Do National Banks have to comply with Reg-E?

Yes.

With this exception, §205.3 Coverage.
(7) Small institutions. Any preauthorized transfer to or from an account if the assets of the account-holding financial institution were $100 million or less on the preceding December 31. If assets of the account-holding institution subsequently exceed $100 million, the institution's exemption for preauthorized transfers terminates one year from the end of the calendar year in which the assets exceed $100 million. Preauthorized transfers exempt under this paragraph (c)(7) remain subject to §205.10(e) regarding compulsory use and sections 915 and 916 of the act regarding civil and criminal liability.

Thanks Andy, I didn't realize that about small banks...

Just be very careful not to stretch that small-institution exemption too far!

It only exempts preauthorized transfers to or from accounts. That gets the small bank off the hook for recurring credits and recurring debits, and that's all. So things like social security benefits or payroll direct deposit credits will be exempt from coverage for these banks, as will recurring debits like monthly EFT debits for insurance premiums, health club memberships, etc.

But if a customer instructs the IRS to direct deposit his refund, that's not a preauthorized EFT under the definition in the regulation, so it will be subject to Reg. E. As will all debit card and ATM card activity, on-line banking transfers, and most bill payment transactions.

Actually John, we aren't considered a small, that's probably why I never paid attention to it before. But heck, you never know, I could be at a small bank someday!

It could be a good place to be, Maria! Happy New Year!

There are many good places to be. The trick is not only finding yours, but realizing it. But I digress. I should have emphasized what John pointed out.

I'm with you Maria. I've never been in a small bank that could take advantage of that, nor have I ever been in a non-HMDA bank. I always skipped those things that didn't apply or I knew I'd never get out of.

Thanks for the reply.
It seems for the most part,national banks have to comply
with Reg E.The question now is,What can the consumer do about a bank that will NOT comply?

If you believe that a bank has failed to comply with Regulation E (or any other consumer regulation), you should draft a careful letter explaining your position. Include details about what specifically you believe was handled incorrectly. You should first direct the letter of complaint to management of the bank. Aim high here. Call the bank or look at their Web site to determine the name and mailing address of their President, and use it.

While the President of the bank won't be equipped in most cases to resolve the problem him- or herself, he or she will usually want to be certain that the bank has not violated any rules.

If you obtain no satisfaction from the bank's management, and still believe you've been wronged, contact the OCC's Customer Assistance Group. Here's a LINK to their customer assistance Web page, where you'll find mailing and e-mail addresses, and additional information. The OCC is the regulator for national banks.

I believe that this bank has failed to comply with Regulation E and I did draft a careful letter explaining my position to management of the bank.I was not able to reach
the President of the bank, only an account executive. He wrote a letter to me saying that the bank has not violated any rules.
I have contacted the OCC office and they said the bank has not violated any rules,but in a follow up letter to them, they said they are going to reopen this complaint!
I also sent a CC to the Bank,this letter was dated 10/22/03
about four weeks later I phoned the Bank exeutive to ask if he was going to responed to my last letter!He said No he was
not going to responed to the letter and that he would not take any more action on my complaint.{Great Customer Service.}
I also phoned the OCC and was told I would hear from them
in about two weeks, that was over five weeks ago!
My problem now is that if the OCC cannot get satisfaction for me,who do I call next!

Patrick, if it is any comfort, regulators generally comply quickly with consumer complaints. They will research the issue and make a determination of whether or not the bank violated any regulations. Rest assured that if there is a violation, it will be dealt with by the OCC.

Once you have your response from the OCC regarding your complaint or inquiry, if it fails to provide you the satisfaction you're seeking, you'll have to weigh the pros and cons of seeking legal advice. My experience has been that the OCC will press the case with the bank aggressively if it believes any regulations were violated.

This forum is not equipped to provide legal advice.

My bank paid an electronic fund transfer without my authorization, I asked asked them why, and was told,
"It's the law" they have to pay as they have no way of knowing if I'm up to date with my payments to the
third party! Why should that concern them?
I was doing business with this third party,that's how they had my account information, but after telling them
and the bank our business was concluded, that should have been the end of it.
This is a problem with national banks that do not comply with Reg E, and it creates a flaw in the banking system!
The crooks have known this for years, and I'm sure the banks know it as well!

Patrick, I am interested to know if you received a response from the OCC yet?

Maria,I wrote to the OCC on 10/22/03,I phoned them on 11/12/03 and was told they would responed in two weeks!
I phoned again on 12/02/03 and was told they would revisit
this complaint with the bank!
On 1/5/04 I was told they will be sending me a letter soon!
Any day now I should be able to tell you how the determination went!

Thanks. I'll be waiting.

Maria,I give up on the OCC replying to my letter, I think they have taken the same position as the bank and decided that it's not in their best interest to reply!
The letter was dated Oct 22. 03. The last time I phoned them, Jan 5.04, I was told they would write and confirm my letter and what action they were about to take!
In the letter I ask, Do Banks Have To Comply With Reg-E?
If Yes! Then this bank is in violation on a number of counts under Sec 205-10.{Preauthorized Transfers}
If No! Then the bank is guilty of fraud, they charged me $30. to stop payment on an item that both the OCC and the bank said I did not have in the first place!
Both the OCC and the Bank say the customer is at fault if a third party posts an EFT to a customers account, with or without authorization from the account holder!
This mess has been ongoing since May 2003 and the OCC did reply in Sept 2003 telling me that the bank was right!
Even with the best of intentions the bank can't have it both ways, they are in violation of Reg-E or they
are guilty of fraud!

Well, that was an interesting outcome. Thanks for sharing and I am sorry you were disappointed.

One thought occured to me in this thread - is the account in question a consumer or a business account? Business accounts are not covered by Reg E.

Without Reg E, I believe you can only look to the UCC and NACHA rules and any other state laws although those would probably be a part of that state's version of the UCC.

Gee Bonnie, that is a thought!

One thought occured to me in this thread - is the account in question a consumer or a business account? Business accounts are not covered by Reg E.
---------------------------------------------------------
Bonnie,The account was a business account,but Reg E.Sec 205-2[j]states that a business [corporation]is a person [consumer]under this rule!
In sec 205-1Purpose, The protection of the consumer.
The question is; Did this bank comply with Reg E?
They did not, and as a result I'm out about $200.
I have a collection agency after me for $400.{Fees}
The bank rep told me at the start that I should close the
account and open a new one,it seems that's what other people
do in this situation!This tells me that the bank knows about this FLAW in the banking system! The crooks have known
about it for years but the bank will never admit it!

(jumping into the middle of a conversation)

How long after the the EFT did you claim that the draft was not authorized? If it was more than 60 days after, I believe that you have no case. If it was, there should not have been a problem filling out an "affidavit of unauthorized ACH activity". I'm struggling with whether this would have been an R10 (unauthorized) or R07 (authorization revoked) situation, but I'm leaning toward R07. Now, you say you were charged for a stop payment fee. That would indicate that you placed a stop payment BEFORE the debit-in-question occurred. Is that correct? Then, the question is what information did and did not match up between the stop order and the actual draft. Did they use a different company name? Was the amount different? Tell us about the actual draft and a timeline.

(jumping into the middle of a conversation)

How long after the the EFT did you claim that the draft was not authorized?
3 Days! The bank then kept me waiting five weeks before telling me that they were not going to take any action on this complaint.

If it was more than 60 days after, I believe that you have no case. If it was, there should not have been a problem filling out an "affidavit of unauthorized ACH activity". I'm struggling with whether this would have been an R10 (unauthorized) or R07 (authorization revoked) situation, but I'm leaning toward R07.
R10!
Now, you say you were charged for a stop payment fee. That would indicate that you placed a stop payment BEFORE the debit-in-question occurred. Is that correct?
Yes! Two months before, it worked for just one month only!

Then, the question is what information did and did not match up between the stop order and the actual draft. Did they use a different company name? Was the amount different? Tell us about the actual draft and a timeline.
The amount was different! This is the reason it was paid by the bank!
Bottom line; The bank was not authorized to pay any EFT at any time by anyone!
This tells me I have no control over my own account/money, and any third party with my account information will get paid!

Your stop payment request entered with the bank was too late to stop the payment that had already posted. It appears you had provided the merchant with your account information and authorized a recurring payment (although I'm not sure of this point). Banks are permitted to require 3 business days' advance notice when being asked to stop payment on a recurring EFT.

As for future payments, the stop order is technically only valid for one pending payment, and depending on what information the bank was given, they may or may not have been able to stop the next payment (if stop was for specific dollar amount and the EFT came through with a different amount, the stop would not have been effective).

The bank is not required to have your authorization if you gave an authorization to the EFT originator. If that authorization was for a recurring payment, the Receiver (that's you in this scenario) has to order the originator to cancel the authorization; then the Receiver may, if the account is a consumer account, require the bank to return any future unauthorized EFT as long as the Receiver does so within 60 days of the posting date.

This is involved, I know, but Reg E is involved. That's why we've been probing for more background info, Patrick.

Bottom line; The bank was not authorized to pay any EFT at any time by anyone!

The problem with that statement is that the bank cannot arbitrarily turn down EFT's because a customer hadn't warned them that it was coming. For example; I may set up an EFT, recurring or one time only, to pay my wireless bill. I'm not going to call the bank and tell them that I've done it. The bank will pay the item unless I tell them to do otherwise. I suppose this is why the 60 day rule exists. This gives time for a customer, such as yourself, to dispute an unauthorized item when you notice it on your statement.

Next question: Was this an ACH (a debit using your routing and account number) or a POS (a debit using your debit card number)? If it is an ACH, I don't see how the bank can refuse to allow you to dispute it as an R07 (authorization revoked). If it is a POS, I'm afraid I cannot help you further.

My bottom line: If we can help you in any way, we are going to. If the banking regulations have been followed and you are to be the "loser" (for lack of a better word) in this case, I hope that we can at least help you to better understand why.

This is involved, I know, but Reg E is involved. That's why we've been probing for more background info, Patrick.
---------------------------------------------------------
John,Thanks for your input.
You say Reg E is involved, if it was I would not be in this mess!I had a 48 month agreement with this third party
for $53.57 EFT/month. The third party and the bank was told
our business was concluded.At this point the third party still posted the same item to my account.I then went into
my bank to see what could be done.I said I wanted to stop
payment on this item and after I paid for the stop payment
order I was told it was good for six months!
It worked for one month only.
The bank had at least 45 days notice that this item was no longer valid,plus the fact my account balance was less than
$200.The EFT item posted was for $364.28.This should at least have raised questions!
John, I appreciate the amount of time/money it would take banks to comply with Reg E, but when the customer is dealing
crooks they need protection from the bank.{REG E!!!}

Patrick -- It's true that it's expensive for banks to comply with Reg E, but that's not the point. It's part of the cost of doing business for all bankers.

I'll try to sum this up for us all. You say you were mistreated by a bank with a national charter, and you have been satisfied with neither their response to your complaints, nor the response of the OCC when you complained to them.

You've attempted to lay out the facts here, as you see them. We've attempted to explain a number of different possibilities, since we didn't have all the information.

Now that we understand your scenario (I think), we are still left ignorant of the bank's side of the story. And it's not likely that we will get it. So we have done our best to explain your position without having all the information we would need to make a fair determination.

It's my experience that the OCC does an excellent job of digging out the story (both sides) on consumer complaints and attempting to obtain redress on behalf of consumers where warranted. It may not be fast enough for you, Patrick. But, shy of trying your case in court, I think the OCC is the best option you have to assure that the bank does what it's supposed to (if it hasn't already).

My bottom line: If we can help you in any way, we are going to. If the banking regulations have been followed and you are to be the "loser" (for lack of a better word) in this case, I hope that we can at least help you to better understand why.
------------------------------------------------------
I know why I'm the "loser" but I just won't accept it!
I understand why this bank did not comply with Reg E--
Time/Money it would take to protect their customers from
the crooks who know about this flaw in the banking system!!
Thanks for your input JP.

Good Luck, Patrick.

I am surprised that you've not heard back from the OCC, though - usually they are pretty quick to respond to consumer complaints. Makes me wonder if they are doing more research behind the scenes. Perhaps if you contact them again to see what the status of your complaint is?

Failing that, if you do not get a response from them, you can always refer the matter to the Ombudsman for the OCC, Samuel Golden. The Ombudsman at any of the regulatory agencies acts as a liasion between the agency and the public (including banks), and their offices are usually EXTREMELY responsive to consumer concerns. But hopefully you'll hear from the OCC or the bank soon, one way or the other.

ExGovBabe,I phoned the OCC today and it seems they are very
busy! I asked them to at least responed to my letter dated
10/23/03! We Then had a long discussion about my complaint and they asked me to put some details in a letter for them!
I will do what they ask, but if they don't act on it in a
reasonable time frame I will do as you advise,The Ombudsman!
Thanks for the advice.

Patrick -- It's true that it's expensive for banks to comply with Reg E, but that's not the point. It's part of the cost of doing business for all bankers.
----------------------------------------
John, You are right, the cost to the Bank is not the point!
The cost to me is very much the point as I now have to pay about $100. a year to maintain my account that was Free before, I'm also out about $200 that the bank gave away to the crooks!
-----------------------------------------
I'll try to sum this up for us all. You say you were mistreated by a bank with a national charter, and you have been satisfied with neither their response to your complaints, nor the response of the OCC when you complained to them.
-------------------------------------------
John, I would like to sum it up for you. The bank paid an EFT item without authorization from me.
Both the bank and the OCC tell me I cannot stop an EFT through the bank, I have to do it through the third party! OK, but the third party are crooks and they still post this item and get paid.
This then creates a FLAW in the system that ignores the customer in favor of the crooks!
-------------------------------------------------
Now that we understand your scenario (I think), we are still left ignorant of the bank's side of the story. And it's not likely that we will get it. So we have done our best to explain your position without having all the information we would need to make a fair determination.
-----------------------------------------
The banks side of the story! Regulation E is meant to protect the consumer but if the bank will not comply with it then the consumer has no protection. This Bank paid this Item after I told them not to pay it!
----------------------------------------------
It's my experience that the OCC does an excellent job of digging out the story (both sides) on consumer complaints and attempting to obtain redress on behalf of consumers where warranted. It may not be fast enough for you, Patrick. But, shy of trying your case in court, I think the OCC is the best option you have to assure that the bank does what it's supposed to (if it hasn't already).
-----------------------------------
The OCC is very busy these days and is not much help to me {Very Slow To Respond} and will not admit that there is a Flaw in the banking system, nor will Bankers On Line!!

The OCC is very busy these days and is not much help to me {Very Slow To Respond} and will not admit that there is a Flaw in the banking system, nor will Bankers On Line!!

Patrick, I understand that you are frustrated, but there is nothing that we can do unless we are insiders at your bank. If you were my customer, I'd probably suggest that you close your account and open a new one. Then, the EFT's would be returned "account closed". It pains me when a banking customer is upset and especially one who does his part to try to rectify the situation. I wish I could apologize to you on behalf of your bank, but I can't. I'm sorry you feel that BOL has let you down. I can speak for those who participated in this forum when I say that we (especially the gurus involved) have done everything within our power both to understand the situation and to translate how Reg E applies, etc. It has been my experience here that, even though we mostly work for banks and work to protect banks from losses, etc, we recognize that there are errors on the part of banks and/or bank employees. On an individual basis, within our own financial institution, we will generally take a loss in order to satisfy a customer rather than just turn away. I'm sorry if that is not the case for you. I wish that you were my customer so that I might be involved in finding a real solution for you. Again, I say good luck, Patrick.

On my own initiative, Patrick, and not speaking on behalf of BankersOnline, I will freely admit there are flaws in the system. It is, after all, designed and operated by humans. But let me offer one more suggestion. If you've already tried this route and run up against a brick wall, I'm sorry.

Regardless of whether the bank was able to stop payment on the ACH charge to your account, they are obliged by Regulation E (if we're talking a consumer account here) to receive your allegation of the now unauthorized transaction and research it. The ACH rules (again, for consumer accounts) allow your bank to return unauthorized ACH debits within 60 days of the posting date. They would have to have you complete a statement under pains of perjury that the transaction was, in fact, unauthorized. That rule won't apply if, as I fear, more than 60 days has elapsed since your account was whacked.

OCC and Federal Reserve Board (they wrote Reg. E) statements to banks have told us that the onus is on the bank to prove that a transaction was authorized, rather than on the customer to prove it was not.

On the question of authorization, there is one piece of the Reg. E rules that could work against you. I don't know enough about the specifics of your situation, so I'll be general here. If you gave your account information to a merchant and at one time authorized that merchant to initiate ACH transfers from your account, your bank is entitled to consider as authorized all future transfers initiated by that merchant until you notify the bank that you have withdrawn that authorization. At the same time, if you gave an authorization to a merchant for recurring charges, the merchant is entitled to act on that authorization until it expires by its own terms (an authorization for 6 transfers, for example) or you notify the merchant that you've pulled the plug.

Now, for my last thought or suggestion for you:

Assuming it's been more than 60 days since your account was whacked, and assuming further that it's been more than 60 days since you got the statement showing the transaction, you still have a glimmer of hope in the Reg. E section 205.6 rules on limits on consumer liability for unauthorized transactions. If, in fact, it can be proven that the transaction was unauthorized, there are limits on your liability that may help you. If access to your account was made strictly using account and bank number information (the numbers that can be found at the bottom of a check), you might be able to recover your money. It might require a court case, however. And there, of course, is the rub. What will it cost to mount a case against megabank?

If you ever do get resolution on this problem, I'd be happy to hear the details.

Patrick, I understand that you are frustrated, but there is nothing that we can do unless we are insiders at your bank. If you were my customer, I'd probably suggest that you close your account and open a new one.
-----------------------------------------------------------------------------
Fraud Pup, I did try to close the old account but the Bank Manager said No!
He said he would not close the account as I had a Negative Balance {Due to the Fees} and until I paid the fees the account had to stay open!
When the fees reached over $400.and went to collection he closed the account and gave me a new account. The old account was free, No service fee, the new account costs $8/month.
------------------------------------------------------------

I'm sorry you feel that BOL has let you down. I can speak for those who participated in this forum when I say that we (especially the gurus involved) have done everything within our power both to understand the situation and to translate how Reg E applies, etc.
---------------------------------------------------------
I don't feel BOL has let me down in any way and everyone has been very helpful and done a Great job for me. I appreciate you all very much.

It sounds to me like you all know the value of good customer service, this bank I'm fighting with has no idea how to treat people. In fact I think they go out of their way to create situations that will cost the customer excess fees!

I'm still waiting for the OCC to respond to my last letter and if I don't like what they say I will take legal action by way of small claims court!

Thanks again and I will keep you posted.

One other avenue to try is file a complaint with the Federal Trade Commission against the third party that took the unauthorized debit.

Retread posted this story in the General Forum about the FTC taking action on fraudulent funds transfers: http://www.ftc.gov/opa/2004/02/firstamerican.htm

If you ever do get resolution on this problem, I'd be happy to hear the details
==============================================
Hello John,
The following is a letter I sent to the CEO of the bank
in question.Still no word from the OCC or reply to the letter dated 3-15-2004.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Dear Sir,
I'm a long standing customer of XXXXX XXXXX, before that, Norwest.
On July 22. 2003. I filed a complaint with the OCC, it is still ongoing!
.
This complaint was that XXXXX XXXXX had violated Regulation E, In respect to EFTs.

XXXXX XXXXX paid an EFT without my authorization even after I informed my branch not to pay this item.
The end result was I lost about $200. And my account went to collection for about $400.{This is unpaid FEES.} This account was a free account from Norwest, Now I have to pay $8/Month on a new account I have to replace the old one.

As I understand Reg E. XXXXX XXXXX has to prove they had authorization from me to pay this item!
I don't have to prove, I did not give authorization to pay this item!
Customer service {Integrity} at XXXXX XXXXX in this case was nonexistent, but I still bank with you as I have found all banks have problems, Oh, to live in a perfect world!

XXXXX XXXXX did violate Reg E. and in doing so created a flaw in the banking system!

As I told Mr. XXX XXXXXXX, from your HQ office when he refused to answer a letter I wrote to him, and after he refused to take any further action to resolve this matter; "If you think I'm going to drop this problem, you must be dreaming."

This is how it works; I can go into any XXXXX XXXXX branch and ask to set up an EFT.The bank representative will say OK, go do it, we don't need to know any details!

So I set up a monthly EFT with this third party for a set period of time like 48 Months.
After 48 Months I have no need for the item from the third party {Crooks } but they still post this EFT to my account for $53.57. My next move is to put a stop payment on this item, {$30. Fee} and it works for one month! The following month the crooks post the item as $364.28. The bank pays them in full, the reason they pay is that I did not put a stop payment on this amount, only for $53.57.!!!

XXXXX XXXXX and the OCC say if you, the customer, set up an EFT with a third party then you cannot stop payment through the bank as you don't have any agreement with the bank, {They still expect you to pay their $30 fee though.} you have to close your agreement with the third party!
OK, I'm the customer and the third party will not close my account, no matter what the reason, the bank
has no legal reason to pay them! This is a Violation of Regulation E. It also Violates my right to control
my account funds.

So any person who has your account information can post an EFT to your account and the bank will pay it without question. As in my case, if your account is not funded enough to cover the posted item, they will create a negative balance and pay it in full!

The purpose of Regulation E is to protect the consumer:

Sec.205-10[d] Preauthorized transfers [1] Varying amounts. [2] Range.

XXXXX XXXXX is in violation of Regulation E. And the employees involved in this transaction are poorly
trained and have no idea how to treat customers!

What do I want?
I want an apology for the way I was treated, I want my account reinstated with the account balance as it was, and as a free account!
Last but not least, I want you to admit you have a Flaw in your system and FIX it!
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
What do you think,how would you answer this letter if it were your bank?

Today I received a reply to two letters I wrote to the OCC,these letters were written at the request of the OCC as they thought what I had to say had some merit in relation to Reg E, and EFT!What a waste of time it turned out to be, all they did was to send me a copy of their letter dated Sept 22. 2003. Saying that the bank had not violated any rules or banking regulations.
It seems it is legal for this bank to charge fees for a service that both the bank and the OCC say I don't have!
It's also legal for this same bank to pay an EFT without my authorization even after being told not to pay this item
They also say that since this was a business checking account that Reg E dose not apply to this account. Reg E provides protection for the consumer and "consumer" is defined in 205-2 as a corporation,etc!
The response from the OCC just validates my position that there is a FLAW in the banking system in relation to EFTs!
Any Attorney or Law Firms out there who feel they can take on the Fifth largest bank in America and the OCC in a class action lawsuit under "Consumer Protection" please contact
me, Patrick, at: pgy57@aol.com

Patrick,

I would not extend this thread any further but for two things. First, your comment in the latest post that the definition section of Regulation E includes "corporation" in the definition of "consumer." It most assuredly does not. The definition of consumer could not be more straightforward: a natural person.

My other concern is your revelation in this most recent post that the discussion has been about a business account all along. Had you been clear on this at the outset, we would have saved a lot of your time and ours. Regulation E most definitely applies only to transactions in consumer accounts. It implements a consumer protection law.

Businesses (or persons operating business accounts) who believe they are victims of unauthorized transaction have recourse in the courts. They should not expect consumer regulations and laws to come to their aid.

My real point here is to encourage those who want to get a reasoned and helpful response here in "Ask a Banker" to understand we cannot react to that which you don't tell us. We obviously cannot act as legal advisors here. But when we attempt to share whatever glimmers of help we might have, it's nice to understand ALL of the background information in your question or plight.

[After re-reading the entire thread, I see that Patrick confirmed his was a business account back on January 17. Shame on me for not seeing that significant information.]

Patrick,

I would not extend this thread any further but for two things. First, your comment in the latest post that the definition section of Regulation E includes "corporation" in the definition of "consumer." It most assuredly does not. The definition of consumer could not be more straightforward: a natural person.
------------------------------------------------------------
John, I'm wrong, I should have said the definition of "Person."

From, Regulation E. 205-2 Definitions;

(e) Consumer Means a natural person.

(j) Person Means a natural person or an organization, including a corporation, government agency, estate, trust, partnership, proprietorship, cooperative, or association.

(m) Unauthorized electronic fund transfer means 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;

John, It's not my intention to mislead you or waste your time, but from the beginning I was told by the bank manager that their authorization to pay the EFT was covered under Reg E. That's why I did not mention the fact it was a business account. I know a few people with consumer
accounts who have been screwed by this same bank!

EFTs are great until you want to cancel them. This bank won't let you cancel, and if the third party won't cancel, you are screwed, this bank will always pay the third party over their customer. Why? excess FEES that's why.

It seems Regulation E is open to interpretation!

The regulation is quite specific in its coverage:

§ 205.3 Coverage.

(a) General. This part applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's account. Generally, this part applies to financial {{8-31-01 p.7363}}institutions. For purposes of §§ 205.10(b), (d), and (e) and 205.13, this part applies to any person.

If you read the sections of Reg E that apply to any "Person" (which includes corporations, etc.), you will find those sections apply in instances where a "person" will be affecting a consumer's account. This means that an individual, corporation, etc., must follow certain rules when conducting electronic transactions that will affect a consumer's account.

Bottom line is that business accounts are treated differently than consumer accounts when it comes to certain regulations. Unfortunately, if consumer type protections were extended to business accounts in certain types of commerce, than commerce itself might come to a screaching halt.

My understanding of NACHA rules is that if you can catch the electronic debit to your business account before the 1st 24 hours are up, you can have the debit reversed. The bank itself only has a 24 hour window to return business debits as unauthorized.

Your target in this should be the company that perpetrated the fraudulent debits.

§ 205.10 Preauthorized transfers.
(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.

(d) Notice of transfers varying in amount--
(1) Notice. When a preauthorized electronic fund transfer from the consumer's accounts 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.

Bonnie,
Thanks for the information, but when I posted this question, Do Banks Have Comply With Reg E? I had no idea it would get so involved.
This bank screwed me, and I'm sure, other people/businesses as well!
I know there are two sides to every story and you have no way of finding out this banks side! Nor do I, This bank won't return phone calls or reply to my letters!

EFTs require a written agreement signed by the consumer.
I did not have any agreement with the bank, their position was that I had an agreement with the third party and that was their authorization to pay any EFTs even after I gave them ample notice to stop payment.

I can't find any regulation that gives banks this authorization to use a third party agreement in such a way that the consumer has no control over their own funds!

So now the issue is not, Did I have protection under Reg E, but did this bank comply with Reg E.?

Patrick,
If your account was a business account then it is not covered by Reg E. You have to look at NACHA rules, the Uniform Commercial Code and state law for your recourse.

If this is a business account, then you are not a consumer with respect to these transactions, and Reg E does not apply.

And, folks, we'll let that be the last word in this exhaustive discussion. This thread will be locked.