Regulation E – Sample Error Resolution Procedures - Iowa Bankers

Regulation E ? Sample Error Resolution Procedures

FOUR STEPS TO DETERMINE IF AN EFT ERROR OCCURRED AND HOW TO RESOLVE

1) Determine Coverage Under Regulation E

a) Is the account covered ? accounts established primarily for personal, family or household purposes (consumer). ? Checking account ? Savings account ? Payroll card account

b) Is the transaction covered ? any electronic fund transfer that authorizes a Bank to debit or credit a consumer account. ? Debit Card transactions (PIN and signature POS transactions) ? ATM transactions ? ACH transactions (PPD, WEB, TEL, ARC, POP, BOC) ? Includes an EFT where a check, draft or similar paper instrument is used as a "source of information" to initiate a one-time EFT from a consumer account. ? Includes any fee debited via an EFT from a consumer's account due to check returned for NSF or uncollected funds

Transactions not covered ? ? Checks (including electronic re-presentment of a returned check) ? Wires ? Telephone transfers ? Automatic transfers between consumer accounts within a Bank ? Remote capture checks ? Mobile deposits

c) Is the error covered ? ? Unauthorized EFTs ? An EFT is unauthorized if it was initiated by a 3rd party without the consent or authority of the consumer and the consumer received no benefit. ? Incorrect EFTs (e.g. incorrect amount) ? Mathematical errors ? Incorrect withdrawal amount from an ATM ? Improperly identified EFTs ? Consumer request for documentation, clarification, or additional information (other than routine inquires)

d) Did consumer provide notice that error occurred ? ? Orally - Bank can require written notice of error within 10 days of when oral notice is received if requested at the time the customer reports the error. If written notice is required and Bank does not receive it within the required timeframe, the bank does not have to provide provisional credit if the investigation takes longer than 10 days.

Rev. 02/2022 Rights Reserved.

? Written notice The notice must include: o Identifying information ? name and account number

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o A statement why the consumer believes an error exists o Information regarding type, date and amount of error

2) Investigate Error

If a consumer claims that an error has occurred, the Bank is required to take action by investigating the error, providing a resolution and communicating the resolution to the consumer.

a) If consumer notifies the Bank within 60 calendar days of sending the periodic statement, bank must conclude the investigation within 10 business days (20 business days for new accounts).

b) Bank may extend the timeframe to conclude investigation to 45 calendar days (in total) If it: ? Provisionally credits consumer's account for amount of claimed error within 10 business days of receiving notification from the consumer or provides final credit within 1 business day after determining an error occurred, whichever occurs first. ? Notifies consumer of credit within 2 business days (can be done orally or in writing), AND ? Gives consumer full use of credit during investigation

c) Bank may extend time to conclude investigation to 90 calendar days (in total) If: ? The transaction was not initiated within a state ? The transaction was a POS ? The transaction occurred within 30 calendar days after the first deposit to new account

Important Note - If the consumer does not notify the bank within 60 calendar days of sending the periodic statement, the bank is not required to comply with the provisional credit or investigation timeframes above BUT late notice does not excuse the bank from potential liability. See Reg. E Consumer Liability Guide

3) Resolution of Investigation

If NO Error Occurred: ? Mail or deliver a written explanation to the consumer within 3 business days of concluding the investigation. ? Include explanation that consumer may request supporting documents. ? Notify consumer that provisional credit was reversed. ? Notify customer that the bank will honor checks, drafts, or similar presentments for 5 business days without charging for resulting overdrafts. Note ? you need only honor item that you would have paid if the provisional credit had not been reversed.

If Error DID Occur: ? Correct error within 1 business day after determining an error occurred ? Report results orally or in writing to consumer within 3 business days after completing investigation including that provisional credit is final, if applicable.

Rev. 02/2022 Rights Reserved.

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(If bank notifies customer orally, be sure to document file with date oral notice was provided).

Note: There are sample Reg. E Error Resolution Notices on the IBA website found under Compliance/Bankers Compliance Resources/Deposits/REG E Error Resolution Notices.

4) Record Retention

Logging the error resolution process for each error is an important part of retaining record of the investigation. To help you with this the IBA has created a Reg. E Error Resolution worksheet you may use on the IBA website found under Compliance/Bankers Compliance Resources/Deposits/Reg E Error Resolution Worksheet.

Rev. 02/2022 Rights Reserved.

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