Electronic Funds Transfers Issues

This episode focuses on common compliance problems under Regulation E, which governs electronic fund transfers and is designed to protect consumers using electronic channels such as ATMs, debit cards, online banking, and phone-initiated transfers. As electronic usage and fraud increase, regulators are finding frequent violations—especially around how financial institutions handle error resolution and consumer liability. A key issue is the improper application of liability limits when consumers report unauthorized transactions, particularly misunderstanding the 60-day rule tied to periodic statements, which can expose consumers to unlimited liability for later transactions if they delay reporting. Another major concern is failures in the provisional credit process—institutions often delay investigations beyond allowed timeframes without issuing timely provisional credit (including interest), despite clear requirements to begin investigations promptly and credit the consumer if more time is needed. The takeaway is that financial institutions must have clear, accurate procedures and well-trained staff to ensure timely investigations, proper liability determinations, and full compliance with Regulation E’s consumer protections.

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