What Is Regulation E?

Regulation E refers to a set of federal rules that protect consumers who use electronic funds transfers (ETFs).

Next, we'll explore what Regulation E is, how it compares to Regulation Z, which provides consumer protection with credit cards, mortgages, home equity lines of credit, installment loans, and some student loans, and what Reg stands for. And for you as an individual saver and investor.

Definition and examples of Regulation E

Created by the Federal Reserve, Regulation E offers protection to consumers who use EFT. EFTs are transactions that involve computers, telephones, or magnetic tape and allow a bank or other financial institution to credit or debit a customer's account. Some of the more common EFTs include:

Direct deposits
Debit card transactions
ATM transfers
Preauthorized withdrawals from bank accounts
Telephone Initiated Transfers

Regulation E does not cover payments with traditional credit cards, gift cards, and prepaid phone cards.

How does regulation E work?

To truly understand Regulation E, it is important to have a good understanding of the Electronic Funds Transfer Act. Passed in 1978, the law requires financial institutions to clearly define the amount they will charge consumers for electronic fund transfers.

Essentially, Regulation E provides the framework for law enforcement. Both the Electronic Funds Transfer Act and Regulation E can help you as a consumer in a number of ways.

Both require financial institutions to release information like their phone numbers and addresses so that you can report lost or stolen cards.

This legislation will protect you from unauthorized transactions and help resolve transaction errors. If someone uses your ATM or debit card before reporting the loss or theft, how quickly you report it to your financial institution will determine your liability.

What does this mean for individual savers and investors?

If you are a saver and investor with a bank account, Regulation E is important. It explains what your rights are when you need to dispute an ATM, debit card, or other EFT transaction due to accident or fraud.

Under Reg E, you have 60 calendar days to report an unauthorized transaction to your financial institution. The time period begins with the date you receive the first statement containing the transaction.

We hope you enjoy watching this video about What Is Regulation E?

Source: Banker's Compliance Consulting

 

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