Regulation E is a consumer protection law for accounts established primarily for personal, family, or household purposes. Regulation E gives consumers a way to notify their financial institution that an EFT has been made on their account number without their permission.
 
Non-consumer accounts, such as Corporations, Partnerships, Trusts, etc. are excluded from coverage. A non-consumer (business account) customer using internet banking and/or bill pay is not protected under Regulation E. As such, special consideration should be made by the business customer to ensure adequate internal security controls are in place that are commensurate with the risk level that the customer is willing to accept.
 
As a non-consumer customer, you should perform periodic assessments to evaluate the security and risk controls you have in place. The risk assessment should be used to determine the risk level associated with any internet activities you perform and any controls you have in place to mitigate these risks.
 
Definition of EFT. An EFT is an electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions initiated through electronic-based systems. The term includes, but is not limited to:

• Point-of-sale transfers.
• Automated Teller Machine transfers (ATM).
• Direct deposits or withdrawals of funds.
• Transfers initiated by telephone.
• Transfers resulting from debit card transactions, whether initiated through an electronic terminal.
• Transfer initiated through internet banking/bill pay.

Protections Provided Under Regulation E for Consumers Who Use Internet Banking/Bill Pay.

If you believe an unauthorized EFT has been made on your account, contact us immediately. If you notify us within two business days after you learn of the loss or theft of your ATM/Debit Card or Personal Identification Number (PIN), the most you can lose is $50. Failure to notify the bank within two business days may result in additional
losses. 

Unlimited Liability. Unlimited loss to a consumer account can occur if:

• The periodic statement reflects an unauthorized transfer of money from your account, and you fail to report the unauthorized transfer to us within 60 days after we mailed your first statement on which the problem or error appeared.
   

Exclusions from Protection.

The term EFT does not include: 

• Checks – any transfer of funds originated by check, draft, or similar paper instrument or any payment made by check, draft, or similar paper instrument at an electronic terminal.
• Check Guarantee or Authorization – Any transfer of funds that guarantees payment or authorizes acceptance of a check, draft, or similar paper instrument but does not directly result in a debit or credit to a consumer’s account.
• Wire or other similar transfers – Any transfer of funds through a wire transfer system that is used primarily for transfers between financial institutions or between businesses.
• Securities and Commodities Transfers – Any transfer of funds for the primary purpose of the purchase or sale of a security or commodity, if the security or commodity is:
  • Regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission
  • Purchased or sold through a broker/dealer regulated by the Securities and Exchange Commission or through a futures commission merchant regulated by the Commodity Futures Trading Commission.
  • Held in Book-entry form by a Federal Reserve Bank or federal agency.
  • Automatic transfers by account-holding institution – Any transfer of funds under an agreement between a consumer and a financial institution which provides that the institution will initiate individual transfers without a specific request from the consumer.
  • Between a consumer’s accounts within the financial institution
  • From a consumer account to an account of a member of the consumer’s family held in the same financial institution
  • Between a consumer’s account and an account of the financial institution, except that these transfers remain subject to § 205.10(e) regarding compulsory use and sections 915 and 916 of the acts regarding civil and criminal liability. (Refer to “Coverage in Detail” below).
  • Telephone-initiated transfers – Any transfer of funds that:
  • Is initiated by telephone communication between a consumer and financial institution making the transfer; and
  • Does not take place under a telephone bill payment or other written plan in which periodic or recurring transfers are contemplated.

 
Regulation E – Coverage in Detail. For a complete detailed explanation of protections under Regulation E, please visit the Consumer Financial Protection Bureau’s (CFPB’s) website: http://www.consumerfinance.gov/eregulations/1005