THE CFPB INHERITS REGULATION E

The Electronic Fund Transfer Act (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). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 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. 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, implementing the EFTA.

In general, the interim final rules recently published by the CFPB substantially duplicate the inherited regulations, making only certain non-substantive, technical, formatting, and stylistic changes. To minimize any potential confusion, the CFPB is preserving where possible past numbering systems by republishing regulations with CFPB part numbers that correspond to regulations in existence prior to the transfer of rulemaking authority. For example the previous citation to Regulation E was 12 CFR 205. The new citation is 12 CFR 1005. Notably, the interim final rules do not impose any new substantive obligations on regulated entities.

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 Historical references that are no longer applicable, and references to effective dates that have passed, have been removed as appropriate.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The Bureau is eliminating three provisions of Regulation E that are no longer applicable and renumbering one section that is affected by this deletion.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).

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 “Web site” 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 Dodd-Frank 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

So, there are no substantial issues to deal with at this point. You may need to update citations to Regulation E contained in your EFTA policy and procedures, and in your EFTA training materials.

A copy revised Regulation E is located at: https://www.jackscomplianceresource.com/CFPB-Reg-E-Electronic-Fund-Transfers.html The Federal Register copy is available at: https://www.jackscomplianceresource.com/CFPB-The-Inherited-Regulations.html

 

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