Regulation E: Authorized vs. Unauthorized

Regulation E outlines a consumer’s liability for “unauthorized” electronic funds transfers (EFT) in §1005.6. To understand what constitutes an “unauthorized” EFT; however, you must look to §1005.2(m) which defines it as:

… an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. The term does not include an electronic fund transfer initiated:

(1) By a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized;

(2) With fraudulent intent by the consumer or any person acting in concert with the consumer; or

(3) By the financial institution or its employee.

While this may seem pretty straightforward, it isn’t always as clear as you would expect.

Jerod explains more in the video.

Video Highlights:

• What if a consumer fails to read the fine print?
• When a consumer makes a purchase but is not satisfied with it, this is not covered by Regulation E.
• What if a consumer lets someone use their debit card, but the person exceeds the authority given?

Published
2023/02/27