Types of Transactions Covered by Reg E

Overview

The Electronic Fund Transfer (EFT) Act, also known as Regulation E or “Reg E” was introduced in 1978. Much of Reg E outlines the procedures consumers must follow in reporting errors with EFTs and the steps a bank must take to provide recourse. This regulation covers unauthorized transfers at places like ATMs, point-of-sale transactions, or automated clearing house (ACH) systems.  

Reg E Dispute Timeframe

The law states that financial institutions have ten days to make a final decision on claims, but they can extend that to 90 days if a provisional credit is issued. 

Woman reading paper wearing glasses

Regulation E mandates that provisional credit be offered within 10 days of a disputed transaction. While offering a timely provisional credit to account holders is crucial to improving customer experience, not all situations call for immediate provisional credit. 

Provisional credit should only be given when issuers can be sure that the credit can truly be provisional, because it requires additional investigation and resources. Automated dispute management software and AI technology help issuers stay compliant, without losing resources to provisional credit.

Penalities

Noncompliance with this law results in a $1,000 fine per violation, not to exceed 1% of the FI’s assets.  

Reg E vs. Reg Z

Reg Z disputes cover all credit or lending disputes. Unlike Reg E, Reg Z does not require financial institutions to provide provisional credit after 10 days of being asked to investigate fraud. However, when Reg Z is in question, financial institutions must stop charging interest on the disputed amounts of their account holders. 

Account Holder Responsibility

During a Reg E dispute, account holders must also remain compliant in order for their claim to be investigated. For example, consumers must report lost or stolen credit or debit cards no more than two days after the consumer becomes aware of the theft; otherwise, the bank has no obligation to refund losses.

Summary

» Reg E outlines rules for electronic funds transfers and provides guidelines for issuers and sellers of debit cards 

» Reg E was enacted for consumer protection 

» It’s essential for both consumers and financial institutions to have an interest in understanding Reg E’s guidelines

» Consumers also have a responsibility to report fraud quickly