[Code of Federal Regulations]

[Title 12, Volume 2]

[Revised as of January 1, 2002]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR205.10]



[Page 134-135]

 

                       TITLE 12--BANKS AND BANKING

 

                   CHAPTER II--FEDERAL RESERVE SYSTEM

 

PART 205--ELECTRONIC FUND TRANSFERS (REGULATION E)--Table of Contents

 

Sec. 205.10  Preauthorized transfers.



    (a) Preauthorized transfers to consumer's account--(1) Notice by 

financial institution. When a person initiates preauthorized electronic 

fund transfers to a consumer's account at least once every 60 days, the 

account-holding financial institution shall provide notice to the 

consumer by:

    (i) Positive notice. Providing oral or written notice of the 

transfer within two business days after the transfer occurs; or

    (ii) Negative notice. Providing oral or written notice, within two 

business days after the date on which the transfer was scheduled to 

occur, that the transfer did not occur; or

    (iii) Readily-available telephone line. Providing a readily 

available telephone



[[Page 135]]



line that the consumer may call to determine whether the transfer 

occurred and disclosing the telephone number on the initial disclosure 

of account terms and on each periodic statement.

    (2) Notice by payor. A financial institution need not provide notice 

of a transfer if the payor gives the consumer positive notice that the 

transfer has been initiated.

    (3) Crediting. A financial institution that receives a preauthorized 

transfer of the type described in paragraph (a)(1) of this section shall 

credit the amount of the transfer as of the date the funds for the 

transfer are received.

    (b) Written authorization for preauthorized transfers from 

consumer's account. Preauthorized electronic fund transfers from a 

consumer's account may be authorized only by a writing signed or 

similarly authenticated by the consumer. The person that obtains the 

authorization shall provide a copy to the consumer.

    (c) Consumer's right to stop payment--(1) Notice. A consumer may 

stop payment of a preauthorized electronic fund transfer from the 

consumer's account by notifying the financial institution orally or in 

writing at least three business days before the scheduled date of the 

transfer.

    (2) Written confirmation. The financial institution may require the 

consumer to give written confirmation of a stop-payment order within 14 

days of an oral notification. An institution that requires written 

confirmation shall inform the consumer of the requirement and provide 

the address where confirmation must be sent when the consumer gives the 

oral notification. An oral stop-payment order ceases to be binding after 

14 days if the consumer fails to provide the required written 

confirmation.

    (d) Notice of transfers varying in amount--(1) Notice. When a 

preauthorized electronic fund transfer from the consumer's account will 

vary in amount from the previous transfer under the same authorization 

or from the preauthorized amount, the designated payee or the financial 

institution shall send the consumer written notice of the amount and 

date of the transfer at least 10 days before the scheduled date of 

transfer.

    (2) Range. The designated payee or the institution shall inform the 

consumer of the right to receive notice of all varying transfers, but 

may give the consumer the option of receiving notice only when a 

transfer falls outside a specified range of amounts or only when a 

transfer differs from the most recent transfer by more than an agreed-

upon amount.

    (e) Compulsory use--(1) Credit. No financial institution or other 

person may condition an extension of credit to a consumer on the 

consumer's repayment by preauthorized electronic fund transfers, except 

for credit extended under an overdraft credit plan or extended to 

maintain a specified minimum balance in the consumer's account.

    (2) Employment or government benefit. No financial institution or 

other person may require a consumer to establish an account for receipt 

of electronic fund transfers with a particular institution as a 

condition of employment or receipt of a government benefit.