The FDIC recently released its Consumer Compliance Supervisory Highlights, which provides an overview of issues noted in the 2021 examinations. Regulation E made the list of most frequently cited violations, among others, which isn’t entirely a surprise. Regulation E has been a focus of the regulatory agencies for some time now and we don’t anticipate it will slow down anytime soon.
The FDIC pointed specifically to Section 1005.11(c) which requires financial institutions
…to investigate allegations of electronic fund transfer errors, determine whether an error occurred, report the results to the consumer, and correct the error within certain timeframes.
The FDIC specifically notes issues with consumers being targets for fraud. Specifically, an instance was noted where consumers were tricked into giving out two-factor authentication codes to a scammer posing as someone from the institution’s third-party fraud department.
The scammer then used that information to steal money from the consumers’ accounts. To try and limit the institution’s liability, account agreements stated that two-factor authentication codes would never be requested. While this fact might be helpful for consumers to know, it does not limit the consumer protections provided in Regulation E.
…the FDIC concluded that Regulation E’s liability protections for unauthorized transfers apply even if a consumer is deceived into giving someone their authorization credentials. Consumer account disclosures cannot limit the protections provided for in the regulation. The regulation’s Official Interpretations expressly state that an unauthorized EFT includes a transfer initiated by a person who obtained the access device from the consumer through fraud or robbery, and that consumer negligence cannot be used as the basis for imposing greater liability than is permitted under Regulation E.
Is Regulation E an area of concern for your financial institution? Want to ensure you’re in compliance? Be sure to check out our webinar, “Regulation E: EFT Errors & Disputes”, which is available now OnDemand.
Here’s what one attendee had to say:
Excellent webinar. Talked about the basics, but also explained the more in-depth parts in an easy-to-understand way. Highly recommended!
Published
2022/04/18
