Regulation E: Consumers Only

Section 1005.3(a) of Regulation E lays out what’s covered by the Rule. It specifies that Subpart A applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's account. While there are a few sections listed that apply to any person (meaning an individual, entity, etc.), it’s clear that the liability for unauthorized transfers (§1005.6), the initial disclosure (§1005.7) and the procedures for resolving errors (§1005.11) apply only to consumer accounts. Surprisingly, we see quite a few banks that give an initial EFT disclosure when they open a business account. While there isn’t necessarily anything wrong with doing this, we recommend you don’t. By giving the initial disclosure to business customers you are, in a sense, implying everything in the disclosure applies to them. If they come in later to dispute an unauthorized transaction and you tell them “Oh, sorry those rules don’t apply to you”, it could lead to a disgruntled customer.

Jerod explains more in the video.


Regulation E Training



Jerod Moyer

Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru. Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports-related!

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