preauthorized transfer credited or 

debited to an account in accordance with 

instructions contained on magnetic tape, 

even if the financial institution holding the 

account sends or receives a composite check. 

iv. A transfer from the consumer’s account 

resulting from a debit-card transaction at a 

merchant location, even if no electronic 

terminal is involved at the time of the 

transaction, if the consumer’s asset account 

is subsequently debited for the amount of the 

transfer. 

v. A transfer via ACH where a consumer 

has provided a check to enable the merchant 

or other payee to capture the routing, 

account, and serial numbers to initiate the 

transfer, whether the check is blank, partially 

completed, or fully completed and signed; 

whether the check is presented at POS or is 

mailed to a merchant or other payee or 

lockbox and later converted to an EFT; or 

whether the check is retained by the 

consumer, the merchant or other payee, or 

the payee’s financial institution. 

vi. A payment made by a bill payer under 

a bill-payment service available to a 

consumer via computer or other electronic 

means, unless the terms of the bill-payment 

service explicitly state that all payments, or 

all payments to a particular payee or payees, 

will be solely by check, draft, or similar 

paper instrument drawn on the consumer’s 

account, and the payee or payees that will be 

paid in this manner are identified to the 

consumer. 

2. Fund transfers not covered. The term 

‘‘electronic fund transfer’’ does not include: 

i. A payment that does not debit or credit 

a consumer asset account, such as a payroll 

allotment to a creditor to repay a credit 

extension (which is deducted from salary). 

ii. A payment made in currency by a 

consumer to another person at an electronic 

terminal. 

iii. A preauthorized check drawn by the 

financial institution on the consumer’s 

account (such as an interest or other 

recurring payment to the consumer or 

another party), even if the check is computergenerated. 

iv. Transactions arising from the electronic 

collection, presentment, or return of checks 

through the check collection system, such as 

through transmission of electronic check 

images. 

3(b)(2) Electronic Fund Transfer Using 

Information From a Check 

1. Notice at POS not furnished due to 

inadvertent error. If the copy of the notice 

under section 1005.3(b)(2)(ii) for electronic 

check conversion (ECK) transactions is not 

provided to the consumer at POS because of 

a bona fide unintentional error, such as when 

a terminal printing mechanism jams, no 

violation results if the payee maintains 

procedures reasonably adapted to avoid such 

occurrences. 

2. Authorization to process a transaction 

as an EFT or as a check. In order to process 

a transaction as an EFT, or alternatively as a 

check, the payee must obtain the consumer’s 

authorization to do so. A payee may, at its 

option, specify the circumstances under 

which a check may not be converted to an 

EFT. See model clauses in Appendix A–6. 

3. Notice for each transfer. Generally, a 

notice to authorize an electronic check 

conversion transaction must be provided for 

each transaction. For example, a consumer 

must receive a notice that the transaction will 

be processed as an EFT for each transaction 

at POS or each time a consumer mails a 

check in an accounts receivable (ARC) 

transaction to pay a bill, such as a utility bill, 

if the payee intends to convert a check 

received as payment. Similarly, the consumer 

must receive notice if the payee intends to 

collect a service fee for insufficient or 

uncollected funds via an EFT for each 

transaction whether at POS or if the 

consumer mails a check to pay a bill. The 

notice about when funds may be debited 

from a consumer’s account and the nonreturn of consumer checks by the consumer’s 

financial institution must also be provided 

for each transaction. However, if in an ARC 

transaction, a payee provides a coupon book 

to a consumer, for example, for mortgage loan 

payments, and the payment dates and 

amounts are set out in the coupon book, the 

payee may provide a single notice on the 

coupon book stating all of the required 

disclosures under paragraph (b)(2) of this 

section in order to obtain authorization for 

each conversion of a check and any debits via 

EFT to the consumer’s account to collect any 

service fees imposed by the payee for 

insufficient or uncollected funds in the 

consumer’s account. The notice must be 

placed on a conspicuous location of the 

coupon book that a consumer can retain—for 

example, on the first page, or inside the front 

cover. 

4. Multiple payments/multiple consumers. 

If a merchant or other payee will use 

information from a consumer’s check to 

initiate an EFT from the consumer’s account, 

notice to a consumer listed on the billing 

account that a check provided as payment 

during a single billing cycle or after receiving 

an invoice or statement will be processed as 

a one-time EFT or as a check transaction 

constitutes notice for all checks provided in 

payment for the billing cycle or the invoice 

for which notice has been provided, whether 

the check(s) is submitted by the consumer or 

someone else. The notice applies to all 

checks provided in payment for the billing 

cycle or invoice until the provision of notice 

on or with the next invoice or statement. 

Thus, if a merchant or other payee receives 

a check as payment for the consumer listed 

on the billing account after providing notice 

that the check will be processed as a onetime EFT, the authorization from that 

consumer constitutes authorization to 

convert any other checks provided for that 

invoice or statement. Other notices required 

under this paragraph (b)(2) (for example, to 

collect a service fee for insufficient or 

uncollected funds via an EFT) provided to 

the consumer listed on the billing account 

also constitutes notice to any other consumer 

who may provide a check for the billing cycle 

or invoice. 

5. Additional disclosures about ECK 

transactions at POS. When a payee initiates 

an EFT at POS using information from the 

consumer’s check, and returns the check to 

the consumer at POS, the payee need not 

provide a notice to the consumer that the 

check will not be returned by the consumer’s 

financial institution. 

3(b)(3) Collection of Returned Item Fees via 

Electronic Fund Transfer 

1. Fees imposed by account-holding 

institution. The requirement to obtain a 

consumer’s authorization to collect a fee via 

EFT for the return of an EFT or check unpaid 

applies only to the person that intends to 

initiate an EFT to collect the returned item 

fee from the consumer’s account. The 

authorization requirement does not apply to 

any fees assessed by the consumer’s accountholding financial institution when it returns 

the unpaid underlying EFT or check or pays 

the amount of an overdraft. 

2. Accounts receivable transactions. In an 

ARC transaction where a consumer sends in 

a payment for amounts owed (or makes an inperson payment at a biller’s physical 

location, such as when a consumer makes a 

loan payment at a bank branch or places a 

payment in a drop box), a person seeking to 

electronically collect a fee for items returned 

unpaid must obtain the consumer’s 

authorization to collect the fee in this 

manner. A consumer authorizes a person to 

electronically collect a returned item fee 

when the consumer receives notice, typically 

on an invoice or statement, that the person 

may collect the fee through an EFT to the 

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consumer’s account, and the consumer goes 

forward with the underlying transaction by 

providing payment. The notice must also 

state the dollar amount of the fee. However, 

an explanation of how that fee will be 

determined may be provided in place of the 

dollar amount of the fee if the fee may vary 

due to the amount of the transaction or due 

to other factors, such as the number of days 

the underlying transaction is left outstanding. 

For example, if a state law permits a 

maximum fee of $30 or 10% of the 

underlying transaction, whichever is greater, 

the person collecting the fee may explain 

how the fee is determined, rather than state 

a specific dollar amount for the fee. 

3. Disclosure of dollar amount of fee for 

POS transactions. The notice provided to the 

consumer in connection with a POS 

transaction under § 1005.3(b)(3)(ii) must state 

the amount of the fee for a returned item if 

the dollar amount of the fee can be calculated 

at the time the notice is provided or mailed. 

For example, if notice is provided to the 

consumer at the time of the transaction, if the 

applicable state law sets a maximum fee that 

may be collected for a returned item based 

on the amount of the underlying transaction 

(such as where the amount of the fee is 

expressed as a percentage of the underlying 

transaction), the person collecting the fee 

must state the actual dollar amount of the fee 

on the notice provided to the consumer. 

Alternatively, if the amount of the fee to be 

collected cannot be calculated at the time of 

the transaction (for example, where the 

amount of the fee will depend on the number 

of days a debt continues to be owed), the 

person collecting the fee may provide a 

description of how the fee will be determined 

on both the posted notice as well as on the 

notice provided at the time of the transaction. 

However, if the person collecting the fee 

elects to send the consumer notice after the 

person has initiated an EFT to collect the fee, 

that notice must state the amount of the fee 

to be collected. 

4. Third party providing notice. The person 

initiating an EFT to a consumer’s account to 

electronically collect a fee for an item 

returned unpaid may obtain the 

authorization and provide the notices 

required under § 1005.3(b)(3) through third 

parties, such as merchants. 

3(c) Exclusions From Coverage 

3(c)(1) Checks 

1. Re-presented checks. The electronic representment of a returned check is not 

covered by Regulation E because the 

transaction originated by check. Regulation E 

does apply, however, to any fee debited via 

an EFT from a consumer’s account by the 

payee because the check was returned for 

insufficient or uncollected funds. The person 

debiting the fee electronically must obtain 

the consumer’s authorization. 

2. Check used to capture information for a 

one-time EFT. See comment 3(b)(1)–1.v. 

3(c)(2) Check Guarantee or Authorization 

1. Memo posting. Under a check guarantee 

or check authorization service, debiting of 

the consumer’s account occurs when the 

check or draft is presented for payment. 

These services are exempt from coverage, 

even when a temporary hold on the account 

is memo-posted electronically at the time of 

authorization. 

3(c)(3) Wire or Other Similar Transfers 

1. Fedwire and ACH. If a financial 

institution makes a fund transfer to a 

consumer’s account after receiving funds 

through Fedwire or a similar network, the 

transfer by ACH is covered by the regulation 

even though the Fedwire or network transfer 

is exempt. 

2. Article 4A. Financial institutions that 

offer telephone-initiated Fedwire payments 

are subject to the requirements of UCC 

section 4A–202, which encourages 

verification of Fedwire payment orders 

pursuant to a security procedure established 

by agreement between the consumer and the 

receiving bank. These transfers are not 

subject to Regulation E and the agreement is 

not considered a telephone plan if the service 

is offered separately from a telephone billpayment or other prearranged plan subject to 

Regulation E. Regulation J of the Board of 

Governors of the Federal Reserve System (12 

CFR part 210) specifies the rules applicable 

to funds handled by Federal Reserve Banks. 

To ensure that the rules for all fund transfers 

through Fedwire are consistent, the Board of 

Governors used its preemptive authority 

under UCC section 4A–107 to determine that 

subpart B of the Board’s Regulation J, 

including the provisions of Article 4A, 

applies to all fund transfers through Fedwire, 

even if a portion of the fund transfer is 

governed by the EFTA. The portion of the 

fund transfer that is governed by the EFTA 

is not governed by subpart B of the Board’s 

Regulation J. 

3. Similar fund transfer systems. Fund 

transfer systems that are similar to Fedwire 

include the Clearing House Interbank 

Payments System (CHIPS), Society for 

Worldwide Interbank Financial 

Telecommunication (SWIFT), Telex, and 

transfers made on the books of correspondent 

banks. 

3(c)(4) Securities and Commodities Transfers 

1. Coverage. The securities exemption 

applies to securities and commodities that 

may be sold by a registered broker-dealer or 

futures commission merchant, even when the 

security or commodity itself is not regulated 

by the Securities and Exchange Commission 

or the Commodity Futures Trading 

Commission. 

2. Example of exempt transfer. The 

exemption applies to a transfer involving a 

transfer initiated by a telephone order to a 

stockbroker to buy or sell securities or to 

exercise a margin call. 

3. Examples of nonexempt transfers. The 

exemption does not apply to a transfer 

involving: 

i. A debit card or other access device that 

accesses a securities or commodities account 

such as a money market mutual fund and 

that the consumer uses for purchasing goods 

or services or for obtaining cash. 

ii. A payment of interest or dividends into 

the consumer’s account (for example, from a 

brokerage firm or from a Federal Reserve 

Bank for government securities). 

3(c)(5) Automatic Transfers by AccountHolding Institution 

1. Automatic transfers exempted. The 

exemption applies to: 

i. Electronic debits or credits to consumer 

accounts for check charges, stop-payment 

charges, non-sufficient funds (NSF) charges, 

overdraft charges, provisional credits, error 

adjustments, and similar items that are 

initiated automatically on the occurrence of 

certain events. 

ii. Debits to consumer accounts for group 

insurance available only through the 

financial institution and payable only by 

means of an aggregate payment from the 

institution to the insurer. 

iii. EFTs between a thrift institution and its 

paired commercial bank in the state of Rhode 

Island, which are deemed under state law to 

be intra-institutional. 

iv. Automatic transfers between a 

consumer’s accounts within the same 

financial institution, even if the account 

holders on the two accounts are not identical. 

2. Automatic transfers not exempted. 

Transfers between accounts of the consumer 

at affiliated institutions (such as between a 

bank and its subsidiary or within a holding 

company) are not intra-institutional transfers, 

and thus do not qualify for the exemption. 

3(c)(6) Telephone-Initiated Transfers 

1. Written plan or agreement. A transfer 

that the consumer initiates by telephone is 

covered by Regulation E if the transfer is 

made under a written plan or agreement 

between the consumer and the financial 

institution making the transfer. A written 

statement available to the public or to 

account holders that describes a service 

allowing a consumer to initiate transfers by 

telephone constitutes a plan; for example, a 

brochure, or material included with periodic 

statements. The following, however, do not 

by themselves constitute a written plan or 

agreement: 

i. A hold-harmless agreement on a 

signature card that protects the institution if 

the consumer requests a transfer. 

ii. A legend on a signature card, periodic 

statement, or passbook that limits the number 

of telephone-initiated transfers the consumer 

can make from a savings account because of 

reserve requirements under Regulation D of 

the Board of Governors of the Federal 

Reserve System (12 CFR part 204). 

iii. An agreement permitting the consumer 

to approve by telephone the rollover of funds 

at the maturity of an instrument. 

2. Examples of covered transfers. When a 

written plan or agreement has been entered 

into, a transfer initiated by a telephone call 

from a consumer is covered even though: 

i. An employee of the financial institution 

completes the transfer manually (for 

example, by means of a debit memo or 

deposit slip). 

ii. The consumer is required to make a 

separate request for each transfer. 

iii. The consumer uses the plan 

infrequently. 

iv. The consumer initiates the transfer via 

a facsimile machine. 

v. The consumer initiates the transfer using 

a financial institution’s audio-response or 

voice-response telephone system. 

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3(c)(7) Small Institutions 

1. Coverage. This exemption is limited to 

preauthorized transfers; institutions that offer 

other EFTs must comply with the applicable 

sections of the regulation as to such services. 

The preauthorized transfers remain subject to 

sections 913, 916, and 917 of the Act and 

§ 1005.10(e), and are therefore exempt from 

UCC Article 4A. 

Section 1005.4 General Disclosure 

Requirements; Jointly Offered Services 

4(a) Form of Disclosures 

1. General. Although no particular rules 

govern type size, number of pages, or the 

relative conspicuousness of various terms, 

the disclosures must be in a clear and readily 

understandable written form that the 

consumer may retain. Numbers or codes are 

considered readily understandable if 

explained elsewhere on the disclosure form. 

2. Foreign language disclosures. 

Disclosures may be made in languages other 

than English, provided they are available in 

English upon request. 

Section 1005.5 Issuance of Access Devices 

1. Coverage. The provisions of this section 

limit the circumstances under which a 

financial institution may issue an access 

device to a consumer. Making an additional 

account accessible through an existing access 

device is equivalent to issuing an access 

device and is subject to the limitations of this 

section. 

5(a) Solicited Issuance 

Paragraph 5(a)(1) 

1. Joint account. For a joint account, a 

financial institution may issue an access 

device to each account holder if the 

requesting holder specifically authorizes the 

issuance. 

2. Permissible forms of request. The request 

for an access device may be written or oral 

(for example, in response to a telephone 

solicitation by a card issuer). 

Paragraph 5(a)(2) 

1. One-for-one rule. In issuing a renewal or 

substitute access device, only one renewal or 

substitute device may replace a previously 

issued device. For example, only one new 

card and PIN may replace a card and PIN 

previously issued. A financial institution 

may provide additional devices at the time it 

issues the renewal or substitute access 

device, however, provided the institution 

complies with § 1005.5(b). See comment 

5(b)–5. If the replacement device or the 

additional device permits either fewer or 

additional types of electronic fund transfer 

services, a change-in-terms notice or new 

disclosures are required. 

2. Renewal or substitution by a successor 

institution. A successor institution is an 

entity that replaces the original financial 

institution (for example, following a 

corporate merger or acquisition) or that 

acquires accounts or assumes the operation 

of an EFT system. 

5(b) Unsolicited Issuance 

1. Compliance. A financial institution may 

issue an unsolicited access device (such as 

the combination of a debit card and PIN) if 

the institution’s ATM system has been 

programmed not to accept the access device 

until after the consumer requests and the 

institution validates the device. Merely 

instructing a consumer not to use an 

unsolicited debit card and PIN until after the 

institution verifies the consumer’s identity 

does not comply with the regulation. 

2. PINs. A financial institution may impose 

no liability on a consumer for unauthorized 

transfers involving an unsolicited access 

device until the device becomes an ‘‘accepted 

access device’’ under the regulation. A card 

and PIN combination may be treated as an 

accepted access device once the consumer 

has used it to make a transfer. 

3. Functions of PIN. If an institution issues 

a PIN at the consumer’s request, the issuance 

may constitute both a way of validating the 

debit card and the means to identify the 

consumer (required as a condition of 

imposing liability for unauthorized transfers). 

4. Verification of identity. To verify the 

consumer’s identity, a financial institution 

may use any reasonable means, such as a 

photograph, fingerprint, personal visit, 

signature comparison, or personal 

information about the consumer. However, 

even if reasonable means were used, if an 

institution fails to verify correctly the 

consumer’s identity and an imposter 

succeeds in having the device validated, the 

consumer is not liable for any unauthorized 

transfers from the account. 

5. Additional access devices in a renewal 

or substitution. A financial institution may 

issue more than one access device in 

connection with the renewal or substitution 

of a previously issued accepted access 

device, provided that any additional access 

device (beyond the device replacing the 

accepted access device) is not validated at 

the time it is issued, and the institution 

complies with the other requirements of 

§ 1005.5(b). The institution may, if it chooses, 

set up the validation procedure such that 

both the device replacing the previously 

issued device and the additional device are 

not validated at the time they are issued, and 

validation will apply to both devices. If the 

institution sets up the validation procedure 

in this way, the institution should provide a 

clear and readily understandable disclosure 

to the consumer that both devices are 

unvalidated and that validation will apply to 

both devices. 

Section 1005.6 Liability of Consumer for 

Unauthorized Transfers 

6(a) Conditions for Liability 

1. Means of identification. A financial 

institution may use various means for 

identifying the consumer to whom the access 

device is issued, including but not limited to: 

i. Electronic or mechanical confirmation 

(such as a PIN). 

ii. Comparison of the consumer’s signature, 

fingerprint, or photograph. 

2. Multiple users. When more than one 

access device is issued for an account, the 

financial institution may, but need not, 

provide a separate means to identify each 

user of the account. 

6(b) Limitations on Amount of Liability 

1. Application of liability provisions. There 

are three possible tiers of consumer liability 

for unauthorized EFTs depending on the 

situation. A consumer may be liable for: (1) 

up to $50; (2) up to $500; or (3) an unlimited 

amount depending on when the 

unauthorized EFT occurs. More than one tier 

may apply to a given situation because each 

corresponds to a different (sometimes 

overlapping) time period or set of conditions. 

2. Consumer negligence. Negligence by the 

consumer cannot be used as the basis for 

imposing greater liability than is permissible 

under Regulation E. Thus, consumer 

behavior that may constitute negligence 

under state law, such as writing the PIN on 

a debit card or on a piece of paper kept with 

the card, does not affect the consumer’s 

liability for unauthorized transfers. 

(However, refer to comment 2(m)–2 regarding 

termination of the authority of given by the 

consumer to another person.) 

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. 

6(b)(1) Timely Notice Given 

1. $50 limit applies. The basic liability 

limit is $50. For example, the consumer’s 

card is lost or stolen on Monday and the 

consumer learns of the loss or theft on 

Wednesday. If the consumer notifies the 

financial institution within two business 

days of learning of the loss or theft (by 

midnight Friday), the consumer’s liability is 

limited to $50 or the amount of the 

unauthorized transfers that occurred before 

notification, whichever is less. 

2. Knowledge of loss or theft of access 

device. The fact that a consumer has received 

a periodic statement that reflects 

unauthorized transfers may be a factor in 

determining whether the consumer had 

knowledge of the loss or theft, but cannot be 

deemed to represent conclusive evidence that 

the consumer had such knowledge. 

3. Two business day rule. The two business 

day period does not include the day the 

consumer learns of the loss or theft or any 

day that is not a business day. The rule is 

calculated based on two 24-hour periods, 

without regard to the financial institution’s 

business hours or the time of day that the 

consumer learns of the loss or theft. For 

example, a consumer learns of the loss or 

theft at 6 p.m. on Friday. Assuming that 

Saturday is a business day and Sunday is not, 

the two business day period begins on 

Saturday and expires at 11:59 p.m. on 

Monday, not at the end of the financial 

institution’s business day on Monday. 

6(b)(2) Timely Notice Not Given 

1. $500 limit applies. The second tier of 

liability is $500. For example, the consumer’s 

card is stolen on Monday and the consumer 

learns of the theft that same day. The 

consumer reports the theft on Friday. The 

$500 limit applies because the consumer 

failed to notify the financial institution 

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81042 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

within two business days of learning of the 

theft (which would have been by midnight 

Wednesday). How much the consumer is 

actually liable for, however, depends on 

when the unauthorized transfers take place. 

In this example, assume a $100 unauthorized 

transfer was made on Tuesday and a $600 

unauthorized transfer on Thursday. Because 

the consumer is liable for the amount of the 

loss that occurs within the first two business 

days (but no more than $50), plus the amount 

of the unauthorized transfers that occurs after 

the first two business days and before the 

consumer gives notice, the consumer’s total 

liability is $500 ($50 of the $100 transfer plus 

$450 of the $600 transfer, in this example). 

But if $600 was taken on Tuesday and $100 

on Thursday, the consumer’s maximum 

liability would be $150 ($50 of the $600 plus 

$100). 

6(b)(3) Periodic Statement; Timely Notice Not 

Given 

1. Unlimited liability applies. The standard 

of unlimited liability applies if unauthorized 

transfers appear on a periodic statement, and 

may apply in conjunction with the first two 

tiers of liability. If a periodic statement 

shows an unauthorized transfer made with a 

lost or stolen debit card, the consumer must 

notify the financial institution within 60 

calendar days after the periodic statement 

was sent; otherwise, the consumer faces 

unlimited liability for all unauthorized 

transfers made after the 60-day period. The 

consumer’s liability for unauthorized 

transfers before the statement is sent, and up 

to 60 days following, is determined based on 

the first two tiers of liability: up to $50 if the 

consumer notifies the financial institution 

within two business days of learning of the 

loss or theft of the card and up to $500 if the 

consumer notifies the institution after two 

business days of learning of the loss or theft. 

2. Transfers not involving access device. 

The first two tiers of liability do not apply 

to unauthorized transfers from a consumer’s 

account made without an access device. If, 

however, the consumer fails to report such 

unauthorized transfers within 60 calendar 

days of the financial institution’s transmittal 

of the periodic statement, the consumer may 

be liable for any transfers occurring after the 

close of the 60 days and before notice is 

given to the institution. For example, a 

consumer’s account is electronically debited 

for $200 without the consumer’s 

authorization and by means other than the 

consumer’s access device. If the consumer 

notifies the institution within 60 days of the 

transmittal of the periodic statement that 

shows the unauthorized transfer, the 

consumer has no liability. However, if in 

addition to the $200, the consumer’s account 

is debited for a $400 unauthorized transfer on 

the 61st day and the consumer fails to notify 

the institution of the first unauthorized 

transfer until the 62nd day, the consumer 

may be liable for the full $400. 

6(b)(4) Extension of Time Limits 

1. Extenuating circumstances. Examples of 

circumstances that require extension of the 

notification periods under this section 

include the consumer’s extended travel or 

hospitalization. 

6(b)(5) Notice to Financial Institution 

1. Receipt of notice. A financial institution 

is considered to have received notice for 

purposes of limiting the consumer’s liability 

if notice is given in a reasonable manner, 

even if the consumer notifies the institution 

but uses an address or telephone number 

other than the one specified by the 

institution. 

2. Notice by third party. Notice to a 

financial institution by a person acting on the 

consumer’s behalf is considered valid under 

this section. For example, if a consumer is 

hospitalized and unable to report the loss or 

theft of an access device, notice is considered 

given when someone acting on the 

consumer’s behalf notifies the bank of the 

loss or theft. A financial institution may 

require appropriate documentation from the 

person representing the consumer to 

establish that the person is acting on the 

consumer’s behalf. 

3. Content of notice. Notice to a financial 

institution is considered given when a 

consumer takes reasonable steps to provide 

the institution with the pertinent account 

information. Even when the consumer is 

unable to provide the account number or the 

card number in reporting a lost or stolen 

access device or an unauthorized transfer, the 

notice effectively limits the consumer’s 

liability if the consumer otherwise identifies 

sufficiently the account in question. For 

example, the consumer may identify the 

account by the name on the account and the 

type of account in question. 

Section 1005.7 Initial Disclosures 

7(a) Timing of Disclosures 

1. Early disclosures. Disclosures given by a 

financial institution earlier than the 

regulation requires (for example, when the 

consumer opens a checking account) need 

not be repeated when the consumer later 

enters into an agreement with a third party 

to initiate preauthorized transfers to or from 

the consumer’s account, unless the terms and 

conditions differ from those that the 

institution previously disclosed. This 

interpretation also applies to any notice 

provided about one-time EFTs from a 

consumer’s account initiated using 

information from the consumer’s check. On 

the other hand, if an agreement for EFT 

services to be provided by an accountholding institution is directly between the 

consumer and the account-holding 

institution, disclosures must be given in 

close proximity to the event requiring 

disclosure, for example, when the consumer 

contracts for a new service. 

2. Lack of advance notice of a transfer. 

Where a consumer authorizes a third party to 

debit or credit the consumer’s account, an 

account-holding institution that has not 

received advance notice of the transfer or 

transfers must provide the required 

disclosures as soon as reasonably possible 

after the first debit or credit is made, unless 

the institution has previously given the 

disclosures. 

3. Addition of new accounts. If a consumer 

opens a new account permitting EFTs at a 

financial institution, and the consumer 

already has received Regulation E disclosures 

for another account at that institution, the 

institution need only disclose terms and 

conditions that differ from those previously 

given. 

4. Addition of service in interchange 

systems. If a financial institution joins an 

interchange or shared network system (which 

provides access to terminals operated by 

other institutions), disclosures are required 

for additional EFT services not previously 

available to consumers if the terms and 

conditions differ from those previously 

disclosed. 

5. Disclosures covering all EFT services 

offered. An institution may provide 

disclosures covering all EFT services that it 

offers, even if some consumers have not 

arranged to use all services. 

7(b) Content of Disclosures 

7(b)(1) Liability of Consumer 

1. No liability imposed by financial 

institution. If a financial institution chooses 

to impose zero liability for unauthorized 

EFTs, it need not provide the liability 

disclosures. If the institution later decides to 

impose liability, however, it must first 

provide the disclosures. 

2. Preauthorized transfers. If the only EFTs 

from an account are preauthorized transfers, 

liability could arise if the consumer fails to 

report unauthorized transfers reflected on a 

periodic statement. To impose such liability 

on the consumer, the institution must have 

disclosed the potential liability and the 

telephone number and address for reporting 

unauthorized transfers. 

3. Additional information. At the 

institution’s option, the summary of the 

consumer’s liability may include advice on 

promptly reporting unauthorized transfers or 

the loss or theft of the access device. 

7(b)(2) Telephone Number and Address 

1. Disclosure of telephone numbers. An 

institution may use the same or different 

telephone numbers in the disclosures for the 

purpose of: 

i. Reporting the loss or theft of an access 

device or possible unauthorized transfers; 

ii. Inquiring about the receipt of a 

preauthorized credit; 

iii. Stopping payment of a preauthorized 

debit; 

iv. Giving notice of an error. 

2. Location of telephone number. The 

telephone number need not be incorporated 

into the text of the disclosure; for example, 

the institution may instead insert a reference 

to a telephone number that is readily 

available to the consumer, such as ‘‘Call your 

branch office. The number is shown on your 

periodic statement.’’ However, an institution 

must provide a specific telephone number 

and address, on or with the disclosure 

statement, for reporting a lost or stolen access 

device or a possible unauthorized transfer. 

7(b)(4) Types of Transfers; Limitations 

1. Security limitations. Information about 

limitations on the frequency and dollar 

amount of transfers generally must be 

disclosed in detail, even if related to security 

aspects of the system. If the confidentiality of 

certain details is essential to the security of 

an account or system, these details may be 

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withheld (but the fact that limitations exist 

must still be disclosed). For example, an 

institution limits cash ATM withdrawals to 

$100 per day. The institution may disclose 

that daily withdrawal limitations apply and 

need not disclose that the limitations may 

not always be in force (such as during 

periods when its ATMs are off-line). 

2. Restrictions on certain deposit accounts. 

A limitation on account activity that restricts 

the consumer’s ability to make EFTs must be 

disclosed even if the restriction also applies 

to transfers made by non-electronic means. 

For example, Regulation D of the Board of 

Governors of the Federal Reserve System (12 

CFR Part 204) restricts the number of 

payments to third parties that may be made 

from a money market deposit account; an 

institution that does not execute fund 

transfers in excess of those limits must 

disclose the restriction as a limitation on the 

frequency of EFTs. 

3. Preauthorized transfers. Financial 

institutions are not required to list 

preauthorized transfers among the types of 

transfers that a consumer can make. 

4. One-time EFTs initiated using 

information from a check. Financial 

institutions must disclose the fact that onetime EFTs initiated using information from a 

consumer’s check are among the types of 

transfers that a consumer can make. See 

Appendix A–2. 

7(b)(5) Fees 

1. Disclosure of EFT fees. An institution is 

required to disclose all fees for EFTs or the 

right to make them. Others fees (for example, 

minimum-balance fees, stop-payment fees, or 

account overdrafts) may, but need not, be 

disclosed. But see Regulation DD, 12 CFR 

Part 1030. An institution is not required to 

disclose fees for inquiries made at an ATM 

since no transfer of funds is involved. 

2. Fees also applicable to non-EFT. A peritem fee for EFTs must be disclosed even if 

the same fee is imposed on non-electronic 

transfers. If a per-item fee is imposed only 

under certain conditions, such as when the 

transactions in the cycle exceed a certain 

number, those conditions must be disclosed. 

Itemization of the various fees may be 

provided on the disclosure statement or on 

an accompanying document that is 

referenced in the statement. 

3. Interchange system fees. Fees paid by 

the account-holding institution to the 

operator of a shared or interchange ATM 

system need not be disclosed, unless they are 

imposed on the consumer by the accountholding institution. Fees for use of an ATM 

that are debited directly from the consumer’s 

account by an institution other than the 

account-holding institution (for example, fees 

included in the transfer amount) need not be 

disclosed. See § 1005.7(b)(11) for the general 

notice requirement regarding fees that may be 

imposed by ATM operators and by a network 

used to complete the transfer. 

7(b)(9) Confidentiality 

1. Information provided to third parties. 

An institution must describe the 

circumstances under which any information 

relating to an account to or from which EFTs 

are permitted will be made available to third 

parties, not just information concerning those 

EFTs. The term ‘‘third parties’’ includes 

affiliates such as other subsidiaries of the 

same holding company. 

7(b)(10) Error Resolution 

1. Substantially similar. The error 

resolution notice must be substantially 

similar to the model form in Appendix A of 

part 1005. An institution may use different 

wording so long as the substance of the 

notice remains the same, may delete 

inapplicable provisions (for example, the 

requirement for written confirmation of an 

oral notification), and may substitute 

substantive state law requirements affording 

greater consumer protection than Regulation 

E. 

2. Extended time-period for certain 

transactions. To take advantage of the longer 

time periods for resolving errors under 

§ 1005.11(c)(3) (for new accounts as defined 

in Regulation CC of the Board of Governors 

of the Federal Reserve System (12 CFR part 

229), transfers initiated outside the United 

States, or transfers resulting from POS debitcard transactions), a financial institution 

must have disclosed these longer time 

periods. Similarly, an institution that relies 

on the exception from provisional crediting 

in § 1005.11(c)(2) for accounts subject to 

Regulation T of the Board of Governors of the 

Federal Reserve System (12 CFR part 220) 

must have disclosed accordingly. 

7(c) Addition of Electronic Fund Transfer 

Services 

1. Addition of electronic check conversion 

services. One-time EFTs initiated using 

information from a consumer’s check are a 

new type of transfer requiring new 

disclosures, as applicable. See Appendix A– 

2. 

Section 1005.8 Change-in-Terms Notice; 

Error Resolution Notice 

8(a) Change-in-Terms Notice 

1. Form of notice. No specific form or 

wording is required for a change-in-terms 

notice. The notice may appear on a periodic 

statement, or may be given by sending a copy 

of a revised disclosure statement, provided 

attention is directed to the change (for 

example, in a cover letter referencing the 

changed term). 

2. Changes not requiring notice. The 

following changes do not require disclosure: 

i. Closing some of an institution’s ATMs; 

ii. Cancellation of an access device. 

3. Limitations on transfers. When the 

initial disclosures omit details about 

limitations because secrecy is essential to the 

security of the account or system, a 

subsequent increase in those limitations need 

not be disclosed if secrecy is still essential. 

If, however, an institution had no limits in 

place when the initial disclosures were given 

and now wishes to impose limits for the first 

time, it must disclose at least the fact that 

limits have been adopted. See also 

§ 1005.7(b)(4) and the related commentary. 

4. Change in telephone number or address. 

When a financial institution changes the 

telephone number or address used for 

reporting possible unauthorized transfers, a 

change-in-terms notice is required only if the 

institution will impose liability on the 

consumer for unauthorized transfers under 

§ 1005.6. See also § 1005.6(a) and the related 

commentary. 

8(b) Error Resolution Notice 

1. Change between annual and periodic 

notice. If an institution switches from an 

annual to a periodic notice, or vice versa, the 

first notice under the new method must be 

sent no later than 12 months after the last 

notice sent under the old method. 

2. Exception for new accounts. For new 

accounts, disclosure of the longer error 

resolution time periods under § 1005.11(c)(3) 

is not required in the annual error resolution 

notice or in the notice that may be provided 

with each periodic statement as an 

alternative to the annual notice. 

Section 1005.9 Receipts at Electronic 

Terminals; Periodic Statements 

9(a) Receipts at Electronic Terminals 

1. Receipts furnished only on request. The 

regulation requires that a receipt be ‘‘made 

available.’’ A financial institution may 

program its electronic terminals to provide a 

receipt only to consumers who elect to 

receive one. 

2. Third party providing receipt. An 

account-holding institution may make 

terminal receipts available through third 

parties such as merchants or other financial 

institutions. 

3. Inclusion of promotional material. A 

financial institution may include 

promotional material on receipts if the 

required information is set forth clearly (for 

example, by separating it from the 

promotional material). In addition, a 

consumer may not be required to surrender 

the receipt or that portion containing the 

required disclosures in order to take 

advantage of a promotion. 

4. Transfer not completed. The receipt 

requirement does not apply to a transfer that 

is initiated but not completed (for example, 

if the ATM is out of currency or the 

consumer decides not to complete the 

transfer). 

5. Receipts not furnished due to 

inadvertent error. If a receipt is not provided 

to the consumer because of a bona fide 

unintentional error, such as when a terminal 

runs out of paper or the mechanism jams, no 

violation results if the financial institution 

maintains procedures reasonably adapted to 

avoid such occurrences. 

6. Multiple transfers. If the consumer 

makes multiple transfers at the same time, 

the financial institution may document them 

on a single or on separate receipts. 

9(a)(1) Amount 

1. Disclosure of transaction fee. The 

required display of a fee amount on or at the 

terminal may be accomplished by displaying 

the fee on a sign at the terminal or on the 

terminal screen for a reasonable duration. 

Displaying the fee on a screen provides 

adequate notice, as long as a consumer is 

given the option to cancel the transaction 

after receiving notice of a fee. See § 1005.16 

for the notice requirements applicable to 

ATM operators that impose a fee for 

providing EFT services. 

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2. Relationship between § 1005.9(a)(1) and 

§ 1005.16. The requirements of 

§§ 1005.9(a)(1) and 1005.16 are similar but 

not identical. 

i. Section 1005.9(a)(1) requires that if the 

amount of the transfer as shown on the 

receipt will include the fee, then the fee must 

be disclosed either on a sign on or at the 

terminal, or on the terminal screen. Section 

1005.16 requires disclosure both on a sign on 

or at the terminal (in a prominent and 

conspicuous location) and on the terminal 

screen. Section 1005.16 permits disclosure 

on a paper notice as an alternative to the onscreen disclosure. 

ii. The disclosure of the fee on the receipt 

under § 1005.9(a)(1) cannot be used to 

comply with the alternative paper disclosure 

procedure under § 1005.16, if the receipt is 

provided at the completion of the transaction 

because, pursuant to the statute, the paper 

notice must be provided before the consumer 

is committed to paying the fee. 

iii. Section 1005.9(a)(1) applies to any type 

of electronic terminal as defined in 

Regulation E (for example, to POS terminals 

as well as to ATMs), while § 1005.16 applies 

only to ATMs. 

9(a)(2) Date 

1. Calendar date. The receipt must disclose 

the calendar date on which the consumer 

uses the electronic terminal. An accounting 

or business date may be disclosed in addition 

if the dates are clearly distinguished. 

9(a)(3) Type 

1. Identifying transfer and account. 

Examples identifying the type of transfer and 

the type of the consumer’s account include 

‘‘withdrawal from checking,’’ ‘‘transfer from 

savings to checking,’’ or ‘‘payment from 

savings.’’ 

2. Exception. Identification of an account 

is not required when the consumer can 

access only one asset account at a particular 

time or terminal, even if the access device 

can normally be used to access more than 

one account. For example, the consumer may 

be able to access only one particular account 

at terminals not operated by the accountholding institution, or may be able to access 

only one particular account when the 

terminal is off-line. The exception is 

available even if, in addition to accessing one 

asset account, the consumer also can access 

a credit line. 

3. Access to multiple accounts. If the 

consumer can use an access device to make 

transfers to or from different accounts of the 

same type, the terminal receipt must specify 

which account was accessed, such as 

‘‘withdrawal from checking I’’ or 

‘‘withdrawal from checking II.’’ If only one 

account besides the primary checking 

account can be debited, the receipt can 

identify the account as ‘‘withdrawal from 

other account.’’ 

4. Generic descriptions. Generic 

descriptions may be used for accounts that 

are similar in function, such as share draft or 

NOW accounts and checking accounts. In a 

shared system, for example, when a credit 

union member initiates transfers to or from 

a share draft account at a terminal owned or 

operated by a bank, the receipt may identify 

a withdrawal from the account as a 

‘‘withdrawal from checking.’’ 

5. Point-of-sale transactions. There is no 

prescribed terminology for identifying a 

transfer at a merchant’s POS terminal. A 

transfer may be identified, for example, as a 

purchase, a sale of goods or services, or a 

payment to a third party. When a consumer 

obtains cash from a POS terminal in addition 

to purchasing goods, or obtains cash only, the 

documentation need not differentiate the 

transaction from one involving the purchase 

of goods. 

9(a)(5) Terminal Location 

1. Options for identifying terminal. The 

institution may provide either: 

i. The city, state or foreign country, and the 

information in § 1005.9(a)(5) (i), (ii), or (iii), 

or 

ii. A number or a code identifying the 

terminal. If the institution chooses the 

second option, the code or terminal number 

identifying the terminal where the transfer is 

initiated may be given as part of a transaction 

code. 

2. Omission of city name. The city may be 

omitted if the generally accepted name (such 

as a branch name) contains the city name. 

3. Omission of a state. A state may be 

omitted from the location information on the 

receipt if: 

i. All the terminals owned or operated by 

the financial institution providing the 

statement (or by the system in which it 

participates) are located in that state, or 

ii. All transfers occur at terminals located 

within 50 miles of the financial institution’s 

main office. 

4. Omission of a city and state. A city and 

state may be omitted if all the terminals 

owned or operated by the financial 

institution providing the statement (or by the 

system in which it participates) are located 

in the same city. 

Paragraph 9(a)(5)(i) 

1. Street address. The address should 

include number and street (or intersection); 

the number (or intersecting street) may be 

omitted if the street alone uniquely identifies 

the terminal location. 

Paragraph 9(a)(5)(ii) 

1. Generally accepted name. Examples of 

a generally accepted name for a specific 

location include a branch of the financial 

institution, a shopping center, or an airport. 

Paragraph 9(a)(5)(iii) 

1. Name of owner or operator of terminal. 

Examples of an owner or operator of a 

terminal are a financial institution or a retail 

merchant. 

9(a)(6) Third Party Transfer 

1. Omission of third-party name. The 

receipt need not disclose the third-party 

name if the name is provided by the 

consumer in a form that is not machine 

readable (for example, if the consumer 

indicates the payee by depositing a payment 

stub into the ATM). If, on the other hand, the 

consumer keys in the identity of the payee, 

the receipt must identify the payee by name 

or by using a code that is explained 

elsewhere on the receipt. 

2. Receipt as proof of payment. 

Documentation required under the regulation 

constitutes prima facie proof of a payment to 

another person, except in the case of a 

terminal receipt documenting a deposit. 

9(b) Periodic Statements 

1. Periodic cycles. Periodic statements may 

be sent on a cycle that is shorter than 

monthly. The statements must correspond to 

periodic cycles that are reasonably equal, that 

is, do not vary by more than four days from 

the regular cycle. The requirement of 

reasonably equal cycles does not apply when 

an institution changes cycles for operational 

or other reasons, such as to establish a new 

statement day or date. 

2. Interim statements. Generally, a 

financial institution must provide periodic 

statements for each monthly cycle in which 

an EFT occurs, and at least quarterly if a 

transfer has not occurred. Where EFTs occur 

between regularly-scheduled cycles, interim 

statements must be provided. For example, if 

an institution issues quarterly statements at 

the end of March, June, September and 

December, and the consumer initiates an EFT 

in February, an interim statement for 

February must be provided. If an interim 

statement contains interest or rate 

information, the institution must comply 

with Regulation DD, 12 CFR 1030.6. 

3. Inactive accounts. A financial institution 

need not send statements to consumers 

whose accounts are inactive as defined by the 

institution. 

4. Statement pickup. A financial 

institution may permit, but may not require, 

consumers to pick up their periodic 

statements at the financial institution. 

5. Periodic statements limited to EFT 

activity. A financial institution that uses a 

passbook as the primary means for displaying 

account activity, but also allows the account 

to be debited electronically, may provide a 

periodic statement requirement that reflects 

only the EFTs and other required disclosures 

(such as charges, account balances, and 

address and telephone number for inquiries). 

See § 1005.9(c)(1)(i) for the exception 

applicable to preauthorized transfers for 

passbook accounts. 

6. Codes and accompanying documents. 

To meet the documentation requirements for 

periodic statements, a financial institution 

may: 

i. Include copies of terminal receipts to 

reflect transfers initiated by the consumer at 

electronic terminals; 

ii. Enclose posting memos, deposit slips, 

and other documents that, together with the 

statement, disclose all the required 

information; 

iii. Use codes for names of third parties or 

terminal locations and explain the 

information to which the codes relate on an 

accompanying document. 

9(b)(1) Transaction Information 

1. Information obtained from others. While 

financial institutions must maintain 

reasonable procedures to ensure the integrity 

of data obtained from another institution, a 

merchant, or other third parties, verification 

of each transfer that appears on the periodic 

statement is not required. 

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Paragraph 9(b)(1)(i) 

1. Incorrect deposit amount. If a financial 

institution determines that the amount 

actually deposited at an ATM is different 

from the amount entered by the consumer, 

the institution need not immediately notify 

the consumer of the discrepancy. The 

periodic statement reflecting the deposit may 

show either the correct amount of the deposit 

or the amount entered by the consumer along 

with the institution’s adjustment. 

Paragraph 9(b)(1)(iii) 

1. Type of transfer. There is no prescribed 

terminology for describing a type of transfer. 

Placement of the amount of the transfer in 

the debit or the credit column is sufficient if 

other information on the statement, such as 

a terminal location or third-party name, 

enables the consumer to identify the type of 

transfer. 

Paragraph 9(b)(1)(iv) 

1. Nonproprietary terminal in network. An 

institution need not reflect on the periodic 

statement the street addresses, identification 

codes, or terminal numbers for transfers 

initiated in a shared or interchange system at 

a terminal operated by an institution other 

than the account-holding institution. The 

statement must, however, specify the entity 

that owns or operates the terminal, plus the 

city and state. 

Paragraph 9(b)(1)(v) 

1. Recurring payments by government 

agency. The third-party name for recurring 

payments from Federal, state, or local 

governments need not list the particular 

agency. For example, ‘‘U.S. gov’t’’ or ‘‘N.Y. 

sal’’ will suffice. 

2. Consumer as third-party payee. If a 

consumer makes an electronic fund transfer 

to another consumer, the financial institution 

must identify the recipient by name (not just 

by an account number, for example). 

3. Terminal location/third party. A single 

entry may be used to identify both the 

terminal location and the name of the third 

party to or from whom funds are transferred. 

For example, if a consumer purchases goods 

from a merchant, the name of the party to 

whom funds are transferred (the merchant) 

and the location of the terminal where the 

transfer is initiated will be satisfied by a 

disclosure such as ‘‘XYZ Store, Anytown, 

Ohio.’’ 

4. Account-holding institution as third 

party. Transfers to the account-holding 

institution (by ATM, for example) must show 

the institution as the recipient, unless other 

information on the statement (such as, ‘‘loan 

payment from checking’’) clearly indicates 

that the payment was to the account-holding 

institution. 

5. Consistency in third-party identity. The 

periodic statement must disclose a thirdparty name as it appeared on the receipt, 

whether it was, for example, the ‘‘dba’’ 

(doing business as) name of the third party 

or the parent corporation’s name. 

6. Third-party identity on deposits at 

electronic terminal. A financial institution 

need not identify third parties whose names 

appear on checks, drafts, or similar paper 

instruments deposited to the consumer’s 

account at an electronic terminal. 

9(b)(3) Fees 

1. Disclosure of fees. The fees disclosed 

may include fees for EFTs and for other nonelectronic services, and both fixed fees and 

per-item fees; they may be given as a total or 

may be itemized in part or in full. 

2. Fees in interchange system. An accountholding institution must disclose any fees it 

imposes on the consumer for EFTs, including 

fees for ATM transactions in an interchange 

or shared ATM system. Fees for use of an 

ATM imposed on the consumer by an 

institution other than the account-holding 

institution and included in the amount of the 

transfer by the terminal-operating institution 

need not be separately disclosed on the 

periodic statement. 

3. Finance charges. The requirement to 

disclose any fees assessed against the account 

does not include a finance charge imposed 

on the account during the statement period. 

9(b)(4) Account Balances 

1. Opening and closing balances. The 

opening and closing balances must reflect 

both EFTs and other account activity. 

9(b)(5) Address and Telephone Number for 

Inquiries 

1. Telephone number. A single telephone 

number, preceded by the ‘‘direct inquiries 

to’’ language, will satisfy the requirements of 

§§ 1005.9(b)(5) and (6). 

9(b)(6) Telephone Number for Preauthorized 

Transfers 

1. Telephone number. See comment 

9(b)(5)–1. 

9(c) Exceptions to the Periodic Statement 

Requirements for Certain Accounts 

1. Transfers between accounts. The 

regulation provides an exception from the 

periodic statement requirement for certain 

intra-institutional transfers between a 

consumer’s accounts. The financial 

institution must still comply with the 

applicable periodic statement requirements 

for any other EFTs to or from the account. 

For example, a Regulation E statement must 

be provided quarterly for an account that also 

receives payroll deposits electronically, or for 

any month in which an account is also 

accessed by a withdrawal at an ATM. 

9(c)(1) Preauthorized Transfers to Accounts 

1. Accounts that may be accessed only by 

preauthorized transfers to the account. The 

exception for ‘‘accounts that may be accessed 

only by preauthorized transfers to the 

account’’ includes accounts that can be 

accessed by means other than EFTs, such as 

checks. If, however, an account may be 

accessed by any EFT other than 

preauthorized credits to the account, such as 

preauthorized debits or ATM transactions, 

the account does not qualify for the 

exception. 

2. Reversal of direct deposits. For directdeposit-only accounts, a financial institution 

must send a periodic statement at least 

quarterly. A reversal of a direct deposit to 

correct an error does not trigger the monthly 

statement requirement when the error 

represented a credit to the wrong consumer’s 

account, a duplicate credit, or a credit in the 

wrong amount. See also comment 2(m)–5. 

9(d) Documentation for Foreign-Initiated 

Transfers 

1. Foreign-initiated transfers. An 

institution must make a good faith effort to 

provide all required information for foreigninitiated transfers. For example, even if the 

institution is not able to provide a specific 

terminal location, it should identify the 

country and city in which the transfer was 

initiated. 

Section 1005.10 Preauthorized Transfers 

10(a) Preauthorized Transfers to Consumer’s 

Account 

10(a)(1) Notice by Financial Institution 

1. Content. No specific language is required 

for notice regarding receipt of a 

preauthorized transfer. Identifying the 

deposit is sufficient; however, simply 

providing the current account balance is not. 

2. Notice of credit. A financial institution 

may use different methods of notice for 

various types or series of preauthorized 

transfers, and the institution need not offer 

consumers a choice of notice methods. 

3. Positive notice. A periodic statement 

sent within two business days of the 

scheduled transfer, showing the transfer, can 

serve as notice of receipt. 

4. Negative notice. The absence of a 

deposit entry (on a periodic statement sent 

within two business days of the scheduled 

transfer date) will serve as negative notice. 

5. Telephone notice. If a financial 

institution uses the telephone notice option, 

the institution should be able in most 

instances to verify during a consumer’s 

initial call whether a transfer was received. 

The institution must respond within two 

business days to any inquiry not answered 

immediately. 

6. Phone number for passbook accounts. 

The financial institution may use any 

reasonable means necessary to provide the 

telephone number to consumers with 

passbook accounts that can only be accessed 

by preauthorized credits and that do not 

receive periodic statements. For example, it 

may print the telephone number in the 

passbook, or include the number with the 

annual error resolution notice. 

7. Telephone line availability. To satisfy 

the readily-available standard, the financial 

institution must provide enough telephone 

lines so that consumers get a reasonably 

prompt response. The institution need only 

provide telephone service during normal 

business hours. Within its primary service 

area, an institution must provide a local or 

toll-free telephone number. It need not 

provide a toll-free number or accept collect 

long-distance calls from outside the area 

where it normally conducts business. 

10(b) Written Authorization for 

Preauthorized Transfers From Consumer’s 

Account 

1. Preexisting authorizations. The financial 

institution need not require a new 

authorization before changing from paperbased to electronic debiting when the 

existing authorization does not specify that 

debiting is to occur electronically or specifies 

that the debiting will occur by paper means. 

A new authorization also is not required 

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81046 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

when a successor institution begins 

collecting payments. 

2. Authorization obtained by third party. 

The account-holding financial institution 

does not violate the regulation when a thirdparty payee fails to obtain the authorization 

in writing or fails to give a copy to the 

consumer; rather, it is the third-party payee 

that is in violation of the regulation. 

3. Written authorization for preauthorized 

transfers. The requirement that preauthorized 

EFTs be authorized by the consumer ‘‘only 

by a writing’’ cannot be met by a payee’s 

signing a written authorization on the 

consumer’s behalf with only an oral 

authorization from the consumer. 

4. Use of a confirmation form. A financial 

institution or designated payee may comply 

with the requirements of this section in 

various ways. For example, a payee may 

provide the consumer with two copies of a 

preauthorization form, and ask the consumer 

to sign and return one and to retain the 

second copy. 

5. Similarly authenticated. The similarly 

authenticated standard permits signed, 

written authorizations to be provided 

electronically. The writing and signature 

requirements of this section are satisfied by 

complying with the Electronic Signatures in 

Global and National Commerce Act, 15 

U.S.C. 7001 et seq., which defines electronic 

records and electronic signatures. Examples 

of electronic signatures include, but are not 

limited to, digital signatures and security 

codes. A security code need not originate 

with the account-holding institution. The 

authorization process should evidence the 

consumer’s identity and assent to the 

authorization. The person that obtains the 

authorization must provide a copy of the 

terms of the authorization to the consumer 

either electronically or in paper form. Only 

the consumer may authorize the transfer and 

not, for example, a third-party merchant on 

behalf of the consumer. 

6. Requirements of an authorization. An 

authorization is valid if it is readily 

identifiable as such and the terms of the 

preauthorized transfer are clear and readily 

understandable. 

7. Bona fide error. Consumers sometimes 

authorize third-party payees, by telephone or 

online, to submit recurring charges against a 

credit card account. If the consumer indicates 

use of a credit card account when in fact a 

debit card is being used, the payee does not 

violate the requirement to obtain a written 

authorization if the failure to obtain written 

authorization was not intentional and 

resulted from a bona fide error, and if the 

payee maintains procedures reasonably 

adapted to avoid any such error. Procedures 

reasonably adapted to avoid error will 

depend upon the circumstances. Generally, 

requesting the consumer to specify whether 

the card to be used for the authorization is 

a debit (or check) card or a credit card is a 

reasonable procedure. Where the consumer 

has indicated that the card is a credit card 

(or that the card is not a debit or check card), 

the payee may rely on the consumer’s 

statement without seeking further 

information about the type of card. If the 

payee believes, at the time of the 

authorization, that a credit card is involved, 

and later finds that the card used is a debit 

card (for example, because the consumer 

later brings the matter to the payee’s 

attention), the payee must obtain a written 

and signed or (where appropriate) a similarly 

authenticated authorization as soon as 

reasonably possible, or cease debiting the 

consumer’s account. 

10(c) Consumer’s Right to Stop Payment 

1. Stop-payment order. The financial 

institution must honor an oral stop-payment 

order made at least three business days 

before a scheduled debit. If the debit item is 

resubmitted, the institution must continue to 

honor the stop-payment order (for example, 

by suspending all subsequent payments to 

the payee-originator until the consumer 

notifies the institution that payments should 

resume). 

2. Revocation of authorization. Once a 

financial institution has been notified that 

the consumer’s authorization is no longer 

valid, it must block all future payments for 

the particular debit transmitted by the 

designated payee-originator. But see 

comment 10(c)–3. The institution may not 

wait for the payee-originator to terminate the 

automatic debits. The institution may 

confirm that the consumer has informed the 

payee-originator of the revocation (for 

example, by requiring a copy of the 

consumer’s revocation as written 

confirmation to be provided within 14 days 

of an oral notification). If the institution does 

not receive the required written confirmation 

within the 14-day period, it may honor 

subsequent debits to the account. 

3. Alternative procedure for processing a 

stop-payment request. If an institution does 

not have the capability to block a 

preauthorized debit from being posted to the 

consumer’s account—as in the case of a 

preauthorized debit made through a debit 

card network or other system, for example— 

the institution may instead comply with the 

stop-payment requirements by using a third 

party to block the transfer(s), as long as the 

consumer’s account is not debited for the 

payment. 

10(d) Notice of Transfers Varying in Amount 

10(d)(1) Notice 

1. Preexisting authorizations. A financial 

institution holding the consumer’s account 

does not violate the regulation if the 

designated payee fails to provide notice of 

varying amounts. 

10(d)(2) Range 

1. Range. A financial institution or 

designated payee that elects to offer the 

consumer a specified range of amounts for 

debiting (in lieu of providing the notice of 

transfers varying in amount) must provide an 

acceptable range that could be anticipated by 

the consumer. For example, if the transfer is 

for payment of a gas bill, an appropriate 

range might be based on the highest bill in 

winter and the lowest bill in summer. 

2. Transfers to an account of the consumer 

held at another institution. A financial 

institution need not provide a consumer the 

option of receiving notice with each varying 

transfer, and may instead provide notice only 

when a debit to an account of the consumer 

falls outside a specified range or differs by 

more than a specified amount from the most 

recent transfer, if the funds are transferred 

and credited to an account of the consumer 

held at another financial institution. The 

specified range or amount, however, must be 

one that reasonably could be anticipated by 

the consumer, and the institution must notify 

the consumer of the range or amount at the 

time the consumer provides authorization for 

the preauthorized transfers. For example, if 

the transfer is for payment of interest for a 

fixed-rate certificate of deposit account, an 

appropriate range might be based on a month 

containing 28 days and a month containing 

31 days. 

10(e) Compulsory Use 

10(e)(1) Credit 

1. Loan payments. Creditors may not 

require repayment of loans by electronic 

means on a preauthorized, recurring basis. A 

creditor may offer a program with a reduced 

annual percentage rate or other cost-related 

incentive for an automatic repayment feature, 

provided the program with the automatic 

payment feature is not the only loan program 

offered by the creditor for the type of credit 

involved. Examples include: 

i. Mortgages with graduated payments in 

which a pledged savings account is 

automatically debited during an initial 

period to supplement the monthly payments 

made by the borrower. 

ii. Mortgage plans calling for preauthorized 

biweekly payments that are debited 

electronically to the consumer’s account and 

produce a lower total finance charge. 

2. Overdraft. A financial institution may 

require the automatic repayment of an 

overdraft credit plan even if the overdraft 

extension is charged to an open-end account 

that may be accessed by the consumer in 

ways other than by overdrafts. 

10(e)(2) Employment or Government Benefit 

1. Payroll. An employer (including a 

financial institution) may not require its 

employees to receive their salary by direct 

deposit to any particular institution. An 

employer may require direct deposit of salary 

by electronic means if employees are allowed 

to choose the institution that will receive the 

direct deposit. Alternatively, an employer 

may give employees the choice of having 

their salary deposited at a particular 

institution (designated by the employer) or 

receiving their salary by another means, such 

as by check or cash. 

Section 1005.11 Procedures for Resolving 

Errors 

11(a) Definition of Error 

1. Terminal location. With regard to 

deposits at an ATM, a consumer’s request for 

the terminal location or other information 

triggers the error resolution procedures, but 

the financial institution need only provide 

the ATM location if it has captured that 

information. 

2. Verifying an account debit or credit. If 

the consumer contacts the financial 

institution to ascertain whether a payment 

(for example, in a home-banking or billpayment program) or any other type of EFT 

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was debited to the account, or whether a 

deposit made via ATM, preauthorized 

transfer, or any other type of EFT was 

credited to the account, without asserting an 

error, the error resolution procedures do not 

apply. 

3. Loss or theft of access device. A financial 

institution is required to comply with the 

error resolution procedures when a consumer 

reports the loss or theft of an access device 

if the consumer also alleges possible 

unauthorized use as a consequence of the 

loss or theft. 

4. Error asserted after account closed. The 

financial institution must comply with the 

error resolution procedures when a consumer 

properly asserts an error, even if the account 

has been closed. 

5. Request for documentation or 

information. A request for documentation or 

other information must be treated as an error 

unless it is clear that the consumer is 

requesting a duplicate copy for tax or other 

record-keeping purposes. 

6. Terminal receipts for transfers of $15 or 

less. The fact that an institution does not 

make a terminal receipt available for a 

transfer of $15 or less in accordance with 

§ 1005.9(e) is not an error for purposes of 

§ 1005.11(a)(1)(vi) or (vii). 

11(b) Notice of Error From Consumer 

11(b)(1) Timing; Contents 

1. Content of error notice. The notice of 

error is effective even if it does not contain 

the consumer’s account number, so long as 

the financial institution is able to identify the 

account in question. For example, the 

consumer could provide a Social Security 

number or other unique means of 

identification. 

2. Investigation pending receipt of 

information. While a financial institution 

may request a written, signed statement from 

the consumer relating to a notice of error, it 

may not delay initiating or completing an 

investigation pending receipt of the 

statement. 

3. Statement held for consumer. When a 

consumer has arranged for periodic 

statements to be held until picked up, the 

statement for a particular cycle is deemed to 

have been transmitted on the date the 

financial institution first makes the statement 

available to the consumer. 

4. Failure to provide statement. When a 

financial institution fails to provide the 

consumer with a periodic statement, a 

request for a copy is governed by this section 

if the consumer gives notice within 60 days 

from the date on which the statement should 

have been transmitted. 

5. Discovery of error by institution. The 

error resolution procedures of this section 

apply when a notice of error is received from 

the consumer, and not when the financial 

institution itself discovers and corrects an 

error. 

6. Notice at particular phone number or 

address. A financial institution may require 

the consumer to give notice only at the 

telephone number or address disclosed by 

the institution, provided the institution 

maintains reasonable procedures to refer the 

consumer to the specified telephone number 

or address if the consumer attempts to give 

notice to the institution in a different 

manner. 

7. Effect of late notice. An institution is not 

required to comply with the requirements of 

this section for any notice of error from the 

consumer that is received by the institution 

later than 60 days from the date on which the 

periodic statement first reflecting the error is 

sent. Where the consumer’s assertion of error 

involves an unauthorized EFT, however, the 

institution must comply with § 1005.6 before 

it may impose any liability on the consumer. 

11(b)(2) Written Confirmation 

1. Written confirmation-of-error notice. If 

the consumer sends a written confirmation of 

error to the wrong address, the financial 

institution must process the confirmation 

through normal procedures. But the 

institution need not provisionally credit the 

consumer’s account if the written 

confirmation is delayed beyond 10 business 

days in getting to the right place because it 

was sent to the wrong address. 

11(c) Time Limits and Extent of Investigation 

1. Notice to consumer. Unless otherwise 

indicated in this section, the financial 

institution may provide the required notices 

to the consumer either orally or in writing. 

2. Written confirmation of oral notice. A 

financial institution must begin its 

investigation promptly upon receipt of an 

oral notice. It may not delay until it has 

received a written confirmation. 

3. Charges for error resolution. If a billing 

error occurred, whether as alleged or in a 

different amount or manner, the financial 

institution may not impose a charge related 

to any aspect of the error-resolution process 

(including charges for documentation or 

investigation). Since the Act grants the 

consumer error-resolution rights, the 

institution should avoid any chilling effect 

on the good-faith assertion of errors that 

might result if charges are assessed when no 

billing error has occurred. 

4. Correction without investigation. A 

financial institution may make, without 

investigation, a final correction to a 

consumer’s account in the amount or manner 

alleged by the consumer to be in error, but 

must comply with all other applicable 

requirements of § 1005.11. 

5. Correction notice. A financial institution 

may include the notice of correction on a 

periodic statement that is mailed or delivered 

within the 10-business-day or 45-calendarday time limits and that clearly identifies the 

correction to the consumer’s account. The 

institution must determine whether such a 

mailing will be prompt enough to satisfy the 

requirements of this section, taking into 

account the specific facts involved. 

6. Correction of an error. If the financial 

institution determines an error occurred, 

within either the 10-day or 45-day period, it 

must correct the error (subject to the liability 

provisions of §§ 1005.6(a) and (b)) including, 

where applicable, the crediting of interest 

and the refunding of any fees imposed by the 

institution. In a combined credit/EFT 

transaction, for example, the institution must 

refund any finance charges incurred as a 

result of the error. The institution need not 

refund fees that would have been imposed 

whether or not the error occurred. 

7. Extent of required investigation. A 

financial institution complies with its duty to 

investigate, correct, and report its 

determination regarding an error described in 

§ 1005.11(a)(1)(vii) by transmitting the 

requested information, clarification, or 

documentation within the time limits set 

forth in § 1005.11(c). If the institution has 

provisionally credited the consumer’s 

account in accordance with § 1005.11(c)(2), it 

may debit the amount upon transmitting the 

requested information, clarification, or 

documentation. 

Paragraph 11(c)(2)(i) 

1. Compliance with all requirements. 

Financial institutions exempted from 

provisionally crediting a consumer’s account 

under §§ 1005.11(c)(2)(i)(A) and (B) must still 

comply with all other requirements of 

§ 1005.11. 

11(c)(3) Extension of Time Periods 

1. POS debit card transactions. The 

extended deadlines for investigating errors 

resulting from POS debit card transactions 

apply to all debit card transactions, including 

those for cash only, at merchants’ POS 

terminals, and also including mail and 

telephone orders. The deadlines do not apply 

to transactions at an ATM, however, even 

though the ATM may be in a merchant 

location. 

11(c)(4) Investigation 

1. Third parties. When information or 

documentation requested by the consumer is 

in the possession of a third party with whom 

the financial institution does not have an 

agreement, the institution satisfies the error 

resolution requirement by so advising the 

consumer within the specified time period. 

2. Scope of investigation. When an alleged 

error involves a payment to a third party 

under the financial institution’s telephone 

bill-payment plan, a review of the 

institution’s own records is sufficient, 

assuming no agreement exists between the 

institution and the third party concerning the 

bill-payment service. 

3. POS transfers. When a consumer alleges 

an error involving a transfer to a merchant 

via a POS terminal, the institution must 

verify the information previously transmitted 

when executing the transfer. For example, 

the financial institution may request a copy 

of the sales receipt to verify that the amount 

of the transfer correctly corresponds to the 

amount of the consumer’s purchase. 

4. Agreement. An agreement that a third 

party will honor an access device is an 

agreement for purposes of this paragraph. A 

financial institution does not have an 

agreement for purposes of § 1005.11(c)(4)(ii) 

solely because it participates in transactions 

that occur under the Federal recurring 

payments programs, or that are cleared 

through an ACH or similar arrangement for 

the clearing and settlement of fund transfers 

generally, or because the institution agrees to 

be bound by the rules of such an 

arrangement. 

5. No EFT agreement. When there is no 

agreement between the institution and the 

third party for the type of EFT involved, the 

financial institution must review any 

relevant information within the institution’s 

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own records for the particular account to 

resolve the consumer’s claim. The extent of 

the investigation required may vary 

depending on the facts and circumstances. 

However, a financial institution may not 

limit its investigation solely to the payment 

instructions where additional information 

within its own records pertaining to the 

particular account in question could help to 

resolve a consumer’s claim. Information that 

may be reviewed as part of an investigation 

might include: 

i. The ACH transaction records for the 

transfer; 

ii. The transaction history of the particular 

account for a reasonable period of time 

immediately preceding the allegation of 

error; 

iii. Whether the check number of the 

transaction in question is notably out-ofsequence; 

iv. The location of either the transaction or 

the payee in question relative to the 

consumer’s place of residence and habitual 

transaction area; 

v. Information relative to the account in 

question within the control of the 

institution’s third-party service providers if 

the financial institution reasonably believes 

that it may have records or other information 

that could be dispositive; or 

vi. Any other information appropriate to 

resolve the claim. 

11(d) Procedures if Financial Institution 

Determines No Error or Different Error 

Occurred 

1. Error different from that alleged. When 

a financial institution determines that an 

error occurred in a manner or amount 

different from that described by the 

consumer, it must comply with the 

requirements of both §§ 1005.11(c) and (d), as 

relevant. The institution may give the notice 

of correction and the explanation separately 

or in a combined form. 

11(d)(1) Written Explanation 

1. Request for documentation. When a 

consumer requests copies of documents, the 

financial institution must provide the copies 

in an understandable form. If an institution 

relied on magnetic tape, it must convert the 

applicable data into readable form, for 

example, by printing it and explaining any 

codes. 

11(d)(2) Debiting Provisional Credit 

1. Alternative procedure for debiting of 

credited funds. The financial institution may 

comply with the requirements of this section 

by notifying the consumer that the 

consumer’s account will be debited five 

business days from the transmittal of the 

notification, specifying the calendar date on 

which the debiting will occur. 

2. Fees for overdrafts. The financial 

institution may not impose fees for items it 

is required to honor under § 1005.11. It may, 

however, impose any normal transaction or 

item fee that is unrelated to an overdraft 

resulting from the debiting. If the account is 

still overdrawn after five business days, the 

institution may impose the fees or finance 

charges to which it is entitled, if any, under 

an overdraft credit plan. 

11(e) Reassertion of Error 

1. Withdrawal of error; right to reassert. 

The financial institution has no further error 

resolution responsibilities if the consumer 

voluntarily withdraws the notice alleging an 

error. A consumer who has withdrawn an 

allegation of error has the right to reassert the 

allegation unless the financial institution had 

already complied with all of the error 

resolution requirements before the allegation 

was withdrawn. The consumer must do so, 

however, within the original 60-day period. 

Section 1005.12 Relation to Other Laws 

12(a) Relation to Truth in Lending 

1. Determining applicable regulation. i. For 

transactions involving access devices that 

also function as credit cards, whether 

Regulation E or Regulation Z (12 CFR part 

1026) applies depends on the nature of the 

transaction. For example, if the transaction 

solely involves an extension of credit, and 

does not include a debit to a checking 

account (or other consumer asset account), 

the liability limitations and error resolution 

requirements of Regulation Z apply. If the 

transaction debits a checking account only 

(with no credit extended), the provisions of 

Regulation E apply. If the transaction debits 

a checking account but also draws on an 

overdraft line of credit attached to the 

account, Regulation E’s liability limitations 

apply, in addition to §§ 1026.13(d) and (g) of 

Regulation Z (which apply because of the 

extension of credit associated with the 

overdraft feature on the checking account). If 

a consumer’s access device is also a credit 

card and the device is used to make 

unauthorized withdrawals from a checking 

account, but also is used to obtain 

unauthorized cash advances directly from a 

line of credit that is separate from the 

checking account, both Regulation E and 

Regulation Z apply. 

ii. The following examples illustrate these 

principles: 

A. A consumer has a card that can be used 

either as a credit card or a debit card. When 

used as a debit card, the card draws on the 

consumer’s checking account. When used as 

a credit card, the card draws only on a 

separate line of credit. If the card is stolen 

and used as a credit card to make purchases 

or to get cash advances at an ATM from the 

line of credit, the liability limits and error 

resolution provisions of Regulation Z apply; 

Regulation E does not apply. 

B. In the same situation, if the card is 

stolen and is used as a debit card to make 

purchases or to get cash withdrawals at an 

ATM from the checking account, the liability 

limits and error resolution provisions of 

Regulation E apply; Regulation Z does not 

apply. 

C. In the same situation, assume the card 

is stolen and used both as a debit card and 

as a credit card; for example, the thief makes 

some purchases using the card as a debit 

card, and other purchases using the card as 

a credit card. Here, the liability limits and 

error resolution provisions of Regulation E 

apply to the unauthorized transactions in 

which the card was used as a debit card, and 

the corresponding provisions of Regulation Z 

apply to the unauthorized transactions in 

which the card was used as a credit card. 

D. Assume a somewhat different type of 

card, one that draws on the consumer’s 

checking account and can also draw on an 

overdraft line of credit attached to the 

checking account. There is no separate line 

of credit, only the overdraft line, associated 

with the card. In this situation, if the card is 

stolen and used, the liability limits and the 

error resolution provisions of Regulation E 

apply. In addition, if the use of the card has 

resulted in accessing the overdraft line of 

credit, the error resolution provisions of 

§§ 1026.13(d) and (g) of Regulation Z also 

apply, but not the other error resolution 

provisions of Regulation Z. 

2. Issuance rules. For access devices that 

also constitute credit cards, the issuance 

rules of Regulation E apply if the only credit 

feature is a preexisting credit line attached to 

the asset account to cover overdrafts (or to 

maintain a specified minimum balance) or an 

overdraft service, as defined in § 1005.17(a). 

Regulation Z (12 CFR part 1026) rules apply 

if there is another type of credit feature; for 

example, one permitting direct extensions of 

credit that do not involve the asset account. 

3. Overdraft service. The addition of an 

overdraft service, as that term is defined in 

§ 1005.17(a), to an accepted access device 

does not constitute the addition of a credit 

feature subject to Regulation Z. Instead, the 

provisions of Regulation E apply, including 

the liability limitations (§ 1005.6) and the 

requirement to obtain consumer consent to 

the service before any fees or charges for 

paying an overdraft may be assessed on the 

account (§ 1005.17). 

12(b) Preemption of Inconsistent State Laws 

1. Specific determinations. The regulation 

prescribes standards for determining whether 

state laws that govern EFTs, and state laws 

regarding gift certificates, store gift cards, or 

general-use prepaid cards that govern 

dormancy, inactivity, or service fees, or 

expiration dates, are preempted by the Act 

and the regulation. A state law that is 

inconsistent may be preempted even if the 

Bureau has not issued a determination. 

However, nothing in § 1005.12(b) provides a 

financial institution with immunity for 

violations of state law if the institution 

chooses not to make state disclosures and the 

Bureau later determines that the state law is 

not preempted. 

2. Preemption determination. The Bureau 

recognizes state law preemption 

determinations made by the Board of 

Governors of the Federal Reserve System 

prior to July 21, 2011, until and unless the 

Bureau makes and publishes any contrary 

determination. The Board of Governors 

determined that certain provisions in the 

state law of Michigan are preempted by the 

Federal law, effective March 30, 1981: 

i. Definition of unauthorized use. Section 

5(4) is preempted to the extent that it relates 

to the section of state law governing 

consumer liability for unauthorized use of an 

access device. 

ii. Consumer liability for unauthorized use 

of an account. Section 14 is inconsistent with 

§ 1005.6 and is less protective of the 

consumer than the Federal law. The state law 

places liability on the consumer for the 

unauthorized use of an account in cases 

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involving the consumer’s negligence. Under 

the Federal law, a consumer’s liability for 

unauthorized use is not related to the 

consumer’s negligence and depends instead 

on the consumer’s promptness in reporting 

the loss or theft of the access device. 

iii. Error resolution. Section 15 is 

preempted because it is inconsistent with 

§ 1005.11 and is less protective of the 

consumer than the Federal law. The state law 

allows financial institutions up to 70 days to 

resolve errors, whereas the Federal law 

generally requires errors to be resolved 

within 45 days. 

iv. Receipts and periodic statements. 

Sections 17 and 18 are preempted because 

they are inconsistent with § 1005.9. The state 

provisions require a different disclosure of 

information than does the Federal law. The 

receipt provision is also preempted because 

it allows the consumer to be charged for 

receiving a receipt if a machine cannot 

furnish one at the time of a transfer. 

Section 1005.13 Administrative 

Enforcement; Record Retention 

13(b) Record Retention 

1. Requirements. A financial institution 

need not retain records that it has given 

disclosures and documentation to each 

consumer; it need only retain evidence 

demonstrating that its procedures reasonably 

ensure the consumers’ receipt of required 

disclosures and documentation. 

Section 1005.14 Electronic Fund Transfer 

Service Provider Not Holding Consumer’s 

Account 

14(a) Electronic Fund Transfer Service 

Providers Subject to Regulation 

1. Applicability. This section applies only 

when a service provider issues an access 

device to a consumer for initiating transfers 

to or from the consumer’s account at a 

financial institution and the two entities have 

no agreement regarding this EFT service. If 

the service provider does not issue an access 

device to the consumer for accessing an 

account held by another institution, it does 

not qualify for the treatment accorded by 

§ 1005.14. For example, this section does not 

apply to an institution that initiates 

preauthorized payroll deposits to consumer 

accounts on behalf of an employer. By 

contrast, § 1005.14 can apply to an institution 

that issues a code for initiating telephone 

transfers to be carried out through the ACH 

from a consumer’s account at another 

institution. This is the case even if the 

consumer has accounts at both institutions. 

2. ACH agreements. The ACH rules 

generally do not constitute an agreement for 

purposes of this section. However, an ACH 

agreement under which members specifically 

agree to honor each other’s debit cards is an 

‘‘agreement,’’ and thus this section does not 

apply. 

14(b) Compliance by Electronic Fund 

Transfer Service Provider 

1. Liability. The service provider is liable 

for unauthorized EFTs that exceed limits on 

the consumer’s liability under § 1005.6. 

14(b)(1) Disclosures and Documentation 

1. Periodic statements from electronic fund 

transfer service provider. A service provider 

that meets the conditions set forth in this 

paragraph does not have to issue periodic 

statements. A service provider that does not 

meet the conditions need only include on 

periodic statements information about 

transfers initiated with the access device it 

has issued. 

14(b)(2) Error Resolution 

1. Error resolution. When a consumer 

notifies the service provider of an error, the 

EFT service provider must investigate and 

resolve the error in compliance with 

§ 1005.11 as modified by § 1005.14(b)(2). If 

an error occurred, any fees or charges 

imposed as a result of the error, either by the 

service provider or by the account-holding 

institution (for example, overdraft or 

dishonor fees) must be reimbursed to the 

consumer by the service provider. 

14(c) Compliance by Account-Holding 

Institution 

14(c)(1) Documentation 

1. Periodic statements from accountholding institution. The periodic statement 

provided by the account-holding institution 

need only contain the information required 

by § 1005.9(b)(1). 

Section 1005.16 Disclosures at Automated 

Teller Machines 

16(b) General 

Paragraph 16(b)(1) 

1. Specific notices. An ATM operator that 

imposes a fee for a specific type of 

transaction—such as for a cash withdrawal, 

but not for a balance inquiry, or for some 

cash withdrawals, but not for others (such as 

where the card was issued by a foreign bank 

or by a card issuer that has entered into a 

special contractual relationship with the 

ATM operator regarding surcharges)—may 

provide a notice on or at the ATM that a fee 

will be imposed or a notice that a fee may 

be imposed for providing EFT services or 

may specify the type of EFT for which a fee 

is imposed. If, however, a fee will be 

imposed in all instances, the notice must 

state that a fee will be imposed. 

Section 1005.17 Requirements for 

Overdraft Services 

17(a) Definition 

1. Exempt securities- and commoditiesrelated lines of credit. The definition of 

‘‘overdraft service’’ does not include the 

payment of transactions in a securities or 

commodities account pursuant to which 

credit is extended by a broker-dealer 

registered with the Securities and Exchange 

Commission or the Commodity Futures 

Trading Commission. 

17(b) Opt-In Requirement 

1. Scope. i. Account-holding institutions. 

Section 1005.17(b) applies to ATM and onetime debit card transactions made with a 

debit card issued by or on behalf of the 

account-holding institution. Section 

1005.17(b) does not apply to ATM and onetime debit card transactions made with a 

debit card issued by or through a third party 

unless the debit card is issued on behalf of 

the account-holding institution. 

ii. Coding of transactions. A financial 

institution complies with the rule if it adapts 

its systems to identify debit card transactions 

as either one-time or recurring. If it does so, 

the financial institution may rely on the 

transaction’s coding by merchants, other 

institutions, and other third parties as a onetime or a preauthorized or recurring debit 

card transaction. 

iii. One-time debit card transactions. The 

opt-in applies to any one-time debit card 

transaction, whether the card is used, for 

example, at a point-of-sale, in an online 

transaction, or in a telephone transaction. 

iv. Application of fee prohibition. The 

prohibition on assessing overdraft fees under 

§ 1005.17(b)(1) applies to all institutions. For 

example, the prohibition applies to an 

institution that has a policy and practice of 

declining to authorize and pay any ATM or 

one-time debit card transactions when the 

institution has a reasonable belief at the time 

of the authorization request that the 

consumer does not have sufficient funds 

available to cover the transaction. However, 

the institution is not required to comply with 

§§ 1005.17(b)(1)(i)–(iv), including the notice 

and opt-in requirements, if it does not assess 

overdraft fees for paying ATM or one-time 

debit card transactions that overdraw the 

consumer’s account. Assume an institution 

does not provide an opt-in notice, but 

authorizes an ATM or one-time debit card 

transaction on the reasonable belief that the 

consumer has sufficient funds in the account 

to cover the transaction. If, at settlement, the 

consumer has insufficient funds in the 

account (for example, due to intervening 

transactions that post to the consumer’s 

account), the institution is not permitted to 

assess an overdraft fee or charge for paying 

that transaction. 

2. No affirmative consent. A financial 

institution may pay overdrafts for ATM and 

one-time debit card transactions even if a 

consumer has not affirmatively consented or 

opted in to the institution’s overdraft service. 

If the institution pays such an overdraft 

without the consumer’s affirmative consent, 

however, it may not impose a fee or charge 

for doing so. These provisions do not limit 

the institution’s ability to debit the 

consumer’s account for the amount 

overdrawn if the institution is permitted to 

do so under applicable law. 

3. Overdraft transactions not required to be 

authorized or paid. Section 1005.17 does not 

require a financial institution to authorize or 

pay an overdraft on an ATM or one-time 

debit card transaction even if the consumer 

has affirmatively consented to an 

institution’s overdraft service for such 

transactions. 

4. Reasonable opportunity to provide 

affirmative consent. A financial institution 

provides a consumer with a reasonable 

opportunity to provide affirmative consent 

when, among other things, it provides 

reasonable methods by which the consumer 

may affirmatively consent. A financial 

institution provides such reasonable 

methods, if: 

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i. By mail. The institution provides a form 

for the consumer to fill out and mail to 

affirmatively consent to the service. 

ii. By telephone. The institution provides 

a readily-available telephone line that 

consumers may call to provide affirmative 

consent. 

iii. By electronic means. The institution 

provides an electronic means for the 

consumer to affirmatively consent. For 

example, the institution could provide a form 

that can be accessed and processed at its Web 

site, where the consumer may click on a 

check box to provide consent and confirm 

that choice by clicking on a button that 

affirms the consumer’s consent. 

iv. In person. The institution provides a 

form for the consumer to complete and 

present at a branch or office to affirmatively 

consent to the service. 

5. Implementing opt-in at account-opening. 

A financial institution may provide notice 

regarding the institution’s overdraft service 

prior to or at account-opening. A financial 

institution may require a consumer, as a 

necessary step to opening an account, to 

choose whether or not to opt into the 

payment of ATM or one-time debit card 

transactions pursuant to the institution’s 

overdraft service. For example, the 

institution could require the consumer, at 

account opening, to sign a signature line or 

check a box on a form (consistent with 

comment 17(b)–6) indicating whether or not 

the consumer affirmatively consents at 

account opening. If the consumer does not 

check any box or provide a signature, the 

institution must assume that the consumer 

does not opt in. Or, the institution could 

require the consumer to choose between an 

account that does not permit the payment of 

ATM or one-time debit card transactions 

pursuant to the institution’s overdraft service 

and an account that permits the payment of 

such overdrafts, provided that the accounts 

comply with § 1005.17(b)(2) and 

§ 1005.17(b)(3). 

6. Affirmative consent required. A 

consumer’s affirmative consent, or opt-in, to 

a financial institution’s overdraft service 

must be obtained separately from other 

consents or acknowledgements obtained by 

the institution, including a consent to receive 

disclosures electronically. An institution may 

obtain a consumer’s affirmative consent by 

providing a blank signature line or check box 

that the consumer could sign or select to 

affirmatively consent, provided that the 

signature line or check box is used solely for 

purposes of evidencing the consumer’s 

choice whether or not to opt into the 

overdraft service and not for other purposes. 

An institution does not obtain a consumer’s 

affirmative consent by including preprinted 

language about the overdraft service in an 

account disclosure provided with a signature 

card or contract that the consumer must sign 

to open the account and that acknowledges 

the consumer’s acceptance of the account 

terms. Nor does an institution obtain a 

consumer’s affirmative consent by providing 

a signature card that contains a pre-selected 

check box indicating that the consumer is 

requesting the service. 

7. Confirmation. A financial institution 

may comply with the requirement in 

§ 1005.17(b)(1)(iv) to provide confirmation of 

the consumer’s affirmative consent by 

mailing or delivering to the consumer a copy 

of the consumer’s completed opt-in notice, or 

by mailing or delivering a letter or notice to 

the consumer acknowledging that the 

consumer has elected to opt into the 

institution’s service. The confirmation, 

which must be provided in writing, or 

electronically if the consumer agrees, must 

include a statement informing the consumer 

of the right to revoke the opt-in at any time. 

See § 1005.17(d)(6), which permits 

institutions to include the revocation 

statement on the initial opt-in notice. An 

institution complies with the confirmation 

requirement if it has adopted reasonable 

procedures designed to ensure that overdraft 

fees are assessed only in connection with 

transactions paid after the confirmation has 

been mailed or delivered to the consumer. 

8. Outstanding Negative Balance. If a fee or 

charge is based on the amount of the 

outstanding negative balance, an institution 

is prohibited from assessing any such fee if 

the negative balance is solely attributable to 

an ATM or one-time debit card transaction, 

unless the consumer has opted into the 

institution’s overdraft service for ATM or 

one-time debit card transactions. However, 

the rule does not prohibit an institution from 

assessing such a fee if the negative balance 

is attributable in whole or in part to a check, 

ACH, or other type of transaction not subject 

to the prohibition on assessing overdraft fees 

in § 1005.17(b)(1). 

9. Daily or Sustained Overdraft, Negative 

Balance, or Similar Fee or Charge i. Daily or 

sustained overdraft, negative balance, or 

similar fees or charges. If a consumer has not 

opted into the institution’s overdraft service 

for ATM or one-time debit card transactions, 

the fee prohibition in § 1005.17(b)(1) applies 

to all overdraft fees or charges for paying 

those transactions, including but not limited 

to daily or sustained overdraft, negative 

balance, or similar fees or charges. Thus, 

where a consumer’s negative balance is 

solely attributable to an ATM or one-time 

debit card transaction, the rule prohibits the 

assessment of such fees unless the consumer 

has opted in. However, the rule does not 

prohibit an institution from assessing daily or 

sustained overdraft, negative balance, or 

similar fees or charges if a negative balance 

is attributable in whole or in part to a check, 

ACH, or other type of transaction not subject 

to the fee prohibition. When the negative 

balance is attributable in part to an ATM or 

one-time debit card transaction, and in part 

to a check, ACH, or other type of transaction 

not subject to the fee prohibition, the date on 

which such a fee may be assessed is based 

on the date on which the check, ACH, or 

other type of transaction is paid into 

overdraft. 

ii. Examples. The following examples 

illustrate how an institution complies with 

the fee prohibition. For each example, 

assume the following: (a) The consumer has 

not opted into the payment of ATM or onetime debit card overdrafts; (b) these 

transactions are paid into overdraft because 

the amount of the transaction at settlement 

exceeded the amount authorized or the 

amount was not submitted for authorization; 

(c) under the account agreement, the 

institution may charge a per-item fee of $20 

for each overdraft, and a one-time sustained 

overdraft fee of $20 on the fifth consecutive 

day the consumer’s account remains 

overdrawn; (d) the institution posts ATM and 

debit card transactions before other 

transactions; and (e) the institution allocates 

deposits to account debits in the same order 

in which it posts debits. 

A. Assume that a consumer has a $50 

account balance on March 1. That day, the 

institution posts a one-time debit card 

transaction of $60 and a check transaction of 

$40. The institution charges an overdraft fee 

of $20 for the check overdraft but cannot 

assess an overdraft fee for the debit card 

transaction. At the end of the day, the 

consumer has an account balance of negative 

$70. The consumer does not make any 

deposits to the account, and no other 

transactions occur between March 2 and 

March 6. Because the consumer’s negative 

balance is attributable in part to the $40 

check (and associated overdraft fee), the 

institution may charge a sustained overdraft 

fee on March 6 in connection with the check. 

B. Same facts as in A., except that on 

March 3, the consumer deposits $40 in the 

account. The institution allocates the $40 to 

the debit card transaction first, consistent 

with its posting order policy. At the end of 

the day on March 3, the consumer has an 

account balance of negative $30, which is 

attributable to the check transaction (and 

associated overdraft fee). The consumer does 

not make any further deposits to the account, 

and no other transactions occur between 

March 4 and March 6. Because the remaining 

negative balance is attributable to the March 

1 check transaction, the institution may 

charge a sustained overdraft fee on March 6 

in connection with the check. 

C. Assume that a consumer has a $50 

account balance on March 1. That day, the 

institution posts a one-time debit card 

transaction of $60. At the end of that day, the 

consumer has an account balance of negative 

$10. The institution may not assess an 

overdraft fee for the debit card transaction. 

On March 3, the institution pays a check 

transaction of $100 and charges an overdraft 

fee of $20. At the end of that day, the 

consumer has an account balance of negative 

$130. The consumer does not make any 

deposits to the account, and no other 

transactions occur between March 4 and 

March 8. Because the consumer’s negative 

balance is attributable in part to the check, 

the institution may assess a $20 sustained 

overdraft fee. However, because the check 

was paid on March 3, the institution must 

use March 3 as the start date for determining 

the date on which the sustained overdraft fee 

may be assessed. Thus, the institution may 

charge a $20 sustained overdraft fee on 

March 8. 

iii. Alternative approach. For a consumer 

who does not opt into the institution’s 

overdraft service for ATM and one-time debit 

card transactions, an institution may also 

comply with the fee prohibition in 

§ 1005.17(b)(1) by not assessing daily or 

sustained overdraft, negative balance, or 

similar fees or charges unless a consumer’s 

negative balance is attributable solely to 

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check, ACH or other types of transactions not 

subject to the fee prohibition while that 

negative balance remains outstanding. In 

such case, the institution would not have to 

determine how to allocate subsequent 

deposits that reduce but do not eliminate the 

negative balance. For example, if a consumer 

has a negative balance of $30, of which $10 

is attributable to a one-time debit card 

transaction, an institution complies with the 

fee prohibition if it does not assess a 

sustained overdraft fee while that negative 

balance remains outstanding. 

17(b)(2) Conditioning Payment of Other 

Overdrafts on Consumer’s Affirmative 

Consent 

1. Application of the same criteria. The 

prohibitions on conditioning in 

§ 1005.17(b)(2) generally require an 

institution to apply the same criteria for 

deciding when to pay overdrafts for checks, 

ACH transactions, and other types of 

transactions, whether or not the consumer 

has affirmatively consented to the 

institution’s overdraft service with respect to 

ATM and one-time debit card overdrafts. For 

example, if an institution’s internal criteria 

would lead the institution to pay a check 

overdraft if the consumer had affirmatively 

consented to the institution’s overdraft 

service for ATM and one-time debit card 

transactions, it must also apply the same 

criteria in a consistent manner in 

determining whether to pay the check 

overdraft if the consumer has not opted in. 

2. No requirement to pay overdrafts on 

checks, ACH transactions, or other types of 

transactions. The prohibition on 

conditioning in § 1005.17(b)(2) does not 

require an institution to pay overdrafts on 

checks, ACH transactions, or other types of 

transactions in all circumstances. Rather, the 

rule simply prohibits institutions from 

considering the consumer’s decision not to 

opt in when deciding whether to pay 

overdrafts for checks, ACH transactions, or 

other types of transactions. 

17(b)(3) Same Account Terms, Conditions, 

and Features 

1. Variations in terms, conditions, or 

features. A financial institution may not vary 

the terms, conditions, or features of an 

account provided to a consumer who does 

not affirmatively consent to the payment of 

ATM or one-time debit card transactions 

pursuant to the institution’s overdraft 

service. This includes, but is not limited to: 

i. Interest rates paid and fees assessed; 

ii. The type of ATM or debit card provided 

to the consumer. For instance, an institution 

may not provide consumers who do not opt 

in a PIN-only card while providing a debit 

card with both PIN and signature-debit 

functionality to consumers who opt in; 

iii. Minimum balance requirements; or 

iv. Account features such as online bill 

payment services. 

2. Limited-feature bank accounts. Section 

1005.17(b)(3) does not prohibit institutions 

from offering deposit account products with 

limited features, provided that a consumer is 

not required to open such an account because 

the consumer did not opt in. For example, 

§ 1005.17(b)(3) does not prohibit an 

institution from offering a checking account 

designed to comply with state basic banking 

laws, or designed for consumers who are not 

eligible for a checking account because of 

their credit or checking account history, 

which may include features limiting the 

payment of overdrafts. However, a consumer 

who applies, and is otherwise eligible, for a 

full-service or other particular deposit 

account product may not be provided instead 

with the account with more limited features 

because the consumer has declined to opt in. 

17(c) Timing 

1. Permitted fees or charges. Fees or 

charges for ATM and one-time debit card 

overdrafts may be assessed only for 

overdrafts paid on or after the date the 

financial institution receives the consumer’s 

affirmative consent to the institution’s 

overdraft service. See also comment 17(b)–7. 

17(d) Content and Format 

1. Overdraft service. The description of the 

institution’s overdraft service should indicate 

that the consumer has the right to 

affirmatively consent, or opt into payment of 

overdrafts for ATM and one-time debit card 

transactions. The description should also 

disclose the institution’s policies regarding 

the payment of overdrafts for other 

transactions, including checks, ACH 

transactions, and automatic bill payments, 

provided that this content is not more 

prominent than the description of the 

consumer’s right to opt into payment of 

overdrafts for ATM and one-time debit card 

transactions. As applicable, the institution 

also should indicate that it pays overdrafts at 

its discretion, and should briefly explain that 

if the institution does not authorize and pay 

an overdraft, it may decline the transaction. 

2. Maximum fee. If the amount of a fee may 

vary from transaction to transaction, the 

financial institution may indicate that the 

consumer may be assessed a fee ‘‘up to’’ the 

maximum fee. The financial institution must 

disclose all applicable overdraft fees, 

including but not limited to: 

i. Per item or per transaction fees; 

ii. Daily overdraft fees; 

iii. Sustained overdraft fees, where fees are 

assessed when the consumer has not repaid 

the amount of the overdraft after some period 

of time (for example, if an account remains 

overdrawn for five or more business days); or 

iv. Negative balance fees. 

3. Opt-in methods. The opt-in notice must 

include the methods by which the consumer 

may consent to the overdraft service for ATM 

and one-time debit card transactions. 

Institutions may tailor Model Form A–9 to 

the methods offered to consumers for 

affirmatively consenting to the service. For 

example, an institution need not provide the 

tear-off portion of Model Form A–9 if it is 

only permitting consumers to opt-in 

telephonically or electronically. Institutions 

may, but are not required, to provide a 

signature line or check box where the 

consumer can indicate that he or she declines 

to opt in. 

4. Identification of consumer’s account. An 

institution may use any reasonable method to 

identify the account for which the consumer 

submits the opt-in notice. For example, the 

institution may include a line for a printed 

name and an account number, as shown in 

Model Form A–9. Or, the institution may 

print a bar code or use other tracking 

information. See also comment 17(b)–6, 

which describes how an institution obtains a 

consumer’s affirmative consent. 

5. Alternative plans for covering overdrafts. 

If the institution offers both a line of credit 

subject to Regulation Z (12 CFR part 1026) 

and a service that transfers funds from 

another account of the consumer held at the 

institution to cover overdrafts, the institution 

must state in its opt-in notice that both 

alternative plans are offered. For example, 

the notice might state ‘‘We also offer 

overdraft protection plans, such as a link to 

a savings account or to an overdraft line of 

credit, which may be less expensive than our 

standard overdraft practices.’’ If the 

institution offers one, but not the other, it 

must state in its opt-in notice the alternative 

plan that it offers. If the institution does not 

offer either plan, it should omit the reference 

to the alternative plans. 

17(f) Continuing Right To Opt-In or To 

Revoke the Opt-In 

1. Fees or charges for overdrafts incurred 

prior to revocation. Section 1005.17(f)(1) 

provides that a consumer may revoke his or 

her prior consent at any time. If a consumer 

does so, this provision does not require the 

financial institution to waive or reverse any 

overdraft fees assessed on the consumer’s 

account prior to the institution’s 

implementation of the consumer’s revocation 

request. 

17(g) Duration of Opt-In 

1. Termination of overdraft service. A 

financial institution may, for example, 

terminate the overdraft service when the 

consumer makes excessive use of the service. 

Section 1005.18 Requirements for 

Financial Institutions Offering Payroll Card 

Accounts 

18(a) Coverage 

1. Issuance of access device. Consistent 

with § 1005.5(a), a financial institution may 

issue an access device only in response to an 

oral or written request for the device, or as 

a renewal or substitute for an accepted access 

device. A consumer is deemed to request an 

access device for a payroll card account 

when the consumer chooses to receive salary 

or other compensation through a payroll card 

account. 

2. Application to employers and service 

providers. Typically, employers and thirdparty service providers do not meet the 

definition of a ‘‘financial institution’’ subject 

to the regulation because they neither hold 

payroll card accounts nor issue payroll cards 

and agree with consumers to provide EFT 

services in connection with payroll card 

accounts. However, to the extent an employer 

or a service provider undertakes either of 

these functions, it would be deemed a 

financial institution under the regulation. 

18(b) Alternative to Periodic Statements 

1. Posted transactions. A history of 

transactions provided under 

§§ 1005.18(b)(1)(ii) and (iii) shall reflect 

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transfers once they have been posted to the 

account. Thus, an institution does not need 

to include transactions that have been 

authorized, but that have not yet posted to 

the account. 

2. Electronic history. The electronic history 

required under § 1005.18(b)(1)(ii) must be 

provided in a form that the consumer may 

keep, as required under § 1005.4(a)(1). 

Financial institutions may satisfy this 

requirement if they make the electronic 

history available in a format that is capable 

of being retained. For example, an institution 

satisfies the requirement if it provides a 

history at a Web site in a format that is 

capable of being printed or stored 

electronically using a web browser. 

18(c) Modified Requirements 

1. Error resolution safe harbor provision. 

Institutions that choose to investigate notices 

of error provided up to 120 days from the 

date a transaction has posted to a consumer’s 

account may still disclose the error 

resolution time period required by the 

regulation (as set forth in the Model Form in 

Appendix A–7). Specifically, an institution 

may disclose to payroll card account holders 

that the institution will investigate any notice 

of error provided within 60 days of the 

consumer electronically accessing an account 

or receiving a written history upon request 

that reflects the error, even if, for some or all 

transactions, the institution investigates any 

notice of error provided up to 120 days from 

the date that the transaction alleged to be in 

error has posted to the consumer’s account. 

Similarly, an institution’s summary of the 

consumer’s liability (as required under 

§ 1005.7(b)(1)) may disclose that liability is 

based on the consumer providing notice of 

error within 60 days of the consumer 

electronically accessing an account or 

receiving a written history reflecting the 

error, even if, for some or all transactions, the 

institution allows a consumer to assert a 

notice of error up to 120 days from the date 

of posting of the alleged error. 

2. Electronic access. A consumer is deemed 

to have accessed a payroll card account 

electronically when the consumer enters a 

user identification code or password or 

otherwise complies with a security procedure 

used by an institution to verify the 

consumer’s identity. An institution is not 

required to determine whether a consumer 

has in fact accessed information about 

specific transactions to trigger the beginning 

of the 60-day periods for liability limits and 

error resolution under §§ 1005.6 and 1005.11. 

3. Untimely notice of error. An institution 

that provides a transaction history under 

§ 1005.18(b)(1) is not required to comply 

with the requirements of § 1005.11 for any 

notice of error from the consumer pertaining 

to a transfer that occurred more than 60 days 

prior to the earlier of the date the consumer 

electronically accesses the account or the 

date the financial institution sends a written 

history upon the consumer’s request. 

(Alternatively, as provided in 

§ 1005.18(c)(4)(ii), an institution need not 

comply with the requirements of § 1005.11 

with respect to any notice of error received 

from the consumer more than 120 days after 

the date of posting of the transfer allegedly 

in error.) Where the consumer’s assertion of 

error involves an unauthorized EFT, 

however, the institution must comply with 

§ 1005.6 before it may impose any liability on 

the consumer. 

Section 1005.20 Requirements for Gift 

Cards and Gift Certificates 

20(a) Definitions 

1. Form of card, code, or device. Section 

1005.20 applies to any card, code, or other 

device that meets one of the definitions in 

§§ 1005.20(a)(1) through (a)(3) (and is not 

otherwise excluded by § 1005.20(b)), even if 

it is not issued in card form. Section 1005.20 

applies, for example, to an account number 

or bar code that can be used to access 

underlying funds. Similarly, § 1005.20 

applies to a device with a chip or other 

embedded mechanism that links the device 

to stored funds, such as a mobile phone or 

sticker containing a contactless chip that 

enables the consumer to access the stored 

funds. A card, code, or other device that 

meets the definition in §§ 1005.20(a)(1) 

through (a)(3) includes an electronic promise 

(see comment 20(a)–2) as well as a promise 

that is not electronic. See, however, 

§ 1005.20(b)(5). In addition, § 1005.20 applies 

if a merchant issues a code that entitles a 

consumer to redeem the code for goods or 

services, regardless of the medium in which 

the code is issued (see, however, 

§ 1005.20(b)(5)), and whether or not it may be 

redeemed electronically or in the merchant’s 

store. Thus, for example, if a merchant emails 

a code that a consumer may redeem in a 

specified amount either online or in the 

merchant’s store, that code is covered under 

§ 1005.20, unless one of the exclusions in 

§ 1005.20(b) apply. 

2. Electronic promise. The term ‘‘electronic 

promise’’ as used in EFTA sections 

915(a)(2)(B), (a)(2)(C), and (a)(2)(D) means a 

person’s commitment or obligation 

communicated or stored in electronic form 

made to a consumer to provide payment for 

goods or services for transactions initiated by 

the consumer. The electronic promise is itself 

represented by a card, code or other device 

that is issued or honored by the person, 

reflecting the person’s commitment or 

obligation to pay. For example, if a merchant 

issues a code that can be given as a gift and 

that entitles the recipient to redeem the code 

in an online transaction for goods or services, 

that code represents an electronic promise by 

the merchant and is a card, code, or other 

device covered by § 1005.20. 

3. Cards, codes, or other devices 

redeemable for specific goods or services. 

Certain cards, codes, or other devices may be 

redeemable upon presentation for a specific 

good or service, or ‘‘experience,’’ such as a 

spa treatment, hotel stay, or airline flight. In 

other cases, a card, code, or other device may 

entitle the consumer to a certain percentage 

off the purchase of a good or service, such 

as 20% off of any purchase in a store. Such 

cards, codes, or other devices generally are 

not subject to the requirements of this section 

because they are not issued to a consumer 

‘‘in a specified amount’’ as required under 

the definitions of ‘‘gift certificate,’’ ‘‘store gift 

card,’’ or ‘‘general-use prepaid card.’’ 

However, if the card, code, or other device 

is issued in a specified or denominated 

amount that can be applied toward the 

purchase of a specific good or service, such 

as a certificate or card redeemable for a spa 

treatment up to $50, the card, code, or other 

device is subject to this section, unless one 

of the exceptions in § 1005.20(b) apply. See, 

e.g., § 1005.20(b)(3). Similarly, if the card, 

code, or other device states a specific 

monetary value, such as ‘‘a $50 value,’’ the 

card, code, or other device is subject to this 

section, unless an exclusion in § 1005.20(b) 

applies. 

4. Issued primarily for personal, family, or 

household purposes. Section 1005.20 only 

applies to cards, codes, or other devices that 

are sold or issued to a consumer primarily for 

personal, family, or household purposes. A 

card, code, or other device initially 

purchased by a business is subject to this 

section if the card, code, or other device is 

purchased for redistribution or resale to 

consumers primarily for personal, family, or 

household purposes. Moreover, the fact that 

a card, code, or other device may be 

primarily funded by a business, for example, 

in the case of certain rewards or incentive 

cards, does not mean the card, code, or other 

device is outside the scope of § 1005.20, if 

the card, code, or other device will be 

provided to a consumer primarily for 

personal, family, or household purposes. But 

see § 1005.20(b)(3). Whether a card, code, or 

other device is issued to a consumer 

primarily for personal, family, or household 

purposes will depend on the facts and 

circumstances. For example, if a program 

manager purchases store gift cards directly 

from an issuing merchant and sells those 

cards through the program manager’s retail 

outlets, such gift cards are subject to the 

requirements of § 1005.20 because the store 

gift cards are sold to consumers primarily for 

personal, family, or household purposes. In 

contrast, a card, code, or other device 

generally would not be issued to consumers 

primarily for personal, family, or household 

purposes, and therefore would fall outside 

the scope of § 1005.20, if the purchaser of the 

card, code, or device is contractually 

prohibited from reselling or redistributing the 

card, code, or device to consumers primarily 

for personal, family, or household purposes, 

and reasonable policies and procedures are 

maintained to avoid such sale or distribution 

for such purposes. However, if an entity that 

has purchased cards, codes, or other devices 

for business purposes sells or distributes 

such cards, codes, or other devices to 

consumers primarily for personal, family, or 

household purposes, that entity does not 

comply with § 1005.20 if it has not otherwise 

met the substantive and disclosure 

requirements of the rule or unless an 

exclusion in § 1005.20(b) applies. 

5. Examples of cards, codes, or other 

devices issued for business purposes. 

Examples of cards, codes, or other devices 

that are issued and used for business 

purposes and therefore excluded from the 

definitions of ‘‘gift certificate,’’ ‘‘store gift 

card,’’ or ‘‘general-use prepaid card’’ include: 

i. Cards, codes, or other devices to 

reimburse employees for travel or moving 

expenses. 

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ii. Cards, codes, or other devices for 

employees to use to purchase office supplies 

and other business-related items. 

20(a)(2) Store Gift Card 

1. Relationship between ‘‘gift certificate’’ 

and ‘‘store gift card.’’ The term ‘‘store gift 

card’’ in § 1005.20(a)(2) includes ‘‘gift 

certificate’’ as defined in § 1005.20(a)(1). For 

example, a numeric or alphanumeric code 

representing a specified dollar amount or 

value that is electronically sent to a 

consumer as a gift which can be redeemed or 

exchanged by the recipient to obtain goods or 

services may be both a ‘‘gift certificate’’ and 

a ‘‘store gift card’’ if the specified amount or 

value cannot be increased. 

2. Affiliated group of merchants. The term 

‘‘affiliated group of merchants’’ means two or 

more affiliated merchants or other persons 

that are related by common ownership or 

common corporate control (see, e.g., 12 CFR 

227.3(b) and 12 CFR 223.2) and that share the 

same name, mark, or logo. For example, the 

term includes franchisees that are subject to 

a common set of corporate policies or 

practices under the terms of their franchise 

licenses. The term also applies to two or 

more merchants or other persons that agree 

among themselves, by contract or otherwise, 

to redeem cards, codes, or other devices 

bearing the same name, mark, or logo (other 

than the mark, logo, or brand of a payment 

network), for the purchase of goods or 

services solely at such merchants or persons. 

For example, assume a movie theatre chain 

and a restaurant chain jointly agree to issue 

cards that share the same ‘‘Flix and Food’’ 

logo that can be redeemed solely towards the 

purchase of movie tickets or concessions at 

any of the participating movie theatres, or 

towards the purchase of food or beverages at 

any of the participating restaurants. For 

purposes of § 1005.20, the movie theatre 

chain and the restaurant chain would be 

considered to be an affiliated group of 

merchants, and the cards are considered to be 

‘‘store gift cards.’’ However, merchants or 

other persons are not considered to be 

affiliated merely because they agree to accept 

a card that bears the mark, logo, or brand of 

a payment network. 

3. Mall gift cards. See comment 20(a)(3)– 

2. 

20(a)(3) General-Use Prepaid Card 

1. Redeemable upon presentation at 

multiple, unaffiliated merchants. A card, 

code, or other device is redeemable upon 

presentation at multiple, unaffiliated 

merchants if, for example, such merchants 

agree to honor the card, code, or device if it 

bears the mark, logo, or brand of a payment 

network, pursuant to the rules of the 

payment network. 

2. Mall gift cards. Mall gift cards that are 

intended to be used or redeemed for goods 

or services at participating retailers within a 

shopping mall may be considered store gift 

cards or general-use prepaid cards depending 

on the merchants with which the cards may 

be redeemed. For example, if a mall card may 

only be redeemed at merchants within the 

mall itself, the card is more likely to be 

redeemable at an affiliated group of 

merchants and considered a store gift card. 

However, certain mall cards also carry the 

brand of a payment network and can be used 

at any retailer that accepts that card brand, 

including retailers located outside of the 

mall. Such cards are considered general-use 

prepaid cards. 

20(a)(4) Loyalty, Award, or Promotional Gift 

Card 

1. Examples of loyalty, award, or 

promotional programs. Examples of loyalty, 

award, or promotional programs under 

§ 1005.20(a)(4) include, but are not limited 

to: 

i. Consumer retention programs operated 

or administered by a merchant or other 

person that provide to consumers cards or 

coupons redeemable for or towards goods or 

services or other monetary value as a reward 

for purchases made or for visits to the 

participating merchant. 

ii. Sales promotions operated or 

administered by a merchant or product 

manufacturer that provide coupons or 

discounts redeemable for or towards goods or 

services or other monetary value. 

iii. Rebate programs operated or 

administered by a merchant or product 

manufacturer that provide cards redeemable 

for or towards goods or services or other 

monetary value to consumers in connection 

with the consumer’s purchase of a product or 

service and the consumer’s completion of the 

rebate submission process. 

iv. Sweepstakes or contests that distribute 

cards redeemable for or towards goods or 

services or other monetary value to 

consumers as an invitation to enter into the 

promotion for a chance to win a prize. 

v. Referral programs that provide cards 

redeemable for or towards goods or services 

or other monetary value to consumers in 

exchange for referring other potential 

consumers to a merchant. 

vi. Incentive programs through which an 

employer provides cards redeemable for or 

towards goods or services or other monetary 

value to employees, for example, to recognize 

job performance, such as increased sales, or 

to encourage employee wellness and safety. 

vii. Charitable or community relations 

programs through which a company provides 

cards redeemable for or towards goods or 

services or other monetary value to a charity 

or community group for their fundraising 

purposes, for example, as a reward for a 

donation or as a prize in a charitable event. 

2. Issued for loyalty, award, or promotional 

purposes. To indicate that a card, code, or 

other device is issued for loyalty, award, or 

promotional purposes as required by 

§ 1005.20(a)(4)(iii), it is sufficient for the 

card, code, or other device to state on the 

front, for example, ‘‘Reward’’ or 

‘‘Promotional.’’ 

3. Reference to toll-free number and Web 

site. If a card, code, or other device issued in 

connection with a loyalty, award, or 

promotional program does not have any fees, 

the disclosure under § 1005.20(a)(4)(iii)(D) is 

not required on the card, code, or other 

device. 

20(a)(6) Service Fee 

1. Service fees. Under § 1005.20(a)(6), a 

service fee includes a periodic fee for holding 

or use of a gift certificate, store gift card, or 

general-use prepaid card. A periodic fee 

includes any fee that may be imposed on a 

gift certificate, store gift card, or general-use 

prepaid card from time to time for holding 

or using the certificate or card, such as a 

monthly maintenance fee, a transaction fee, 

an ATM fee, a reload fee, a foreign currency 

transaction fee, or a balance inquiry fee, 

whether or not the fee is waived for a certain 

period of time or is only imposed after a 

certain period of time. A service fee does not 

include a one-time fee or a fee that is 

unlikely to be imposed more than once while 

the underlying funds are still valid, such as 

an initial issuance fee, a cash-out fee, a 

supplemental card fee, or a lost or stolen 

certificate or card replacement fee. 

20(a)(7) Activity 

1. Activity. Under § 1005.20(a)(7), any 

action that results in an increase or decrease 

of the funds underlying a gift certificate, store 

gift card, or general-use prepaid card, other 

than the imposition of a fee, or an adjustment 

due to an error or a reversal of a prior 

transaction, constitutes activity for purposes 

of § 1005.20. For example, the purchase and 

activation of a certificate or card, the use of 

the certificate or card to purchase a good or 

service, or the reloading of funds onto a store 

gift card or general-use prepaid card 

constitutes activity. However, the imposition 

of a fee, the replacement of an expired, lost, 

or stolen certificate or card, and a balance 

inquiry do not constitute activity. In 

addition, if a consumer attempts to engage in 

a transaction with a gift certificate, store gift 

card, or general-use prepaid card, but the 

transaction cannot be completed due to 

technical or other reasons, such attempt does 

not constitute activity. Furthermore, if the 

funds underlying a gift certificate, store gift 

card, or general-use prepaid card are adjusted 

because there was an error or the consumer 

has returned a previously purchased good, 

the adjustment also does not constitute 

activity with respect to the certificate or card. 

20(b) Exclusions 

1. Application of exclusion. A card, code, 

or other device is excluded from the 

definition of ‘‘gift certificate,’’ ‘‘store gift 

card,’’ or ‘‘general-use prepaid card’’ if it 

meets any of the exclusions in § 1005.20(b). 

An excluded card, code, or other device 

generally is not subject to any of the 

requirements of this section. See, however, 

§ 1005.20(a)(4)(iii), requiring certain 

disclosures for loyalty, award, or promotional 

gift cards. 

2. Eligibility for multiple exclusions. A 

card, code, or other device may qualify for 

one or more exclusions. For example, a 

corporation may give its employees a gift 

card that is marketed solely to businesses for 

incentive-related purposes, such as to reward 

job performance or promote employee safety. 

In this case, the card may qualify for the 

exclusion for loyalty, award, or promotional 

gift cards under § 1005.20(b)(3), or for the 

exclusion for cards, codes, or other devices 

not marketed to the general public under 

§ 1005.20(b)(4). In addition, as long as any 

one of the exclusions applies, a card, code, 

or other device is not covered by § 1005.20, 

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81054 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

even if other exclusions do not apply. In the 

above example, the corporation may give its 

employees a type of gift card that can also be 

purchased by a consumer directly from a 

merchant. Under these circumstances, while 

the card does not qualify for the exclusion for 

cards, codes, or other devices not marketed 

to the general public under § 1005.20(b)(4) 

because the card can also be obtained 

through retail channels, it is nevertheless 

exempt from the substantive requirements of 

§ 1005.20 because it is a loyalty, award, or 

promotional gift card. See, however, 

§ 1005.20(a)(4)(iii), requiring certain 

disclosures for loyalty, award, or promotional 

gift cards. Similarly, a person may market a 

reloadable card to teenagers for occasional 

expenses that enables parents to monitor 

spending. Although the card does not qualify 

for the exclusion for cards, codes, or other 

devices not marketed to the general public 

under § 1005.20(b)(4), it may nevertheless be 

exempt from the requirements of § 1005.20 

under § 1005.20(b)(2) if it is reloadable and 

not marketed or labeled as a gift card or gift 

certificate. 

Paragraph 20(b)(1) 

1. Examples of excluded products. The 

exclusion for products usable solely for 

telephone services applies to prepaid cards 

for long-distance telephone service, prepaid 

cards for wireless telephone service and 

prepaid cards for other services that function 

similar to telephone services, such as prepaid 

cards for voice over Internet protocol (VoIP) 

access time. 

Paragraph 20(b)(2) 

1. Reloadable. A card, code, or other device 

is ‘‘reloadable’’ if the terms and conditions of 

the agreement permit funds to be added to 

the card, code, or other device after the initial 

purchase or issuance. A card, code, or other 

device is not ‘‘reloadable’’ merely because 

the issuer or processor is technically able to 

add functionality that would otherwise 

enable the card, code, or other device to be 

reloaded. 

2. Marketed or labeled as a gift card or gift 

certificate. The term ‘‘marketed or labeled as 

a gift card or gift certificate’’ means directly 

or indirectly offering, advertising, or 

otherwise suggesting the potential use of a 

card, code or other device, as a gift for 

another person. Whether the exclusion 

applies generally does not depend on the 

type of entity that makes the promotional 

message. For example, a card may be 

marketed or labeled as a gift card or gift 

certificate if anyone (other than the purchaser 

of the card), including the issuer, the retailer, 

the program manager that may distribute the 

card, or the payment network on which a 

card is used, promotes the use of the card as 

a gift card or gift certificate. A card, code, or 

other device, including a general-purpose 

reloadable card, is marketed or labeled as a 

gift card or gift certificate even if it is only 

occasionally marketed as a gift card or gift 

certificate. For example, a network-branded 

general purpose reloadable card would be 

marketed or labeled as a gift card or gift 

certificate if the issuer principally advertises 

the card as a less costly alternative to a bank 

account but promotes the card in a television, 

radio, newspaper, or Internet advertisement, 

or on signage as ‘‘the perfect gift’’ during the 

holiday season. However, the mere mention 

of the availability of gift cards or gift 

certificates in an advertisement or on a sign 

that also indicates the availability of other 

excluded prepaid cards does not by itself 

cause the excluded prepaid cards to be 

marketed as a gift card or a gift certificate. 

For example, the posting of a sign in a store 

that refers to the availability of gift cards does 

not by itself constitute the marketing of 

otherwise excluded prepaid cards that may 

also be sold in the store as gift cards or gift 

certificates, provided that a consumer acting 

reasonably under the circumstances would 

not be led to believe that the sign applies to 

all prepaid cards sold in the store. See, 

however, comment 20(b)(2)–4.ii. 

3. Examples of marketed or labeled as a 

gift card or gift certificate. i. Examples of 

marketed or labeled as a gift card or gift 

certificate include: 

A. Using the word ‘‘gift’’ or ‘‘present’’ on 

a card, certificate, or accompanying material, 

including documentation, packaging and 

promotional displays. 

B. Representing or suggesting that a 

certificate or card can be given to another 

person, for example, as a ‘‘token of 

appreciation’’ or a ‘‘stocking stuffer,’’ or 

displaying a congratulatory message on the 

card, certificate or accompanying material. 

C. Incorporating gift-giving or celebratory 

imagery or motifs, such as a bow, ribbon, 

wrapped present, candle, or congratulatory 

message, on a card, certificate, accompanying 

documentation, or promotional material. 

ii. The term does not include: 

A. Representing that a card or certificate 

can be used as a substitute for a checking, 

savings, or deposit account. 

B. Representing that a card or certificate 

can be used to pay for a consumer’s healthrelated expenses—for example, a card tied to 

a health savings account. 

C. Representing that a card or certificate 

can be used as a substitute for traveler’s 

checks or cash. 

D. Representing that a card or certificate 

can be used as a budgetary tool, for example, 

by teenagers, or to cover emergency 

expenses. 

4. Reasonable policies and procedures to 

avoid marketing as a gift card. The exclusion 

for a card, code, or other device that is 

reloadable and not marketed or labeled as a 

gift card or gift certificate in § 1005.20(b)(2) 

applies if a reloadable card, code, or other 

device is not marketed or labeled as a gift 

card or gift certificate and if persons subject 

to the rule, including issuers, program 

managers, and retailers, maintain policies 

and procedures reasonably designed to avoid 

such marketing. Such policies and 

procedures may include contractual 

provisions prohibiting a reloadable card, 

code, or other device from being marketed or 

labeled as a gift card or gift certificate, 

merchandising guidelines or plans regarding 

how the product must be displayed in a retail 

outlet, and controls to regularly monitor or 

otherwise verify that the card, code or other 

device is not being marketed as a gift card. 

Whether a reloadable card, code, or other 

device has been marketed as a gift card or gift 

certificate will depend on the facts and 

circumstances, including whether a 

reasonable consumer would be led to believe 

that the card, code, or other device is a gift 

card or gift certificate. The following 

examples illustrate the application of 

§ 1005.20(b)(2): 

i. An issuer or program manager of prepaid 

cards agrees to sell general-purpose 

reloadable cards through a retailer. The 

contract between the issuer or program 

manager and the retailer establishes the terms 

and conditions under which the cards may 

be sold and marketed at the retailer. The 

terms and conditions prohibit the generalpurpose reloadable cards from being 

marketed as a gift card or gift certificate, and 

require policies and procedures to regularly 

monitor or otherwise verify that the cards are 

not being marketed as such. The issuer or 

program manager sets up one promotional 

display at the retailer for gift cards and 

another physically separated display for 

excluded products under § 1005.20(b), 

including general-purpose reloadable cards 

and wireless telephone cards, such that a 

reasonable consumer would not believe that 

the excluded cards are gift cards. The 

exclusion in § 1005.20(b)(2) applies because 

policies and procedures reasonably designed 

to avoid the marketing of the general-purpose 

reloadable cards as gift cards or gift 

certificates are maintained, even if a retail 

clerk inadvertently stocks or a consumer 

inadvertently places a general-purpose 

reloadable card on the gift card display. 

ii. Same facts as in i., except that the issuer 

or program manager sets up a single 

promotional display at the retailer on which 

a variety of prepaid cards are sold, including 

store gift cards and general-purpose 

reloadable cards. A sign stating ‘‘Gift Cards’’ 

appears prominently at the top of the display. 

The exclusion in § 1005.20(b)(2) does not 

apply with respect to the general-purpose 

reloadable cards because policies and 

procedures reasonably designed to avoid the 

marketing of excluded cards as gift cards or 

gift certificates are not maintained. 

iii. Same facts as in i., except that the 

issuer or program manager sets up a single 

promotional multi-sided display at the 

retailer on which a variety of prepaid card 

products, including store gift cards and 

general-purpose reloadable cards are sold. 

Gift cards are segregated from excluded 

cards, with gift cards on one side of the 

display and excluded cards on a different 

side of a display. Signs of equal prominence 

at the top of each side of the display clearly 

differentiate between gift cards and the other 

types of prepaid cards that are available for 

sale. The retailer does not use any more 

conspicuous signage suggesting the general 

availability of gift cards, such as a large sign 

stating ‘‘Gift Cards’’ at the top of the display 

or located near the display. The exclusion in 

§ 1005.20(b)(2) applies because policies and 

procedures reasonably designed to avoid the 

marketing of the general-purpose reloadable 

cards as gift cards or gift certificates are 

maintained, even if a retail clerk 

inadvertently stocks or a consumer 

inadvertently places a general-purpose 

reloadable card on the gift card display. 

iv. Same facts as in i., except that the 

retailer sells a variety of prepaid card 

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products, including store gift cards and 

general-purpose reloadable cards, arranged 

side-by-side in the same checkout lane. The 

retailer does not affirmatively indicate or 

represent that gift cards are available, such as 

by displaying any signage or other indicia at 

the checkout lane suggesting the general 

availability of gift cards. The exclusion in 

§ 1005.20(b)(2) applies because policies and 

procedures reasonably designed to avoid 

marketing the general-purpose reloadable 

cards as gift cards or gift certificates are 

maintained. 

5. Online sales of prepaid cards. Some 

Web sites may prominently advertise or 

promote the availability of gift cards or gift 

certificates in a manner that suggests to a 

consumer that the Web site exclusively sells 

gift cards or gift certificates. For example, a 

Web site may display a banner advertisement 

or a graphic on the home page that 

prominently states ‘‘Gift Cards,’’ ‘‘Gift 

Giving,’’ or similar language without mention 

of other available products, or use a web 

address that includes only a reference to gift 

cards or gift certificates in the address. In 

such a case, a consumer acting reasonably 

under the circumstances could be led to 

believe that all prepaid products sold on the 

Web site are gift cards or gift certificates. 

Under these facts, the Web site has marketed 

all such products, including general-purpose 

reloadable cards, as gift cards or gift 

certificates, and the exclusion in 

§ 1005.20(b)(2) does not apply. 

6. Temporary non-reloadable cards issued 

in connection with a general-purpose 

reloadable card. Certain general-purpose 

reloadable cards that are typically marketed 

as an account substitute initially may be sold 

or issued in the form of a temporary nonreloadable card. After the card is purchased, 

the cardholder is typically required to call 

the issuer to register the card and to provide 

identifying information in order to obtain a 

reloadable replacement card. In most cases, 

the temporary non-reloadable card can be 

used for purchases until the replacement 

reloadable card arrives and is activated by 

the cardholder. Because the temporary nonreloadable card may only be obtained in 

connection with the general-purpose 

reloadable card, the exclusion in 

§ 1005.20(b)(2) applies so long as the card is 

not marketed as a gift card or gift certificate. 

Paragraph 20(b)(4) 

1. Marketed to the general public. A card, 

code, or other device is marketed to the 

general public if the potential use of the card, 

code, or other device is directly or indirectly 

offered, advertised, or otherwise promoted to 

the general public. A card, code, or other 

device may be marketed to the general public 

through any advertising medium, including 

television, radio, newspaper, the Internet, or 

signage. However, the posting of a company 

policy that funds may be disbursed by 

prepaid card (such as a sign posted at a cash 

register or customer service center stating 

that store credit will be issued by prepaid 

card) does not constitute the marketing of a 

card, code, or other device to the general 

public. In addition, the method of 

distribution by itself is not dispositive in 

determining whether a card, code, or other 

device is marketed to the general public. 

Factors that may be considered in 

determining whether the exclusion applies to 

a particular card, code, or other device 

include the means or channel through which 

the card, code, or device may be obtained by 

a consumer, the subset of consumers that are 

eligible to obtain the card, code, or device, 

and whether the availability of the card, 

code, or device is advertised or otherwise 

promoted in the marketplace. 

2. Examples. The following examples 

illustrate the application of the exclusion in 

§ 1005.20(b)(4): 

i. A merchant sells its gift cards at a 

discount to a business which may give them 

to employees or loyal consumers as 

incentives or rewards. In determining 

whether the gift card falls within the 

exclusion in § 1005.20(b)(4), the merchant 

must consider whether the card is of a type 

that is advertised or made available to 

consumers generally or can be obtained 

elsewhere. If the card can also be purchased 

through retail channels, the exclusion in 

§ 1005.20(b)(4) does not apply, even if the 

consumer obtained the card from the 

business as an incentive or reward. See, 

however, § 1005.20(b)(3). 

ii. A national retail chain decides to market 

its gift cards only to members of its frequent 

buyer program. Similarly, a bank may decide 

to sell gift cards only to its customers. If a 

member of the general public may become a 

member of the program or a customer of the 

bank, the card does not fall within the 

exclusion in § 1005.20(b)(4) because the 

general public has the ability to obtain the 

cards. See, however, § 1005.20(b)(3). 

iii. A card issuer advertises a reloadable 

card to teenagers and their parents promoting 

the card for use by teenagers for occasional 

expenses, schoolbooks and emergencies and 

by parents to monitor spending. Because the 

card is marketed to and may be sold to any 

member of the general public, the exclusion 

in § 1005.20(b)(4) does not apply. See, 

however, § 1005.20(b)(2). 

iv. An insurance company settles a 

policyholder’s claim and distributes the 

insurance proceeds to the consumer by 

means of a prepaid card. Because the prepaid 

card is simply the means for providing the 

insurance proceeds to the consumer and the 

availability of the card is not advertised to 

the general public, the exclusion in 

§ 1005.20(b)(4) applies. 

v. A merchant provides store credit to a 

consumer following a merchandise return by 

issuing a prepaid card that clearly indicates 

that the card contains funds for store credit. 

Because the prepaid card is issued for the 

stated purpose of providing store credit to the 

consumer and the ability to receive refunds 

by a prepaid card is not advertised to the 

general public, the exclusion in 

§ 1005.20(b)(4) applies. 

vi. A tax preparation company elects to 

distribute tax refunds to its clients by issuing 

prepaid cards, but does not advertise or 

otherwise promote the ability to receive 

proceeds in this manner. Because the prepaid 

card is simply the mechanism for providing 

the tax refund to the consumer, and the tax 

preparer does not advertise the ability to 

obtain tax refunds by a prepaid card, the 

exclusion in § 1005.20(b)(4) applies. 

However, if the tax preparer promotes the 

ability to receive tax refund proceeds through 

a prepaid card as a way to obtain ‘‘faster’’ 

access to the proceeds, the exclusion in 

§ 1005.20(b)(4) does not apply. 

Paragraph 20(b)(5) 

1. Exclusion explained. To qualify for the 

exclusion in § 1005.20(b)(5), the sole means 

of issuing the card, code, or other device 

must be in a paper form. Thus, the exclusion 

generally applies to certificates issued in 

paper form where solely the paper itself may 

be used to purchase goods or services. A 

card, code or other device is not issued solely 

in paper form simply because it may be 

reproduced or printed on paper. For 

example, a bar code, card or certificate 

number, or certificate or coupon 

electronically provided to a consumer and 

redeemable for goods and services is not 

issued in paper form, even if it may be 

reproduced or otherwise printed on paper by 

the consumer. In this circumstance, although 

the consumer might hold a paper facsimile of 

the card, code, or other device, the exclusion 

does not apply because the information 

necessary to redeem the value was initially 

issued in electronic form. A paper certificate 

is within the exclusion regardless of whether 

it may be redeemed electronically. For 

example, a paper certificate or receipt that 

bears a bar code, code, or account number 

falls within the exclusion in § 1005.20(b)(5) 

if the bar code, code, or account number is 

not issued in any form other than on the 

paper. In addition, the exclusion in 

§ 1005.20(b)(5) continues to apply in 

circumstances where an issuer replaces a gift 

certificate that was initially issued in paper 

form with a card or electronic code (for 

example, to replace a lost paper certificate). 

2. Examples. The following examples 

illustrate the application of the exclusion in 

§ 1005.20(b)(5): 

i. A merchant issues a paper gift certificate 

that entitles the bearer to a specified dollar 

amount that can be applied towards a future 

meal. The merchant fills in the certificate 

with the name of the certificate holder and 

the amount of the certificate. The certificate 

falls within the exclusion in § 1005.20(b)(5) 

because it is issued in paper form only. 

ii. A merchant allows a consumer to 

prepay for a good or service, such as a car 

wash or time at a parking meter, and issues 

a paper receipt bearing a numerical or bar 

code that the consumer may redeem to obtain 

the good or service. The exclusion in 

§ 1005.20(b)(5) applies because the code is 

issued in paper form only. 

iii. A merchant issues a paper certificate or 

receipt bearing a bar code or certificate 

number that can later be scanned or entered 

into the merchant’s system and redeemed by 

the certificate or receipt holder towards the 

purchase of goods or services. The bar code 

or certificate number is not issued by the 

merchant in any form other than paper. The 

exclusion in § 1005.20(b)(5) applies because 

the bar code or certificate number is issued 

in paper form only. 

iv. An online merchant electronically 

provides a bar code, card or certificate 

number, or certificate or coupon to a 

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consumer that the consumer may print on a 

home printer and later redeem towards the 

purchase of goods or services. The exclusion 

in § 1005.20(b)(5) does not apply because the 

bar code or card or certificate number was 

issued to the consumer in electronic form, 

even though it can be reproduced or 

otherwise printed on paper by the consumer. 

Paragraph 20(b)(6) 

1. Exclusion explained. The exclusion for 

cards, codes, or other devices that are 

redeemable solely for admission to events or 

venues at a particular location or group of 

affiliated locations generally applies to cards, 

codes, or other devices that are not redeemed 

for a specified monetary value, but rather 

solely for admission or entry to an event or 

venue. The exclusion also covers a card, 

code, or other device that is usable to 

purchase goods or services in addition to 

entry into the event or the venue, either at 

the event or venue or at an affiliated location 

or location in geographic proximity to the 

event or venue. 

2. Examples. The following examples 

illustrate the application of the exclusion in 

§ 1005.20(b)(6): 

i. A consumer purchases a prepaid card 

that entitles the holder to a ticket for entry 

to an amusement park. The prepaid card may 

only be used for entry to the park. The card 

qualifies for the exclusion in § 1005.20(b)(6) 

because it is redeemable for admission or 

entry and for goods or services in 

conjunction with that admission. In addition, 

if the prepaid card does not have a monetary 

value, and therefore is not ‘‘issued in a 

specified amount,’’ the card does not meet 

the definitions of ‘‘gift certificate,’’ ‘‘store gift 

card,’’ or ‘‘general-use prepaid card’’ in 

§ 1005.20(a). See comment 20(a)–3. 

ii. Same facts as in i., except that the gift 

card also entitles the holder of the gift card 

to a dollar amount that can be applied 

towards the purchase of food and beverages 

or goods or services at the park or at nearby 

affiliated locations. The card qualifies for the 

exclusion in § 1005.20(b)(6) because it is 

redeemable for admission or entry and for 

goods or services in conjunction with that 

admission. 

iii. A consumer purchases a $25 gift card 

that the holder of the gift card can use to 

make purchases at a merchant, or, 

alternatively, can apply towards the cost of 

admission to the merchant’s affiliated 

amusement park. The card is not eligible for 

the exclusion in § 1005.20(b)(6) because it is 

not redeemable solely for the admission or 

ticket itself (or for goods and services 

purchased in conjunction with such 

admission). The card meets the definition of 

‘‘store gift card’’ and is therefore subject to 

§ 1005.20, unless a different exclusion 

applies. 

20(c) Form of Disclosures 

20(c)(1) Clear and Conspicuous 

1. Clear and conspicuous standard. All 

disclosures required by this section must be 

clear and conspicuous. Disclosures are clear 

and conspicuous for purposes of this section 

if they are readily understandable and, in the 

case of written and electronic disclosures, the 

location and type size are readily noticeable 

to consumers. Disclosures need not be 

located on the front of the certificate or card, 

except where otherwise required, to be 

considered clear and conspicuous. 

Disclosures are clear and conspicuous for the 

purposes of this section if they are in a print 

that contrasts with and is otherwise not 

obstructed by the background on which they 

are printed. For example, disclosures on a 

card or computer screen are not likely to be 

conspicuous if obscured by a logo printed in 

the background. Similarly, disclosures on the 

back of a card that are printed on top of 

indentations from embossed type on the front 

of the card are not likely to be conspicuous 

if the indentations obstruct the readability of 

the disclosures. To the extent permitted, oral 

disclosures meet the standard when they are 

given at a volume and speed sufficient for a 

consumer to hear and comprehend them. 

2. Abbreviations and symbols. Disclosures 

may contain commonly accepted or readily 

understandable abbreviations or symbols, 

such as ‘‘mo.’’ for month or a ‘‘/’’ to indicate 

‘‘per.’’ Under the clear and conspicuous 

standard, it is sufficient to state, for example, 

that a particular fee is charged ‘‘$2.50/mo. 

after 12 mos.’’ 

20(c)(2) Format 

1. Electronic disclosures. Disclosures 

provided electronically pursuant to this 

section are not subject to compliance with 

the consumer consent and other applicable 

provisions of the Electronic Signatures in 

Global and National Commerce Act (E–Sign 

Act) (15 U.S.C. 7001 et seq.). Electronic 

disclosures must be in a retainable form. For 

example, a person may satisfy the 

requirement if it provides an online 

disclosure in a format that is capable of being 

printed. Electronic disclosures may not be 

provided through a hyperlink or in another 

manner by which the purchaser can bypass 

the disclosure. A person is not required to 

confirm that the consumer has read the 

electronic disclosures. 

20(c)(3) Disclosure Prior to Purchase 

1. Method of purchase. The disclosures 

required by this paragraph must be provided 

before a certificate or card is purchased 

regardless of whether the certificate or card 

is purchased in person, online, by telephone, 

or by other means. 

2. Electronic disclosures. Section 

1005.20(c)(3) provides that the disclosures 

required by this section must be provided to 

the consumer prior to purchase. For 

certificates or cards purchased electronically, 

disclosures made to the consumer after a 

consumer has initiated an online purchase of 

a certificate or card, but prior to completing 

the purchase of the certificate or card, would 

satisfy the prior-to-purchase requirement. 

However, electronic disclosures made 

available on a person’s Web site that may or 

may not be accessed by the consumer are not 

provided to the consumer and therefore 

would not satisfy the prior-to-purchase 

requirement. 

3. Non-physical certificates and cards. If 

no physical certificate or card is issued, the 

disclosures must be provided to the 

consumer before the certificate or card is 

purchased. For example, where a gift 

certificate or card is a code that is provided 

by telephone, the required disclosures may 

be provided orally prior to purchase. See also 

§ 1005.20(c)(2). 

20(c)(4) Disclosures on the Certificate or Card 

1. Non-physical certificates and cards. If 

no physical certificate or card is issued, the 

disclosures required by this paragraph must 

be disclosed on the code, confirmation, or 

other written or electronic document 

provided to the consumer. For example, 

where a gift certificate or card is a code or 

confirmation that is provided to a consumer 

online or sent to a consumer’s email address, 

the required disclosures may be provided 

electronically on the same document as the 

code or confirmation. 

2. No disclosures on a certificate or card. 

Disclosures required by § 1005.20(c)(4) need 

not be made on a certificate or card if it is 

accompanied by a certificate or card that 

complies with this section. For example, a 

person may issue or sell a supplemental gift 

card that is smaller than a standard size and 

that does not bear the applicable disclosures 

if it is accompanied by a fully compliant 

certificate or card. See also comment 

20(c)(2)–2. 

20(d) Prohibition on Imposition of Fees or 

Charges 

1. One-year period. Section 1005.20(d) 

provides that a person may impose a 

dormancy, inactivity, or service fee only if 

there has been no activity with respect to a 

certificate or card for one year. The following 

examples illustrate this rule: 

i. A certificate or card is purchased on 

January 15 of year one. If there has been no 

activity on the certificate or card since the 

certificate or card was purchased, a 

dormancy, inactivity, or service fee may be 

imposed on the certificate or card on January 

15 of year two. 

ii. Same facts as i., and a fee was imposed 

on January 15 of year two. Because no more 

than one dormancy, inactivity, or service fee 

may be imposed in any given calendar 

month, the earliest date that another 

dormancy, inactivity, or service fee may be 

imposed, assuming there continues to be no 

activity on the certificate or card, is February 

1 of year two. A dormancy, inactivity, or 

service fee is permitted to be imposed on 

February 1 of year two because there has 

been no activity on the certificate or card for 

the preceding year (February 1 of year one 

through January 31 of year two), and 

February is a new calendar month. The 

imposition of a fee on January 15 of year two 

is not activity for purposes of § 1005.20(d). 

See comment 20(a)(7)–1. 

iii. Same facts as i., and a fee was imposed 

on January 15 of year two. On January 31 of 

year two, the consumer uses the card to make 

a purchase. Another dormancy, inactivity, or 

service fee could not be imposed until 

January 31 of year three, assuming there has 

been no activity on the certificate or card 

since January 31 of year two. 

2. Relationship between §§ 1005.20(d)(2) 

and (c)(3). Sections 1005.20(d)(2) and (c)(3) 

contain similar, but not identical, disclosure 

requirements. Section 1005.20(d)(2) requires 

the disclosure of dormancy, inactivity, and 

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service fees on a certificate or card. Section 

1005.20(c)(3) requires that vendor person that 

issues or sells such certificate or card 

disclose to a consumer any dormancy, 

inactivity, and service fees associated with 

the certificate or card before such certificate 

or card may be purchased. Depending on the 

context, a single disclosure that meets the 

clear and conspicuous requirements of both 

§§ 1005.20(d)(2) and (c)(3) may be used to 

disclose a dormancy, inactivity, or service 

fee. For example, if the disclosures on a 

certificate or card, required by 

§ 1005.20(d)(2), are visible to the consumer 

without having to remove packaging or other 

materials sold with the certificate or card, for 

a purchase made in person, the disclosures 

also meet the requirements of § 1005.20(c)(3). 

Otherwise, a dormancy, inactivity, or service 

fee may need to be disclosed multiple times 

to satisfy the requirements of §§ 1005.20(d)(2) 

and (c)(3). For example, if the disclosures on 

a certificate or card, required by 

§ 1005.20(d)(2), are obstructed by packaging 

sold with the certificate or card, for a 

purchase made in person, they also must be 

disclosed on the packaging sold with the 

certificate or card to meet the requirements 

of § 1005.20(c)(3). 

3. Relationship between §§ 1005.20(d)(2), 

(e)(3), and (f)(2). In addition to any 

disclosures required under § 1005.20(d)(2), 

any applicable disclosures under 

§§ 1005.20(e)(3) and (f)(2) of this section 

must also be provided on the certificate or 

card. 

4. One fee per month. Under 

§ 1005.20(d)(3), no more than one dormancy, 

inactivity, or service fee may be imposed in 

any given calendar month. For example, if a 

dormancy fee is imposed on January 1, 

following a year of inactivity, and a 

consumer makes a balance inquiry on 

January 15, a balance inquiry fee may not be 

imposed at that time because a dormancy fee 

was already imposed earlier that month and 

a balance inquiry fee is a type of service fee. 

If, however, the dormancy fee could be 

imposed on January 1, following a year of 

inactivity, and the consumer makes a balance 

inquiry on the same date, the person 

assessing the fees may choose whether to 

impose the dormancy fee or the balance 

inquiry fee on January 1. The restriction in 

§ 1005.20(d)(3) does not apply to any fee that 

is not a dormancy, inactivity, or service fee. 

For example, assume a service fee is imposed 

on a general-use prepaid card on January 1, 

following a year of inactivity. If a consumer 

cashes out the remaining funds by check on 

January 15, a cash-out fee, to the extent such 

cash-out fee is permitted under 

§ 1005.20(e)(4), may be imposed at that time 

because a cash-out fee is not a dormancy, 

inactivity, or service fee. 

5. Accumulation of fees. Section 

1005.20(d) prohibits the accumulation of 

dormancy, inactivity, or service fees for 

previous periods into a single fee because 

such a practice would circumvent the 

limitation in § 1005.20(d)(3) that only one fee 

may be charged per month. For example, if 

a consumer purchases and activates a store 

gift card on January 1 but never uses the card, 

a monthly maintenance fee of $2.00 a month 

may not be accumulated such that a fee of 

$24 is imposed on January 1 the following 

year. 

20(e) Prohibition on Sale of Gift Certificates 

or Cards With Expiration Dates 

1. Reasonable opportunity. Under 

§ 1005.20(e)(1), no person may sell or issue 

a gift certificate, store gift card, or general-use 

prepaid card with an expiration date, unless 

there are policies and procedures in place to 

provide consumers with a reasonable 

opportunity to purchase a certificate or card 

with at least five years remaining until the 

certificate or card expiration date. Consumers 

are deemed to have a reasonable opportunity 

to purchase a certificate or card with at least 

five years remaining until the certificate or 

card expiration date if: 

i. There are policies and procedures 

established to prevent the sale of a certificate 

or card unless the certificate or card 

expiration date is at least five years after the 

date the certificate or card was sold or 

initially issued to a consumer; or 

ii. A certificate or card is available to 

consumers to purchase five years and six 

months before the certificate or card 

expiration date. 

2. Applicability to replacement certificates 

or cards. Section 1005.20(e)(1) applies solely 

to the purchase of a certificate or card. 

Therefore, § 1005.20(e)(1) does not apply to 

the replacement of such certificates or cards. 

Certificates or cards issued as a replacement 

may bear a certificate or card expiration date 

of less than five years from the date of 

issuance of the replacement certificate or 

card. If the certificate or card expiration date 

for a replacement certificate or card is later 

than the date set forth in § 1005.20(e)(2)(i), 

then pursuant to § 1005.20(e)(2), the 

expiration date for the underlying funds at 

the time the replacement certificate or card 

is issued must be no earlier than the 

expiration date for the replacement certificate 

or card. For purposes of § 1005.20(e)(2), 

funds are not considered to be loaded to a 

store gift card or general-use prepaid card 

solely because a replacement card has been 

issued or activated for use. 

3. Disclosure of funds expiration—date not 

required. Section 1005.20(e)(3)(i) does not 

require disclosure of the precise date the 

funds will expire. It is sufficient to disclose, 

for example, ‘‘Funds expire 5 years from the 

date funds last loaded to the card.’’; ‘‘Funds 

can be used 5 years from the date money was 

last added to the card.’’; or ‘‘Funds do not 

expire.’’ 

4. Disclosure not required if no expiration 

date. If the certificate or card and underlying 

funds do not expire, the disclosure required 

by § 1005.20(e)(3)(i) need not be stated on the 

certificate or card. If the certificate or card 

and underlying funds expire at the same 

time, only one expiration date need be 

disclosed on the certificate or card. 

5. Reference to toll-free telephone number 

and Web site. If a certificate or card does not 

expire, or if the underlying funds are not 

available after the certificate or card expires, 

the disclosure required by § 1005.20(e)(3)(ii) 

need not be stated on the certificate or card. 

See, however, § 1005.20(f)(2). 

6. Relationship to § 226.20(f)(2). The same 

toll-free telephone number and Web site may 

be used to comply with §§ 226.20(e)(3)(ii) 

and (f)(2). Neither a toll-free number nor a 

Web site must be maintained or disclosed if 

no fees are imposed in connection with a 

certificate or card, and the certificate or card 

and the underlying funds do not expire. 

7. Distinguishing between certificate or 

card expiration and funds expiration. If 

applicable, a disclosure must be made on the 

certificate or card that notifies a consumer 

that the certificate or card expires, but the 

funds either do not expire or expire later than 

the certificate or card, and that the consumer 

may contact the issuer for a replacement 

card. The disclosure must be made with 

equal prominence and in close proximity to 

the certificate or card expiration date. The 

close proximity requirement does not apply 

to oral disclosures. In the case of a certificate 

or card, close proximity means that the 

disclosure must be on the same side as the 

certificate or card expiration date. For 

example, if the disclosure is the same type 

size and is located immediately next to or 

directly above or below the certificate or card 

expiration date, without any intervening text 

or graphical displays, the disclosures would 

be deemed to be equally prominent and in 

close proximity. The disclosure need not be 

embossed on the certificate or card to be 

deemed equally prominent, even if the 

expiration date is embossed on the certificate 

or card. The disclosure may state on the front 

of the card, for example, ‘‘Funds expire after 

card. Call for replacement card.’’ or ‘‘Funds 

do not expire. Call for new card after 09/ 

2016.’’ Disclosures made pursuant to 

§ 1005.20(e)(3)(iii)(A) may also fulfill the 

requirements of § 1005.20(e)(3)(i). For 

example, making a disclosure that ‘‘Funds do 

not expire’’ to comply with 

§ 1005.20(e)(3)(iii)(A) also fulfills the 

requirements of § 1005.20(e)(3)(i). 

8. Expiration date safe harbor. A nonreloadable certificate or card that bears an 

expiration date that is at least seven years 

from the date of manufacture need not state 

the disclosure required by § 1005.20(e)(3)(iii). 

However, § 1005.20(e)(1) still prohibits the 

sale or issuance of such certificate or card 

unless there are policies and procedures in 

place to provide a consumer with a 

reasonable opportunity to purchase the 

certificate or card with at least five years 

remaining until the certificate or card 

expiration date. In addition, under 

§ 1005.20(e)(2), the funds may not expire 

before the certificate or card expiration date, 

even if the expiration date of the certificate 

or card bears an expiration date that is more 

than five years from the date of purchase. For 

purposes of this safe harbor, the date of 

manufacture is the date on which the 

certificate or card expiration date is printed 

on the certificate or card. 

9. Relationship between §§ 1005.20(d)(2), 

(e)(3), and (f)(2). In addition to any 

disclosures required to be made under 

§ 1005.20(e)(3), any applicable disclosures 

under §§ 1005.20(d)(2) and (f)(2) must also be 

provided on the certificate or card. 

10. Replacement or remaining balance of 

an expired certificate or card. When a 

certificate or card expires, but the underlying 

funds have not expired, an issuer, at its 

option in accordance with applicable state 

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81058 Federal Register / Vol. 76, No. 248 / Tuesday, December 27, 2011 / Rules and Regulations 

law, may provide either a replacement 

certificate or card or otherwise provide the 

certificate or card holder, for example, by 

check, with the remaining balance on the 

certificate or card. In either case, the issuer 

may not charge a fee for the service. 

11. Replacement of a lost or stolen 

certificate or card not required. Section 

1005.20(e)(4) does not require the 

replacement of a certificate or card that has 

been lost or stolen. 

12. Date of issuance or loading. For 

purposes of § 1005.20(e)(2)(i), a certificate or 

card is not issued or loaded with funds until 

the certificate or card is activated for use. 

13. Application of expiration date 

provisions after redemption of certificate or 

card. The requirement that funds underlying 

a certificate or card must not expire for at 

least five years from the date of issuance or 

date of last load ceases to apply once the 

certificate or card has been fully redeemed, 

even if the underlying funds are not used to 

contemporaneously purchase a specific good 

or service. For example, some certificates or 

cards can be used to purchase music, media, 

or virtual goods. Once redeemed by a 

consumer, the entire balance on the 

certificate or card is debited from the 

certificate or card and credited or transferred 

to another ‘‘account’’ established by the 

merchant of such goods or services. The 

consumer can then make purchases of songs, 

media, or virtual goods from the merchant 

using that ‘‘account’’ either at the time the 

value is transferred from the certificate or 

card or at a later time. Under these 

circumstances, once the card has been fully 

redeemed and the ‘‘account’’ credited with 

the amount of the underlying funds, the fiveyear minimum expiration term no longer 

applies to the underlying funds. However, if 

the consumer only partially redeems the 

value of the certificate or card, the five-year 

minimum expiration term requirement 

continues to apply to the funds remaining on 

the certificate or card. 

20(f) Additional Disclosure Requirements for 

Gift Certificates or Cards 

1. Reference to toll-free telephone number 

and Web site. If a certificate or card does not 

have any fees, the disclosure under 

§ 1005.20(f)(2) is not required on the 

certificate or card. See, however, 

§ 1005.20(e)(3)(ii). 

2. Relationship to § 226.20(e)(3)(ii). The 

same toll-free telephone number and Web 

site may be used to comply with 

§§ 226.20(e)(3)(ii) and (f)(2). Neither a tollfree number nor a Web site must be 

maintained or disclosed if no fees are 

imposed in connection with a certificate or 

card, and both the certificate or card and 

underlying funds do not expire. 

3. Relationship between §§ 1005.20(d)(2), 

(e)(3), and (f)(2). In addition to any 

disclosures required pursuant to 

§ 1005.20(f)(2), any applicable disclosures 

under §§ 1005.20(d)(2) and (e)(3) must also 

be provided on the certificate or card. 

20(g) Compliance Dates 

1. Period of eligibility for loyalty, award, or 

promotional programs. For purposes of 

§ 1005.20(g)(2), the period of eligibility is the 

time period during which a consumer must 

engage in a certain action or actions to meet 

the terms of eligibility for a loyalty, award, 

or promotional program and obtain the card, 

code, or other device. Under § 1005.20(g)(2), 

a gift card issued pursuant to a loyalty, 

award, or promotional program that began 

prior to August 22, 2010 need not state the 

disclosures in § 1005.20(a)(4)(iii) regardless 

of whether the consumer became eligible to 

receive the gift card prior to August 22, 2010, 

or after that date. For example, a product 

manufacturer may provide a $20 rebate card 

to a consumer if the consumer purchases a 

particular product and submits a fully 

completed entry between January 1, 2010 and 

December 31, 2010. Similarly, a merchant 

may provide a $20 gift card to a consumer 

if the consumer makes $200 worth of 

qualifying purchases between June 1, 2010 

and October 30, 2010. Under both examples, 

gift cards provided pursuant to these loyalty, 

award, or promotional programs need not 

state the disclosures in § 1005.20(a)(4)(iii) to 

qualify for the exclusion in § 1005.20(b)(3) 

for loyalty, award, or promotional gift cards 

because the period of eligibility for each 

program began prior to August 22, 2010. 

20(h) Temporary Exemption 

20(h)(1) Delayed Effective Date 

1. Application to certificates or cards 

produced prior to April 1, 2010. Certificates 

or cards produced prior to April 1, 2010 may 

be sold to a consumer on or after August 22, 

2010 without satisfying the requirements of 

§§ 1005.20(c)(3), (d)(2), (e)(1), (e)(3), and (f) 

through January 30, 2011, provided that 

issuers of such certificates or cards comply 

with the additional substantive and 

disclosure requirements of §§ 1005.20(h)(1)(i) 

through (iv). Issuers of certificates or cards 

produced prior to April 1, 2010 need not 

satisfy these additional requirements if the 

certificates or cards fully comply with the 

rule (§§ 1005.20(a) through (f)). For example, 

the in-store signage and other disclosures 

required by § 1005.20(h)(2) do not apply to 

gift cards produced prior to April 1, 2010 that 

do not have fees and do not expire, and 

which otherwise comply with the rule. 

2. Expiration of temporary exemption. 

Certificates or cards produced prior to April 

1, 2010 that do not fully comply with 

§§ 1005.20(a) through (f) may not be issued 

or sold to consumers on or after January 31, 

2011. 

20(h)(2) Additional Disclosures 

1. Disclosures through third parties. Issuers 

may make the disclosures required by 

§ 1005.20(h)(2) through a third party, such as 

a retailer or merchant. For example, an issuer 

may have a merchant install in-store signage 

with the disclosures required by 

§ 1005.20(h)(2) on the issuer’s behalf. 

2. General advertising disclosures. Section 

1005.20(h)(2) does not impose an obligation 

on the issuer to advertise gift certificates, 

store gift cards, or general-use prepaid cards. 

Appendix A—Model Disclosure Clauses 

and Forms 

1. Review of forms. The Bureau will not 

review or approve disclosure forms or 

statements for financial institutions. 

However, the Bureau has issued model 

clauses for institutions to use in designing 

their disclosures. If an institution uses these 

clauses accurately to reflect its service, the 

institution is protected from liability for 

failure to make disclosures in proper form. 

2. Use of forms. The appendix contains 

model disclosure clauses for optional use by 

financial institutions to facilitate compliance 

with the disclosure requirements of sections 

1005.5(b)(2) and (b)(3), 1005.6(a), 1005.7, 

1005.8(b), 1005.14(b)(1)(ii), 1005.15(d)(1) and 

(d)(2), and 1005.18(c)(1) and (c)(2). The use 

of appropriate clauses in making disclosures 

will protect a financial institution from 

liability under sections 916 and 917 of the 

Act provided the clauses accurately reflect 

the institution’s EFT services. 

3. Altering the clauses. Financial 

institutions may use clauses of their own 

design in conjunction with the Bureau’s 

model clauses. The inapplicable words or 

portions of phrases in parentheses should be 

deleted. The catchlines are not part of the 

clauses and need not be used. Financial 

institutions may make alterations, 

substitutions, or additions in the clauses to 

reflect the services offered, such as technical 

changes (including the substitution of a trade 

name for the word ‘‘card,’’ deletion of 

inapplicable services, or substitution of lesser 

liability limits). Several of the model clauses 

include references to a telephone number 

and address. Where two or more of these 

clauses are used in a disclosure, the 

telephone number and address may be 

referenced and need not be repeated. 

Dated: October 24, 2011. 

Alastair M. Fitzpayne, 

Deputy Chief of Staff and Executive Secretary, 

Department of the Treasury. 

[FR Doc. 2011–31725 Filed 12–23–11; 8:45 am] 

BILLING CODE 4810–AM–P 

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