Supplement I to Part 1005 - Official Interpretations
12:8.0.2.1.6.4.1.1.17 :
Supplement I to Part 1005 - Official Interpretations Section 1005.2
Definitions 2(a) Access Device
1. Examples. The term “access device” includes debit
cards, personal identification numbers (PINs), telephone transfer
and telephone bill payment codes, and other means that may be used
by a consumer to initiate an electronic fund transfer (EFT) to or
from a consumer account. The term does not include magnetic tape or
other devices used internally by a financial institution to
initiate electronic transfers.
2. Checks used to capture information. The term “access
device” does not include a check or draft used to capture the
Magnetic Ink Character Recognition (MICR) encoding to initiate a
one-time automated clearinghouse (ACH) debit. For example, if a
consumer authorizes a one-time ACH debit from the consumer's
account using a blank, partially completed, or fully completed and
signed check for the merchant to capture the routing, account, and
serial numbers to initiate the debit, the check is not an access
device. (Although the check is not an access device under
Regulation E, the transaction is nonetheless covered by the
regulation. See comment 3(b)(1)-1.v.)
2(b) Account
1. Consumer asset account. The term “consumer asset
account” includes:
i. Club accounts, such as vacation clubs. In many cases,
however, these accounts are exempt from the regulation under §
1005.3(c)(5) because all electronic transfers to or from the
account have been preauthorized by the consumer and involve another
account of the consumer at the same institution.
ii. A retail repurchase agreement (repo), which is a loan made
to a financial institution by a consumer that is collateralized by
government or government-insured securities.
2. Examples of accounts not covered by Regulation E (12 CFR part
1005) include:
i. Profit-sharing and pension accounts established under a trust
agreement, which are exempt under § 1005.2(b)(2).
ii. Escrow accounts, such as those established to ensure payment
of items such as real estate taxes, insurance premiums, or
completion of repairs or improvements.
iii. Accounts for accumulating funds to purchase U.S. savings
bonds.
Paragraph 2(b)(2)
1. Bona fide trust agreements. The term “bona fide trust
agreement” is not defined by the Act or regulation; therefore,
financial institutions must look to state or other applicable law
for interpretation.
2. Custodial agreements. An account held under a
custodial agreement that qualifies as a trust under the Internal
Revenue Code, such as an individual retirement account, is
considered to be held under a trust agreement for purposes of
Regulation E.
Paragraph 2(b)(3) Paragraph 2(b)(3)(i)
1. Debit card includes prepaid card. For purposes of
subpart A of Regulation E, unless otherwise specified, the term
debit card also includes a prepaid card.
2. Certain employment-related cards not covered as payroll
card accounts. The term “payroll card account” does not include
an account used solely to disburse incentive-based payments (other
than commissions which can represent the primary means through
which a consumer is paid), such as bonuses, which are unlikely to
be a consumer's primary source of salary or other compensation. The
term also does not include an account used solely to make
disbursements unrelated to compensation, such as petty cash
reimbursements or travel per diem payments. Similarly, a payroll
card account does not include an account that is used in isolated
instances to which an employer typically does not make recurring
payments, such as when providing final payments or in emergency
situations when other payment methods are unavailable. While such
accounts would not be payroll card accounts, such accounts could
constitute prepaid accounts generally, provided the other
conditions of the definition of that term in § 1005.2(b)(3) are
satisfied. In addition, all transactions involving the transfer of
funds to or from a payroll card account or prepaid account are
covered by the regulation, even if a particular transaction
involves payment of a bonus, other incentive-based payment, or
reimbursement, or the transaction does not represent a transfer of
wages, salary, or other employee compensation.
3. Marketed or labeled as “prepaid.” The term
“marketed or labeled as `prepaid' ” means promoting or advertising
an account using the term “prepaid.” For example, an account is
marketed or labeled as prepaid if the term “prepaid” appears on the
access device associated with the account or the access device's
packaging materials, or on a display, advertisement, or other
publication to promote purchase or use of the account. An account
may be marketed or labeled as prepaid if the financial institution,
its service provider, including a program manager, or the payment
network on which an access device for the account is used, promotes
or advertises, or contracts with another party to promote or
advertise, the account using the label “prepaid.” A product or
service that is marketed or labeled as prepaid is not a “prepaid
account” pursuant to § 1005.2(b)(3)(i)(C) if it does not otherwise
meet the definition of account under § 1005.2(b)(1).
4. Issued on a prepaid basis. To be issued on a prepaid
basis, a prepaid account must be loaded with funds when it is first
provided to the consumer for use. For example, if a consumer
purchases a prepaid account and provides funds that are loaded onto
a card at the time of purchase, the prepaid account is issued on a
prepaid basis.
5. Capable of being loaded with funds. A prepaid account
that is not issued on a prepaid basis but is capable of being
loaded with funds thereafter includes a prepaid card issued to a
consumer with a zero balance to which funds may be loaded by the
consumer or a third party subsequent to issuance.
6. Product acting as a pass-through vehicle for funds. To
satisfy § 1005.2(b)(3)(i)(D), a prepaid account must be issued on a
prepaid basis or be capable of being loaded with funds. This means
that the prepaid account must be capable of holding funds, rather
than merely acting as a pass-through vehicle. For example, if a
product, such as a digital wallet, is only capable of storing a
consumer's payment credentials for other accounts but is incapable
of having funds stored on it, such a product is not a prepaid
account. However, if a product allows a consumer to transfer funds,
which can be stored before the consumer designates a destination
for the funds, the product satisfies § 1005.2(b)(3)(i)(D).
7. Not required to be reloadable. Prepaid accounts need
not be reloadable by the consumer or a third party.
8. Primary function. To satisfy § 1005.2(b)(3)(i)(D), an
account's primary function must be to provide consumers with
general transaction capability, which includes the general ability
to use loaded funds to conduct transactions with multiple,
unaffiliated merchants for goods or services, or at automated
teller machines, or to conduct person-to-person transfers. This
definition excludes accounts that provide such capability only
incidentally. For example, the primary function of a brokerage
account is to hold funds so that the consumer can conduct
transactions through a licensed broker or firm, not to conduct
transactions with multiple, unaffiliated merchants for good or
services, or at automated teller machines, or to conduct
person-to-person transfers. Similarly, the primary function of a
savings account is to accrue interest on funds held in the account;
such accounts restrict the extent to which the consumer can conduct
general transactions and withdrawals. Accordingly, brokerage
accounts and savings accounts do not satisfy § 1005.2(b)(3)(i)(D),
and thus are not prepaid accounts as defined by § 1005.2(b)(3). The
following examples provide additional guidance:
i. An account's primary function is to enable a consumer to
conduct transactions with multiple, unaffiliated merchants for
goods or services, at automated teller machines, or to conduct
person-to-person transfers, even if the account also enables a
third party to disburse funds to a consumer. For example, a prepaid
account that conveys tax refunds or insurance proceeds to a
consumer meets the primary function test if the account can be
used, e.g., to purchase goods or services at multiple,
unaffiliated merchants.
ii. Whether an account satisfies § 1005.2(b)(3)(i)(D) is
determined by reference to the account, not the access device
associated with the account. An account satisfies §
1005.2(b)(3)(i)(D) even if the account's access device can be used
for other purposes, for example, as a form of identification. Such
accounts may include, for example, a prepaid account used to
disburse student loan proceeds via a card device that can be used
at unaffiliated merchants or to withdraw cash from an automated
teller machine, even if that access device also acts as a student
identification card.
iii. Where multiple accounts are associated with the same access
device, the primary function of each account is determined
separately. One or more accounts can satisfy § 1005.2(b)(3)(i)(D)
even if other accounts associated with the same access device do
not. For example, a student identification card may act as an
access device associated with two separate accounts: An account
used to conduct transactions with multiple, unaffiliated merchants
for goods or services, and an account used to conduct closed-loop
transactions on campus. The account used to conduct transactions
with multiple, unaffiliated merchants for goods or services
satisfies § 1005.2(b)(3)(i)(D), even though the account used to
conduct closed-loop transactions does not (and as such the latter
is not a prepaid account as defined by § 1005.2(b)(3)).
iv. An account satisfies § 1005.2(b)(3)(i)(D) if its primary
function is to provide general transaction capability, even if an
individual consumer does not in fact use it to conduct multiple
transactions. For example, the fact that a consumer may choose to
withdraw the entire account balance at an automated teller machine
or transfer it to another account held by the consumer does not
change the fact that the account's primary function is to provide
general transaction capability.
v. An account whose primary function is other than to conduct
transactions with multiple, unaffiliated merchants for goods or
services, or at automated teller machines, or to conduct
person-to-person transfers, does not satisfy § 1005.2(b)(3)(i)(D).
Such accounts may include, for example, a product whose only
function is to make a one-time transfer of funds into a separate
prepaid account.
9. Redeemable upon presentation at multiple, unaffiliated
merchants. For guidance, see comments 20(a)(3)-1 and -2.
10. Person-to-person transfers. A prepaid account whose
primary function is to conduct person-to-person transfers is an
account that allows a consumer to send funds by electronic fund
transfer to another consumer or business. An account may qualify as
a prepaid account if its primary function is person-to-person
transfers even if it is neither redeemable upon presentation at
multiple, unaffiliated merchants for goods or services, nor usable
at automated teller machines. A transaction involving a store gift
card would not be a person-to-person transfer if it could only be
used to make payments to the merchant or affiliated group of
merchants on whose behalf the card was issued.
Paragraph 2(b)(3)(ii)
1. Excluded health care and employee benefit related prepaid
products. For purposes of § 1005.2(b)(3)(ii)(A), “health
savings account” means a health savings account as defined in 26
U.S.C. 223(d); “flexible spending arrangement” means a health
benefits or a health flexible spending arrangement pursuant to 26
U.S.C. 125; “medical savings account” means an Archer MSA as
defined in 26 U.S.C. 220(d); “health reimbursement arrangement”
means a health reimbursement arrangement which is treated as
employer-provided coverage under an accident or health plan for
purposes of 26 U.S.C. 106; “dependent care assistance program”
means a dependent care assistance program pursuant to 26 U.S.C.
129; and “transit or parking reimbursement arrangement” means a
qualified transportation fringe benefit provided by an employer
pursuant to 26 U.S.C. 132.
2. Excluded disaster relief funds. For purposes of §
1005.2(b)(3)(ii)(B), “qualified disaster relief funds” means funds
made available through a qualified disaster relief program as
defined in 26 U.S.C. 139(b).
3. Marketed and labeled as a gift card or gift
certificate. Section 1005.2(b)(3)(ii)(D) excludes, among other
things, reloadable general-use prepaid cards that are both marketed
and labeled as gift cards or gift certificates, whereas §
1005.20(b)(2) excludes such products that are marketed or labeled
as gift cards or gift certificates. Comment 20(b)(2)-2 describes,
in part, a network-branded GPR card that is principally advertised
as a less-costly alternative to a bank account but is promoted in a
television, radio, newspaper, or internet advertisement, or on
signage as “the perfect gift” during the holiday season. For
purposes of § 1005.20, such a product would be considered marketed
as a gift card or gift certificate because of this occasional
holiday marketing activity. For purposes of § 1005.2(b)(3)(ii)(D),
however, such a product would not be considered to be both marketed
and labeled as a gift card or gift certificate and thus would be
covered by the definition of prepaid account.
4. Loyalty, award, or promotional gift cards. Section
1005.2(b)(3)(ii)(D)(3) excludes loyalty, award, or
promotional gift cards as defined in § 1005.20(a)(4); those cards
are excluded from coverage under § 1005.20 pursuant to §
1005.20(b)(3). Section 1005.2(b)(3)(ii)(D)(3) also excludes
cards that satisfy the criteria in § 1005.20(a)(4)(i) and (ii) and
are excluded from coverage under § 1005.20 pursuant to §
1005.20(b)(4) because they are not marketed to the general public;
such products are not required to set forth the disclosures
enumerated in § 1005.20(a)(4)(iii) in order to be excluded pursuant
to § 1005.2(b)(3)(ii)(D)(3).
2(d) Business Day
1. Duration. A business day includes the entire 24-hour
period ending at midnight, and a notice required by the regulation
is effective even if given outside normal business hours. The
regulation does not require, however, that a financial institution
make telephone lines available on a 24-hour basis.
2. Substantially all business functions. Substantially
all business functions include both the public and the back-office
operations of the institution. For example, if the offices of an
institution are open on Saturdays for handling some consumer
transactions (such as deposits, withdrawals, and other teller
transactions), but not for performing internal functions (such as
investigating account errors), then Saturday is not a business day
for that institution. In this case, Saturday does not count toward
the business-day standard set by the regulation for reporting lost
or stolen access devices, resolving errors, etc.
3. Short hours. A financial institution may determine, at
its election, whether an abbreviated day is a business day. For
example, if an institution engages in substantially all business
functions until noon on Saturdays instead of its usual 3 p.m.
closing, it may consider Saturday a business day.
4. Telephone line. If a financial institution makes a
telephone line available on Sundays for reporting the loss or theft
of an access device, but performs no other business functions,
Sunday is not a business day under the substantially all business
functions standard.
2(h) Electronic Terminal
1. Point-of-sale (POS) payments initiated by telephone.
Because the term “electronic terminal” excludes a telephone
operated by a consumer, a financial institution need not provide a
terminal receipt when:
i. A consumer uses a debit card at a public telephone to pay for
the call.
ii. A consumer initiates a transfer by a means analogous in
function to a telephone, such as by home banking equipment or a
facsimile machine.
2. POS terminals. A POS terminal that captures data
electronically, for debiting or crediting to a consumer's asset
account, is an electronic terminal for purposes of Regulation E
even if no access device is used to initiate the transaction.
See § 1005.9 for receipt requirements.
3. Teller-operated terminals. A terminal or other
computer equipment operated by an employee of a financial
institution is not an electronic terminal for purposes of the
regulation. However, transfers initiated at such terminals by means
of a consumer's access device (using the consumer's PIN, for
example) are EFTs and are subject to other requirements of the
regulation. If an access device is used only for identification
purposes or for determining the account balance, the transfers are
not EFTs for purposes of the regulation.
2(k) Preauthorized Electronic Fund Transfer
1. Advance authorization. A preauthorized electronic fund
transfer under Regulation E is one authorized by the consumer in
advance of a transfer that will take place on a recurring basis, at
substantially regular intervals, and will require no further action
by the consumer to initiate the transfer. In a bill-payment system,
for example, if the consumer authorizes a financial institution to
make monthly payments to a payee by means of EFTs, and the payments
take place without further action by the consumer, the payments are
preauthorized EFTs. In contrast, if the consumer must take action
each month to initiate a payment (such as by entering instructions
on a touch-tone telephone or home computer), the payments are not
preauthorized EFTs.
2(m) Unauthorized Electronic Fund Transfer
1. Transfer by institution's employee. A consumer has no
liability for erroneous or fraudulent transfers initiated by an
employee of a financial institution.
2. Authority. If a consumer furnishes an access device
and grants authority to make transfers to a person (such as a
family member or co-worker) who exceeds the authority given, the
consumer is fully liable for the transfers unless the consumer has
notified the financial institution that transfers by that person
are no longer authorized.
3. Access device obtained through robbery or fraud. An
unauthorized EFT includes a transfer initiated by a person who
obtained the access device from the consumer through fraud or
robbery.
4. Forced initiation. An EFT at an ATM is an unauthorized
transfer if the consumer has been induced by force to initiate the
transfer.
5. Reversal of direct deposits. The reversal of a direct
deposit made in error is not an unauthorized EFT when it
involves:
i. A credit made to the wrong consumer's account;
ii. A duplicate credit made to a consumer's account; or
iii. A credit in the wrong amount (for example, when the amount
credited to the consumer's account differs from the amount in the
transmittal instructions).
Section 1005.3 Coverage 3(a) General
1. Accounts covered. The requirements of the regulation
apply only to an account for which an agreement for EFT services to
or from the account has been entered into between:
i. The consumer and the financial institution (including an
account for which an access device has been issued to the consumer,
for example);
ii. The consumer and a third party (for preauthorized debits or
credits, for example), when the account-holding institution has
received notice of the agreement and the fund transfers have
begun.
2. Automated clearing house (ACH) membership. The fact
that membership in an ACH requires a financial institution to
accept EFTs to accounts at the institution does not make every
account of that institution subject to the regulation.
3. Foreign applicability. Regulation E applies to all
persons (including branches and other offices of foreign banks
located in the United States) that offer EFT services to residents
of any state, including resident aliens. It covers any account
located in the United States through which EFTs are offered to a
resident of a state. This is the case whether or not a particular
transfer takes place in the United States and whether or not the
financial institution is chartered in the United States or a
foreign country. The regulation does not apply to a foreign branch
of a U.S. bank unless the EFT services are offered in connection
with an account in a state as defined in § 1005.2(l).
3(b) Electronic Fund Transfer 3(b)(1) Definition
1. Fund transfers covered. The term “electronic fund
transfer” includes:
i. A deposit made at an ATM or other electronic terminal
(including a deposit in cash or by check) provided a specific
agreement exists between the financial institution and the consumer
for EFTs to or from the account to which the deposit is made.
ii. A transfer sent via ACH. For example, social security
benefits under the U.S. Treasury's direct-deposit program are
covered, even if the listing of payees and payment amounts reaches
the account-holding institution by means of a computer printout
from a correspondent bank.
iii. A preauthorized transfer credited or debited to an account
in accordance with instructions contained on magnetic tape, even if
the financial institution holding the account sends or receives a
composite check.
iv. A transfer from the consumer's account resulting from a
debit-card transaction at a merchant location, even if no
electronic terminal is involved at the time of the transaction, if
the consumer's asset account is subsequently debited for the amount
of the transfer.
v. A transfer via ACH where a consumer has provided a check to
enable the merchant or other payee to capture the routing, account,
and serial numbers to initiate the transfer, whether the check is
blank, partially completed, or fully completed and signed; whether
the check is presented at POS or is mailed to a merchant or other
payee or lockbox and later converted to an EFT; or whether the
check is retained by the consumer, the merchant or other payee, or
the payee's financial institution.
vi. A payment made by a bill payer under a bill-payment service
available to a consumer via computer or other electronic means,
unless the terms of the bill-payment service explicitly state that
all payments, or all payments to a particular payee or payees, will
be solely by check, draft, or similar paper instrument drawn on the
consumer's account, and the payee or payees that will be paid in
this manner are identified to the consumer.
2. Fund transfers not covered. The term “electronic fund
transfer” does not include:
i. A payment that does not debit or credit a consumer asset
account, such as a payroll allotment to a creditor to repay a
credit extension (which is deducted from salary).
ii. A payment made in currency by a consumer to another person
at an electronic terminal.
iii. A preauthorized check drawn by the financial institution on
the consumer's account (such as an interest or other recurring
payment to the consumer or another party), even if the check is
computer-generated.
iv. Transactions arising from the electronic collection,
presentment, or return of checks through the check collection
system, such as through transmission of electronic check
images.
3(b)(2) Electronic Fund Transfer Using Information From a Check
1. Notice at POS not furnished due to inadvertent error.
If the copy of the notice under section 1005.3(b)(2)(ii) for
electronic check conversion (ECK) transactions is not provided to
the consumer at POS because of a bona fide unintentional error,
such as when a terminal printing mechanism jams, no violation
results if the payee maintains procedures reasonably adapted to
avoid such occurrences.
2. Authorization to process a transaction as an EFT or as a
check. In order to process a transaction as an EFT, or
alternatively as a check, the payee must obtain the consumer's
authorization to do so. A payee may, at its option, specify the
circumstances under which a check may not be converted to an EFT.
See model clauses in appendix A-6.
3. Notice for each transfer. Generally, a notice to
authorize an electronic check conversion transaction must be
provided for each transaction. For example, a consumer must receive
a notice that the transaction will be processed as an EFT for each
transaction at POS or each time a consumer mails a check in an
accounts receivable (ARC) transaction to pay a bill, such as a
utility bill, if the payee intends to convert a check received as
payment. Similarly, the consumer must receive notice if the payee
intends to collect a service fee for insufficient or uncollected
funds via an EFT for each transaction whether at POS or if the
consumer mails a check to pay a bill. The notice about when funds
may be debited from a consumer's account and the non-return of
consumer checks by the consumer's financial institution must also
be provided for each transaction. However, if in an ARC
transaction, a payee provides a coupon book to a consumer, for
example, for mortgage loan payments, and the payment dates and
amounts are set out in the coupon book, the payee may provide a
single notice on the coupon book stating all of the required
disclosures under paragraph (b)(2) of this section in order to
obtain authorization for each conversion of a check and any debits
via EFT to the consumer's account to collect any service fees
imposed by the payee for insufficient or uncollected funds in the
consumer's account. The notice must be placed on a conspicuous
location of the coupon book that a consumer can retain - for
example, on the first page, or inside the front cover.
4. Multiple payments/multiple consumers. If a merchant or
other payee will use information from a consumer's check to
initiate an EFT from the consumer's account, notice to a consumer
listed on the billing account that a check provided as payment
during a single billing cycle or after receiving an invoice or
statement will be processed as a one-time EFT or as a check
transaction constitutes notice for all checks provided in payment
for the billing cycle or the invoice for which notice has been
provided, whether the check(s) is submitted by the consumer or
someone else. The notice applies to all checks provided in payment
for the billing cycle or invoice until the provision of notice on
or with the next invoice or statement. Thus, if a merchant or other
payee receives a check as payment for the consumer listed on the
billing account after providing notice that the check will be
processed as a one-time EFT, the authorization from that consumer
constitutes authorization to convert any other checks provided for
that invoice or statement. Other notices required under this
paragraph (b)(2) (for example, to collect a service fee for
insufficient or uncollected funds via an EFT) provided to the
consumer listed on the billing account also constitutes notice to
any other consumer who may provide a check for the billing cycle or
invoice.
5. Additional disclosures about ECK transactions at POS.
When a payee initiates an EFT at POS using information from the
consumer's check, and returns the check to the consumer at POS, the
payee need not provide a notice to the consumer that the check will
not be returned by the consumer's financial institution.
3(b)(3) Collection of Returned Item Fees via Electronic Fund
Transfer
1. Fees imposed by account-holding institution. The
requirement to obtain a consumer's authorization to collect a fee
via EFT for the return of an EFT or check unpaid applies only to
the person that intends to initiate an EFT to collect the returned
item fee from the consumer's account. The authorization requirement
does not apply to any fees assessed by the consumer's
account-holding financial institution when it returns the unpaid
underlying EFT or check or pays the amount of an overdraft.
2. Accounts receivable transactions. In an ARC
transaction where a consumer sends in a payment for amounts owed
(or makes an in-person payment at a biller's physical location,
such as when a consumer makes a loan payment at a bank branch or
places a payment in a drop box), a person seeking to electronically
collect a fee for items returned unpaid must obtain the consumer's
authorization to collect the fee in this manner. A consumer
authorizes a person to electronically collect a returned item fee
when the consumer receives notice, typically on an invoice or
statement, that the person may collect the fee through an EFT to
the consumer's account, and the consumer goes forward with the
underlying transaction by providing payment. The notice must also
state the dollar amount of the fee. However, an explanation of how
that fee will be determined may be provided in place of the dollar
amount of the fee if the fee may vary due to the amount of the
transaction or due to other factors, such as the number of days the
underlying transaction is left outstanding. For example, if a state
law permits a maximum fee of $30 or 10% of the underlying
transaction, whichever is greater, the person collecting the fee
may explain how the fee is determined, rather than state a specific
dollar amount for the fee.
3. Disclosure of dollar amount of fee for POS
transactions. The notice provided to the consumer in connection
with a POS transaction under § 1005.3(b)(3)(ii) must state the
amount of the fee for a returned item if the dollar amount of the
fee can be calculated at the time the notice is provided or mailed.
For example, if notice is provided to the consumer at the time of
the transaction, if the applicable state law sets a maximum fee
that may be collected for a returned item based on the amount of
the underlying transaction (such as where the amount of the fee is
expressed as a percentage of the underlying transaction), the
person collecting the fee must state the actual dollar amount of
the fee on the notice provided to the consumer. Alternatively, if
the amount of the fee to be collected cannot be calculated at the
time of the transaction (for example, where the amount of the fee
will depend on the number of days a debt continues to be owed), the
person collecting the fee may provide a description of how the fee
will be determined on both the posted notice as well as on the
notice provided at the time of the transaction. However, if the
person collecting the fee elects to send the consumer notice after
the person has initiated an EFT to collect the fee, that notice
must state the amount of the fee to be collected.
4. Third party providing notice. The person initiating an
EFT to a consumer's account to electronically collect a fee for an
item returned unpaid may obtain the authorization and provide the
notices required under § 1005.3(b)(3) through third parties, such
as merchants.
3(c) Exclusions From Coverage 3(c)(1) Checks
1. Re-presented checks. The electronic re-presentment of
a returned check is not covered by Regulation E because the
transaction originated by check. Regulation E does apply, however,
to any fee debited via an EFT from a consumer's account by the
payee because the check was returned for insufficient or
uncollected funds. The person debiting the fee electronically must
obtain the consumer's authorization.
2. Check used to capture information for a one-time EFT.
See comment 3(b)(1)-1.v.
3(c)(2) Check Guarantee or Authorization
1. Memo posting. Under a check guarantee or check
authorization service, debiting of the consumer's account occurs
when the check or draft is presented for payment. These services
are exempt from coverage, even when a temporary hold on the account
is memo-posted electronically at the time of authorization.
3(c)(3) Wire or Other Similar Transfers
1. Fedwire and ACH. If a financial institution makes a
fund transfer to a consumer's account after receiving funds through
Fedwire or a similar network, the transfer by ACH is covered by the
regulation even though the Fedwire or network transfer is
exempt.
2. Article 4A. Financial institutions that offer
telephone-initiated Fedwire payments are subject to the
requirements of UCC section 4A-202, which encourages verification
of Fedwire payment orders pursuant to a security procedure
established by agreement between the consumer and the receiving
bank. These transfers are not subject to Regulation E and the
agreement is not considered a telephone plan if the service is
offered separately from a telephone bill-payment or other
prearranged plan subject to Regulation E. Regulation J of the Board
of Governors of the Federal Reserve System (12 CFR part 210)
specifies the rules applicable to funds handled by Federal Reserve
Banks. To ensure that the rules for all fund transfers through
Fedwire are consistent, the Board of Governors used its preemptive
authority under UCC section 4A-107 to determine that subpart B of
the Board's Regulation J, including the provisions of Article 4A,
applies to all fund transfers through Fedwire, even if a portion of
the fund transfer is governed by the EFTA. The portion of the fund
transfer that is governed by the EFTA is not governed by subpart B
of the Board's Regulation J.
3. Similar fund transfer systems. Fund transfer systems
that are similar to Fedwire include the Clearing House Interbank
Payments System (CHIPS), Society for Worldwide Interbank Financial
Telecommunication (SWIFT), Telex, and transfers made on the books
of correspondent banks.
3(c)(4) Securities and Commodities Transfers
1. Coverage. The securities exemption applies to
securities and commodities that may be sold by a registered
broker-dealer or futures commission merchant, even when the
security or commodity itself is not regulated by the Securities and
Exchange Commission or the Commodity Futures Trading
Commission.
2. Example of exempt transfer. The exemption applies to a
transfer involving a transfer initiated by a telephone order to a
stockbroker to buy or sell securities or to exercise a margin
call.
3. Examples of nonexempt transfers. The exemption does
not apply to a transfer involving:
i. A debit card or other access device that accesses a
securities or commodities account such as a money market mutual
fund and that the consumer uses for purchasing goods or services or
for obtaining cash.
ii. A payment of interest or dividends into the consumer's
account (for example, from a brokerage firm or from a Federal
Reserve Bank for government securities).
3(c)(5) Automatic Transfers by Account-Holding Institution
1. Automatic transfers exempted. The exemption applies
to:
i. Electronic debits or credits to consumer accounts for check
charges, stop-payment charges, non-sufficient funds (NSF) charges,
overdraft charges, provisional credits, error adjustments, and
similar items that are initiated automatically on the occurrence of
certain events.
ii. Debits to consumer accounts for group insurance available
only through the financial institution and payable only by means of
an aggregate payment from the institution to the insurer.
iii. EFTs between a thrift institution and its paired commercial
bank in the state of Rhode Island, which are deemed under state law
to be intra-institutional.
iv. Automatic transfers between a consumer's accounts within the
same financial institution, even if the account holders on the two
accounts are not identical.
2. Automatic transfers not exempted. Transfers between
accounts of the consumer at affiliated institutions (such as
between a bank and its subsidiary or within a holding company) are
not intra-institutional transfers, and thus do not qualify for the
exemption.
3(c)(6) Telephone-Initiated Transfers
1. Written plan or agreement. A transfer that the
consumer initiates by telephone is covered by Regulation E if the
transfer is made under a written plan or agreement between the
consumer and the financial institution making the transfer. A
written statement available to the public or to account holders
that describes a service allowing a consumer to initiate transfers
by telephone constitutes a plan; for example, a brochure, or
material included with periodic statements. The following, however,
do not by themselves constitute a written plan or agreement:
i. A hold-harmless agreement on a signature card that protects
the institution if the consumer requests a transfer.
ii. A legend on a signature card, periodic statement, or
passbook that limits the number of telephone-initiated transfers
the consumer can make from a savings account because of reserve
requirements under Regulation D of the Board of Governors of the
Federal Reserve System (12 CFR part 204).
iii. An agreement permitting the consumer to approve by
telephone the rollover of funds at the maturity of an
instrument.
2. Examples of covered transfers. When a written plan or
agreement has been entered into, a transfer initiated by a
telephone call from a consumer is covered even though:
i. An employee of the financial institution completes the
transfer manually (for example, by means of a debit memo or deposit
slip).
ii. The consumer is required to make a separate request for each
transfer.
iii. The consumer uses the plan infrequently.
iv. The consumer initiates the transfer via a facsimile
machine.
v. The consumer initiates the transfer using a financial
institution's audio-response or voice-response telephone
system.
3(c)(7) Small Institutions
1. Coverage. This exemption is limited to preauthorized
transfers; institutions that offer other EFTs must comply with the
applicable sections of the regulation as to such services. The
preauthorized transfers remain subject to sections 913, 916, and
917 of the Act and § 1005.10(e), and are therefore exempt from UCC
Article 4A.
Section 1005.4 General Disclosure Requirements; Jointly Offered
Services 4(a) Form of Disclosures
1. General. The disclosures required by this part must be
in a clear and readily understandable written form that the
consumer may retain. Additionally, except as otherwise set forth in
§§ 1005.18(b)(7) and 1005.31(c), no particular rules govern type
size, number of pages, or the relative conspicuousness of various
terms. Numbers or codes are considered readily understandable if
explained elsewhere on the disclosure form.
2. Foreign language disclosures. Disclosures may be made
in languages other than English, provided they are available in
English upon request.
Section 1005.5 Issuance of Access Devices
1. Coverage. The provisions of this section limit the
circumstances under which a financial institution may issue an
access device to a consumer. Making an additional account
accessible through an existing access device is equivalent to
issuing an access device and is subject to the limitations of this
section.
5(a) Solicited Issuance Paragraph 5(a)(1)
1. Joint account. For a joint account, a financial
institution may issue an access device to each account holder if
the requesting holder specifically authorizes the issuance.
2. Permissible forms of request. The request for an
access device may be written or oral (for example, in response to a
telephone solicitation by a card issuer).
Paragraph 5(a)(2)
1. One-for-one rule. In issuing a renewal or substitute
access device, only one renewal or substitute device may replace a
previously issued device. For example, only one new card and PIN
may replace a card and PIN previously issued. A financial
institution may provide additional devices at the time it issues
the renewal or substitute access device, however, provided the
institution complies with § 1005.5(b). See comment 5(b)-5.
If the replacement device or the additional device permits either
fewer or additional types of electronic fund transfer services, a
change-in-terms notice or new disclosures are required.
2. Renewal or substitution by a successor institution. A
successor institution is an entity that replaces the original
financial institution (for example, following a corporate merger or
acquisition) or that acquires accounts or assumes the operation of
an EFT system.
5(b) Unsolicited Issuance
1. Compliance. A financial institution may issue an
unsolicited access device (such as the combination of a debit card
and PIN) if the institution's ATM system has been programmed not to
accept the access device until after the consumer requests and the
institution validates the device. Merely instructing a consumer not
to use an unsolicited debit card and PIN until after the
institution verifies the consumer's identity does not comply with
the regulation.
2. PINs. A financial institution may impose no liability
on a consumer for unauthorized transfers involving an unsolicited
access device until the device becomes an “accepted access device”
under the regulation. A card and PIN combination may be treated as
an accepted access device once the consumer has used it to make a
transfer.
3. Functions of PIN. If an institution issues a PIN at
the consumer's request, the issuance may constitute both a way of
validating the debit card and the means to identify the consumer
(required as a condition of imposing liability for unauthorized
transfers).
4. Verification of identity. To verify the consumer's
identity, a financial institution may use any reasonable means,
such as a photograph, fingerprint, personal visit, signature
comparison, or personal information about the consumer. However,
even if reasonable means were used, if an institution fails to
verify correctly the consumer's identity and an imposter succeeds
in having the device validated, the consumer is not liable for any
unauthorized transfers from the account.
5. Additional access devices in a renewal or
substitution. A financial institution may issue more than one
access device in connection with the renewal or substitution of a
previously issued accepted access device, provided that any
additional access device (beyond the device replacing the accepted
access device) is not validated at the time it is issued, and the
institution complies with the other requirements of § 1005.5(b).
The institution may, if it chooses, set up the validation procedure
such that both the device replacing the previously issued device
and the additional device are not validated at the time they are
issued, and validation will apply to both devices. If the
institution sets up the validation procedure in this way, the
institution should provide a clear and readily understandable
disclosure to the consumer that both devices are unvalidated and
that validation will apply to both devices.
Section 1005.6 Liability of Consumer for Unauthorized Transfers
6(a) Conditions for Liability
1. Means of identification. A financial institution may
use various means for identifying the consumer to whom the access
device is issued, including but not limited to:
i. Electronic or mechanical confirmation (such as a PIN).
ii. Comparison of the consumer's signature, fingerprint, or
photograph.
2. Multiple users. When more than one access device is
issued for an account, the financial institution may, but need not,
provide a separate means to identify each user of the account.
6(b) Limitations on Amount of Liability
1. Application of liability provisions. There are three
possible tiers of consumer liability for unauthorized EFTs
depending on the situation. A consumer may be liable for: (1) up to
$50; (2) up to $500; or (3) an unlimited amount depending on when
the unauthorized EFT occurs. More than one tier may apply to a
given situation because each corresponds to a different (sometimes
overlapping) time period or set of conditions.
2. Consumer negligence. Negligence by the consumer cannot
be used as the basis for imposing greater liability than is
permissible under Regulation E. Thus, consumer behavior that may
constitute negligence under state law, such as writing the PIN on a
debit card or on a piece of paper kept with the card, does not
affect the consumer's liability for unauthorized transfers.
(However, refer to comment 2(m)-2 regarding termination of the
authority of given by the consumer to another person.)
3. Limits on liability. The extent of the consumer's
liability is determined solely by the consumer's promptness in
reporting the loss or theft of an access device. Similarly, no
agreement between the consumer and an institution may impose
greater liability on the consumer for an unauthorized transfer than
the limits provided in Regulation E.
6(b)(1) Timely Notice Given
1. $50 limit applies. The basic liability limit is $50.
For example, the consumer's card is lost or stolen on Monday and
the consumer learns of the loss or theft on Wednesday. If the
consumer notifies the financial institution within two business
days of learning of the loss or theft (by midnight Friday), the
consumer's liability is limited to $50 or the amount of the
unauthorized transfers that occurred before notification, whichever
is less.
2. Knowledge of loss or theft of access device. The fact
that a consumer has received a periodic statement that reflects
unauthorized transfers may be a factor in determining whether the
consumer had knowledge of the loss or theft, but cannot be deemed
to represent conclusive evidence that the consumer had such
knowledge.
3. Two business day rule. The two business day period
does not include the day the consumer learns of the loss or theft
or any day that is not a business day. The rule is calculated based
on two 24-hour periods, without regard to the financial
institution's business hours or the time of day that the consumer
learns of the loss or theft. For example, a consumer learns of the
loss or theft at 6 p.m. on Friday. Assuming that Saturday is a
business day and Sunday is not, the two business day period begins
on Saturday and expires at 11:59 p.m. on Monday, not at the end of
the financial institution's business day on Monday.
6(b)(2) Timely Notice Not Given
1. $500 limit applies. The second tier of liability is
$500. For example, the consumer's card is stolen on Monday and the
consumer learns of the theft that same day. The consumer reports
the theft on Friday. The $500 limit applies because the consumer
failed to notify the financial institution within two business days
of learning of the theft (which would have been by midnight
Wednesday). How much the consumer is actually liable for, however,
depends on when the unauthorized transfers take place. In this
example, assume a $100 unauthorized transfer was made on Tuesday
and a $600 unauthorized transfer on Thursday. Because the consumer
is liable for the amount of the loss that occurs within the first
two business days (but no more than $50), plus the amount of the
unauthorized transfers that occurs after the first two business
days and before the consumer gives notice, the consumer's total
liability is $500 ($50 of the $100 transfer plus $450 of the $600
transfer, in this example). But if $600 was taken on Tuesday and
$100 on Thursday, the consumer's maximum liability would be $150
($50 of the $600 plus $100).
6(b)(3) Periodic Statement; Timely Notice Not Given
1. Unlimited liability applies. The standard of unlimited
liability applies if unauthorized transfers appear on a periodic
statement, and may apply in conjunction with the first two tiers of
liability. If a periodic statement shows an unauthorized transfer
made with a lost or stolen debit card, the consumer must notify the
financial institution within 60 calendar days after the periodic
statement was sent; otherwise, the consumer faces unlimited
liability for all unauthorized transfers made after the 60-day
period. The consumer's liability for unauthorized transfers before
the statement is sent, and up to 60 days following, is determined
based on the first two tiers of liability: up to $50 if the
consumer notifies the financial institution within two business
days of learning of the loss or theft of the card and up to $500 if
the consumer notifies the institution after two business days of
learning of the loss or theft.
2. Transfers not involving access device. The first two
tiers of liability do not apply to unauthorized transfers from a
consumer's account made without an access device. If, however, the
consumer fails to report such unauthorized transfers within 60
calendar days of the financial institution's transmittal of the
periodic statement, the consumer may be liable for any transfers
occurring after the close of the 60 days and before notice is given
to the institution. For example, a consumer's account is
electronically debited for $200 without the consumer's
authorization and by means other than the consumer's access device.
If the consumer notifies the institution within 60 days of the
transmittal of the periodic statement that shows the unauthorized
transfer, the consumer has no liability. However, if in addition to
the $200, the consumer's account is debited for a $400 unauthorized
transfer on the 61st day and the consumer fails to notify the
institution of the first unauthorized transfer until the 62nd day,
the consumer may be liable for the full $400.
6(b)(4) Extension of Time Limits
1. Extenuating circumstances. Examples of circumstances
that require extension of the notification periods under this
section include the consumer's extended travel or
hospitalization.
6(b)(5) Notice to Financial Institution
1. Receipt of notice. A financial institution is
considered to have received notice for purposes of limiting the
consumer's liability if notice is given in a reasonable manner,
even if the consumer notifies the institution but uses an address
or telephone number other than the one specified by the
institution.
2. Notice by third party. Notice to a financial
institution by a person acting on the consumer's behalf is
considered valid under this section. For example, if a consumer is
hospitalized and unable to report the loss or theft of an access
device, notice is considered given when someone acting on the
consumer's behalf notifies the bank of the loss or theft. A
financial institution may require appropriate documentation from
the person representing the consumer to establish that the person
is acting on the consumer's behalf.
3. Content of notice. Notice to a financial institution
is considered given when a consumer takes reasonable steps to
provide the institution with the pertinent account information.
Even when the consumer is unable to provide the account number or
the card number in reporting a lost or stolen access device or an
unauthorized transfer, the notice effectively limits the consumer's
liability if the consumer otherwise identifies sufficiently the
account in question. For example, the consumer may identify the
account by the name on the account and the type of account in
question.
Section 1005.7 Initial Disclosures 7(a) Timing of Disclosures
1. Early disclosures. Disclosures given by a financial
institution earlier than the regulation requires (for example, when
the consumer opens a checking account) need not be repeated when
the consumer later enters into an agreement with a third party to
initiate preauthorized transfers to or from the consumer's account,
unless the terms and conditions differ from those that the
institution previously disclosed. This interpretation also applies
to any notice provided about one-time EFTs from a consumer's
account initiated using information from the consumer's check. On
the other hand, if an agreement for EFT services to be provided by
an account-holding institution is directly between the consumer and
the account-holding institution, disclosures must be given in close
proximity to the event requiring disclosure, for example, when the
consumer contracts for a new service.
2. Lack of advance notice of a transfer. Where a consumer
authorizes a third party to debit or credit the consumer's account,
an account-holding institution that has not received advance notice
of the transfer or transfers must provide the required disclosures
as soon as reasonably possible after the first debit or credit is
made, unless the institution has previously given the
disclosures.
3. Addition of new accounts. If a consumer opens a new
account permitting EFTs at a financial institution, and the
consumer already has received Regulation E disclosures for another
account at that institution, the institution need only disclose
terms and conditions that differ from those previously given.
4. Addition of service in interchange systems. If a
financial institution joins an interchange or shared network system
(which provides access to terminals operated by other
institutions), disclosures are required for additional EFT services
not previously available to consumers if the terms and conditions
differ from those previously disclosed.
5. Disclosures covering all EFT services offered. An
institution may provide disclosures covering all EFT services that
it offers, even if some consumers have not arranged to use all
services.
7(b) Content of Disclosures 7(b)(1) Liability of Consumer
1. No liability imposed by financial institution. If a
financial institution chooses to impose zero liability for
unauthorized EFTs, it need not provide the liability disclosures.
If the institution later decides to impose liability, however, it
must first provide the disclosures.
2. Preauthorized transfers. If the only EFTs from an
account are preauthorized transfers, liability could arise if the
consumer fails to report unauthorized transfers reflected on a
periodic statement. To impose such liability on the consumer, the
institution must have disclosed the potential liability and the
telephone number and address for reporting unauthorized
transfers.
3. Additional information. At the institution's option,
the summary of the consumer's liability may include advice on
promptly reporting unauthorized transfers or the loss or theft of
the access device.
7(b)(2) Telephone Number and Address
1. Disclosure of telephone numbers. An institution may
use the same or different telephone numbers in the disclosures for
the purpose of:
i. Reporting the loss or theft of an access device or possible
unauthorized transfers;
ii. Inquiring about the receipt of a preauthorized credit;
iii. Stopping payment of a preauthorized debit;
iv. Giving notice of an error.
2. Location of telephone number. The telephone number
need not be incorporated into the text of the disclosure; for
example, the institution may instead insert a reference to a
telephone number that is readily available to the consumer, such as
“Call your branch office. The number is shown on your periodic
statement.” However, an institution must provide a specific
telephone number and address, on or with the disclosure statement,
for reporting a lost or stolen access device or a possible
unauthorized transfer.
7(b)(4) Types of Transfers; Limitations
1. Security limitations. Information about limitations on
the frequency and dollar amount of transfers generally must be
disclosed in detail, even if related to security aspects of the
system. If the confidentiality of certain details is essential to
the security of an account or system, these details may be withheld
(but the fact that limitations exist must still be disclosed). For
example, an institution limits cash ATM withdrawals to $100 per
day. The institution may disclose that daily withdrawal limitations
apply and need not disclose that the limitations may not always be
in force (such as during periods when its ATMs are off-line).
2. Restrictions on certain deposit accounts. A limitation
on account activity that restricts the consumer's ability to make
EFTs must be disclosed even if the restriction also applies to
transfers made by non-electronic means. For example, Regulation D
of the Board of Governors of the Federal Reserve System (12 CFR
part 204) restricts the number of payments to third parties that
may be made from a money market deposit account; an institution
that does not execute fund transfers in excess of those limits must
disclose the restriction as a limitation on the frequency of
EFTs.
3. Preauthorized transfers. Financial institutions are
not required to list preauthorized transfers among the types of
transfers that a consumer can make.
4. One-time EFTs initiated using information from a
check. Financial institutions must disclose the fact that
one-time EFTs initiated using information from a consumer's check
are among the types of transfers that a consumer can make.
See appendix A-2.
7(b)(5) Fees
1. Disclosure of EFT fees. An institution is required to
disclose all fees for EFTs or the right to make them. Others fees
(for example, minimum-balance fees, stop-payment fees, or account
overdrafts) may, but need not, be disclosed. But see
Regulation DD, 12 CFR part 1030. An institution is not required to
disclose fees for inquiries made at an ATM since no transfer of
funds is involved.
2. Fees also applicable to non-EFT. A per-item fee for
EFTs must be disclosed even if the same fee is imposed on
non-electronic transfers. If a per-item fee is imposed only under
certain conditions, such as when the transactions in the cycle
exceed a certain number, those conditions must be disclosed.
Itemization of the various fees may be provided on the disclosure
statement or on an accompanying document that is referenced in the
statement.
3. Interchange system fees. Fees paid by the
account-holding institution to the operator of a shared or
interchange ATM system need not be disclosed, unless they are
imposed on the consumer by the account-holding institution. Fees
for use of an ATM that are debited directly from the consumer's
account by an institution other than the account-holding
institution (for example, fees included in the transfer amount)
need not be disclosed. See § 1005.7(b)(11) for the general
notice requirement regarding fees that may be imposed by ATM
operators and by a network used to complete the transfer.
7(b)(9) Confidentiality
1. Information provided to third parties. An institution
must describe the circumstances under which any information
relating to an account to or from which EFTs are permitted will be
made available to third parties, not just information concerning
those EFTs. The term “third parties” includes affiliates such as
other subsidiaries of the same holding company.
7(b)(10) Error Resolution
1. Substantially similar. The error resolution notice
must be substantially similar to the model form in appendix A of
part 1005. An institution may use different wording so long as the
substance of the notice remains the same, may delete inapplicable
provisions (for example, the requirement for written confirmation
of an oral notification), and may substitute substantive state law
requirements affording greater consumer protection than Regulation
E.
2. Extended time-period for certain transactions. To take
advantage of the longer time periods for resolving errors under §
1005.11(c)(3) (for new accounts as defined in Regulation CC of the
Board of Governors of the Federal Reserve System (12 CFR part 229),
transfers initiated outside the United States, or transfers
resulting from POS debit-card transactions), a financial
institution must have disclosed these longer time periods.
Similarly, an institution that relies on the exception from
provisional crediting in § 1005.11(c)(2) for accounts subject to
Regulation T of the Board of Governors of the Federal Reserve
System (12 CFR part 220) must have disclosed accordingly.
7(c) Addition of Electronic Fund Transfer Services
1. Addition of electronic check conversion services.
One-time EFTs initiated using information from a consumer's check
are a new type of transfer requiring new disclosures, as
applicable. See appendix A-2.
Section 1005.8 Change-in-Terms Notice; Error Resolution Notice 8(a)
Change-in-Terms Notice
1. Form of notice. No specific form or wording is
required for a change-in-terms notice. The notice may appear on a
periodic statement, or may be given by sending a copy of a revised
disclosure statement, provided attention is directed to the change
(for example, in a cover letter referencing the changed term).
2. Changes not requiring notice. The following changes do
not require disclosure:
i. Closing some of an institution's ATMs;
ii. Cancellation of an access device.
3. Limitations on transfers. When the initial disclosures
omit details about limitations because secrecy is essential to the
security of the account or system, a subsequent increase in those
limitations need not be disclosed if secrecy is still essential.
If, however, an institution had no limits in place when the initial
disclosures were given and now wishes to impose limits for the
first time, it must disclose at least the fact that limits have
been adopted. See also § 1005.7(b)(4) and the related
commentary.
4. Change in telephone number or address. When a
financial institution changes the telephone number or address used
for reporting possible unauthorized transfers, a change-in-terms
notice is required only if the institution will impose liability on
the consumer for unauthorized transfers under § 1005.6. See
also § 1005.6(a) and the related commentary.
8(b) Error Resolution Notice
1. Change between annual and periodic notice. If an
institution switches from an annual to a periodic notice, or vice
versa, the first notice under the new method must be sent no later
than 12 months after the last notice sent under the old method.
2. Exception for new accounts. For new accounts,
disclosure of the longer error resolution time periods under §
1005.11(c)(3) is not required in the annual error resolution notice
or in the notice that may be provided with each periodic statement
as an alternative to the annual notice.
Section 1005.9 Receipts at Electronic Terminals; Periodic
Statements 9(a) Receipts at Electronic Terminals
1. Receipts furnished only on request. The regulation
requires that a receipt be “made available.” A financial
institution may program its electronic terminals to provide a
receipt only to consumers who elect to receive one.
2. Third party providing receipt. An account-holding
institution may make terminal receipts available through third
parties such as merchants or other financial institutions.
3. Inclusion of promotional material. A financial
institution may include promotional material on receipts if the
required information is set forth clearly (for example, by
separating it from the promotional material). In addition, a
consumer may not be required to surrender the receipt or that
portion containing the required disclosures in order to take
advantage of a promotion.
4. Transfer not completed. The receipt requirement does
not apply to a transfer that is initiated but not completed (for
example, if the ATM is out of currency or the consumer decides not
to complete the transfer).
5. Receipts not furnished due to inadvertent error. If a
receipt is not provided to the consumer because of a bona fide
unintentional error, such as when a terminal runs out of paper or
the mechanism jams, no violation results if the financial
institution maintains procedures reasonably adapted to avoid such
occurrences.
6. Multiple transfers. If the consumer makes multiple
transfers at the same time, the financial institution may document
them on a single or on separate receipts.
9(a)(1) Amount
1. Disclosure of transaction fee. The required display of
a fee amount on or at the terminal may be accomplished by
displaying the fee on a sign at the terminal or on the terminal
screen for a reasonable duration. Displaying the fee on a screen
provides adequate notice, as long as a consumer is given the option
to cancel the transaction after receiving notice of a fee.
See § 1005.16 for the notice requirements applicable to ATM
operators that impose a fee for providing EFT services.
2. Relationship between § 1005.9(a)(1) and § 1005.16. The
requirements of §§ 1005.9(a)(1) and 1005.16 are similar but not
identical.
i. Section 1005.9(a)(1) requires that if the amount of the
transfer as shown on the receipt will include the fee, then the fee
must be disclosed either on a sign on or at the terminal, or on the
terminal screen. Section 1005.16 requires disclosure both on a sign
on or at the terminal (in a prominent and conspicuous location) and
on the terminal screen. Section 1005.16 permits disclosure on a
paper notice as an alternative to the on-screen disclosure.
ii. The disclosure of the fee on the receipt under §
1005.9(a)(1) cannot be used to comply with the alternative paper
disclosure procedure under § 1005.16, if the receipt is provided at
the completion of the transaction because, pursuant to the statute,
the paper notice must be provided before the consumer is committed
to paying the fee.
iii. Section 1005.9(a)(1) applies to any type of electronic
terminal as defined in Regulation E (for example, to POS terminals
as well as to ATMs), while § 1005.16 applies only to ATMs.
9(a)(2) Date
1. Calendar date. The receipt must disclose the calendar
date on which the consumer uses the electronic terminal. An
accounting or business date may be disclosed in addition if the
dates are clearly distinguished.
9(a)(3) Type
1. Identifying transfer and account. Examples identifying
the type of transfer and the type of the consumer's account include
“withdrawal from checking,” “transfer from savings to checking,” or
“payment from savings.”
2. Exception. Identification of an account is not
required when the consumer can access only one asset account at a
particular time or terminal, even if the access device can normally
be used to access more than one account. For example, the consumer
may be able to access only one particular account at terminals not
operated by the account-holding institution, or may be able to
access only one particular account when the terminal is off-line.
The exception is available even if, in addition to accessing one
asset account, the consumer also can access a credit line.
3. Access to multiple accounts. If the consumer can use
an access device to make transfers to or from different accounts of
the same type, the terminal receipt must specify which account was
accessed, such as “withdrawal from checking I” or “withdrawal from
checking II.” If only one account besides the primary checking
account can be debited, the receipt can identify the account as
“withdrawal from other account.”
4. Generic descriptions. Generic descriptions may be used
for accounts that are similar in function, such as share draft or
NOW accounts and checking accounts. In a shared system, for
example, when a credit union member initiates transfers to or from
a share draft account at a terminal owned or operated by a bank,
the receipt may identify a withdrawal from the account as a
“withdrawal from checking.”
5. Point-of-sale transactions. There is no prescribed
terminology for identifying a transfer at a merchant's POS
terminal. A transfer may be identified, for example, as a purchase,
a sale of goods or services, or a payment to a third party. When a
consumer obtains cash from a POS terminal in addition to purchasing
goods, or obtains cash only, the documentation need not
differentiate the transaction from one involving the purchase of
goods.
9(a)(5) Terminal Location
1. Options for identifying terminal. The institution may
provide either:
i. The city, state or foreign country, and the information in §
1005.9(a)(5) (i), (ii), or (iii), or
ii. A number or a code identifying the terminal. If the
institution chooses the second option, the code or terminal number
identifying the terminal where the transfer is initiated may be
given as part of a transaction code.
2. Omission of city name. The city may be omitted if the
generally accepted name (such as a branch name) contains the city
name.
3. Omission of a state. A state may be omitted from the
location information on the receipt if:
i. All the terminals owned or operated by the financial
institution providing the statement (or by the system in which it
participates) are located in that state, or
ii. All transfers occur at terminals located within 50 miles of
the financial institution's main office.
4. Omission of a city and state. A city and state may be
omitted if all the terminals owned or operated by the financial
institution providing the statement (or by the system in which it
participates) are located in the same city.
Paragraph 9(a)(5)(i)
1. Street address. The address should include number and
street (or intersection); the number (or intersecting street) may
be omitted if the street alone uniquely identifies the terminal
location.
Paragraph 9(a)(5)(ii)
1. Generally accepted name. Examples of a generally
accepted name for a specific location include a branch of the
financial institution, a shopping center, or an airport.
Paragraph 9(a)(5)(iii)
1. Name of owner or operator of terminal. Examples of an
owner or operator of a terminal are a financial institution or a
retail merchant.
9(a)(6) Third Party Transfer
1. Omission of third-party name. The receipt need not
disclose the third-party name if the name is provided by the
consumer in a form that is not machine readable (for example, if
the consumer indicates the payee by depositing a payment stub into
the ATM). If, on the other hand, the consumer keys in the identity
of the payee, the receipt must identify the payee by name or by
using a code that is explained elsewhere on the receipt.
2. Receipt as proof of payment. Documentation required
under the regulation constitutes prima facie proof of a payment to
another person, except in the case of a terminal receipt
documenting a deposit.
9(b) Periodic Statements
1. Periodic cycles. Periodic statements may be sent on a
cycle that is shorter than monthly. The statements must correspond
to periodic cycles that are reasonably equal, that is, do not vary
by more than four days from the regular cycle. The requirement of
reasonably equal cycles does not apply when an institution changes
cycles for operational or other reasons, such as to establish a new
statement day or date.
2. Interim statements. Generally, a financial institution
must provide periodic statements for each monthly cycle in which an
EFT occurs, and at least quarterly if a transfer has not occurred.
Where EFTs occur between regularly-scheduled cycles, interim
statements must be provided. For example, if an institution issues
quarterly statements at the end of March, June, September and
December, and the consumer initiates an EFT in February, an interim
statement for February must be provided. If an interim statement
contains interest or rate information, the institution must comply
with Regulation DD, 12 CFR 1030.6.
3. Inactive accounts. A financial institution need not
send statements to consumers whose accounts are inactive as defined
by the institution.
4. Statement pickup. A financial institution may permit,
but may not require, consumers to pick up their periodic statements
at the financial institution.
5. Periodic statements limited to EFT activity. A
financial institution that uses a passbook as the primary means for
displaying account activity, but also allows the account to be
debited electronically, may provide a periodic statement
requirement that reflects only the EFTs and other required
disclosures (such as charges, account balances, and address and
telephone number for inquiries). See § 1005.9(c)(1)(i) for
the exception applicable to preauthorized transfers for passbook
accounts.
6. Codes and accompanying documents. To meet the
documentation requirements for periodic statements, a financial
institution may:
i. Include copies of terminal receipts to reflect transfers
initiated by the consumer at electronic terminals;
ii. Enclose posting memos, deposit slips, and other documents
that, together with the statement, disclose all the required
information;
iii. Use codes for names of third parties or terminal locations
and explain the information to which the codes relate on an
accompanying document.
9(b)(1) Transaction Information
1. Information obtained from others. While financial
institutions must maintain reasonable procedures to ensure the
integrity of data obtained from another institution, a merchant, or
other third parties, verification of each transfer that appears on
the periodic statement is not required.
Paragraph 9(b)(1)(i)
1. Incorrect deposit amount. If a financial institution
determines that the amount actually deposited at an ATM is
different from the amount entered by the consumer, the institution
need not immediately notify the consumer of the discrepancy. The
periodic statement reflecting the deposit may show either the
correct amount of the deposit or the amount entered by the consumer
along with the institution's adjustment.
Paragraph 9(b)(1)(iii)
1. Type of transfer. There is no prescribed terminology
for describing a type of transfer. Placement of the amount of the
transfer in the debit or the credit column is sufficient if other
information on the statement, such as a terminal location or
third-party name, enables the consumer to identify the type of
transfer.
Paragraph 9(b)(1)(iv)
1. Nonproprietary terminal in network. An institution
need not reflect on the periodic statement the street addresses,
identification codes, or terminal numbers for transfers initiated
in a shared or interchange system at a terminal operated by an
institution other than the account-holding institution. The
statement must, however, specify the entity that owns or operates
the terminal, plus the city and state.
Paragraph 9(b)(1)(v)
1. Recurring payments by government agency. The
third-party name for recurring payments from Federal, state, or
local governments need not list the particular agency. For example,
“U.S. gov't” or “N.Y. sal” will suffice.
2. Consumer as third-party payee. If a consumer makes an
electronic fund transfer to another consumer, the financial
institution must identify the recipient by name (not just by an
account number, for example).
3. Terminal location/third party. A single entry may be
used to identify both the terminal location and the name of the
third party to or from whom funds are transferred. For example, if
a consumer purchases goods from a merchant, the name of the party
to whom funds are transferred (the merchant) and the location of
the terminal where the transfer is initiated will be satisfied by a
disclosure such as “XYZ Store, Anytown, Ohio.”
4. Account-holding institution as third party. Transfers
to the account-holding institution (by ATM, for example) must show
the institution as the recipient, unless other information on the
statement (such as, “loan payment from checking”) clearly indicates
that the payment was to the account-holding institution.
5. Consistency in third-party identity. The periodic
statement must disclose a third-party name as it appeared on the
receipt, whether it was, for example, the “dba” (doing business as)
name of the third party or the parent corporation's name.
6. Third-party identity on deposits at electronic
terminal. A financial institution need not identify third
parties whose names appear on checks, drafts, or similar paper
instruments deposited to the consumer's account at an electronic
terminal.
9(b)(3) Fees
1. Disclosure of fees. The fees disclosed may include
fees for EFTs and for other non-electronic services, and both fixed
fees and per-item fees; they may be given as a total or may be
itemized in part or in full.
2. Fees in interchange system. An account-holding
institution must disclose any fees it imposes on the consumer for
EFTs, including fees for ATM transactions in an interchange or
shared ATM system. Fees for use of an ATM imposed on the consumer
by an institution other than the account-holding institution and
included in the amount of the transfer by the terminal-operating
institution need not be separately disclosed on the periodic
statement.
3. Finance charges. The requirement to disclose any fees
assessed against the account does not include a finance charge
imposed on the account during the statement period.
9(b)(4) Account Balances
1. Opening and closing balances. The opening and closing
balances must reflect both EFTs and other account activity.
9(b)(5) Address and Telephone Number for Inquiries
1. Telephone number. A single telephone number, preceded
by the “direct inquiries to” language, will satisfy the
requirements of §§ 1005.9(b)(5) and (6).
9(b)(6) Telephone Number for Preauthorized Transfers
1. Telephone number. See comment 9(b)(5)-1.
9(c) Exceptions to the Periodic Statement Requirements for Certain
Accounts
1. Transfers between accounts. The regulation provides an
exception from the periodic statement requirement for certain
intra-institutional transfers between a consumer's accounts. The
financial institution must still comply with the applicable
periodic statement requirements for any other EFTs to or from the
account. For example, a Regulation E statement must be provided
quarterly for an account that also receives payroll deposits
electronically, or for any month in which an account is also
accessed by a withdrawal at an ATM.
9(c)(1) Preauthorized Transfers to Accounts
1. Accounts that may be accessed only by preauthorized
transfers to the account. The exception for “accounts that may
be accessed only by preauthorized transfers to the account”
includes accounts that can be accessed by means other than EFTs,
such as checks. If, however, an account may be accessed by any EFT
other than preauthorized credits to the account, such as
preauthorized debits or ATM transactions, the account does not
qualify for the exception.
2. Reversal of direct deposits. For direct-deposit-only
accounts, a financial institution must send a periodic statement at
least quarterly. A reversal of a direct deposit to correct an error
does not trigger the monthly statement requirement when the error
represented a credit to the wrong consumer's account, a duplicate
credit, or a credit in the wrong amount. See also comment
2(m)-5.
9(d) Documentation for Foreign-Initiated Transfers
1. Foreign-initiated transfers. An institution must make
a good faith effort to provide all required information for
foreign-initiated transfers. For example, even if the institution
is not able to provide a specific terminal location, it should
identify the country and city in which the transfer was
initiated.
Section 1005.10 Preauthorized Transfers 10(a) Preauthorized
Transfers to Consumer's Account 10(a)(1) Notice by Financial
Institution
1. Content. No specific language is required for notice
regarding receipt of a preauthorized transfer. Identifying the
deposit is sufficient; however, simply providing the current
account balance is not.
2. Notice of credit. A financial institution may use
different methods of notice for various types or series of
preauthorized transfers, and the institution need not offer
consumers a choice of notice methods.
3. Positive notice. A periodic statement sent within two
business days of the scheduled transfer, showing the transfer, can
serve as notice of receipt.
4. Negative notice. The absence of a deposit entry (on a
periodic statement sent within two business days of the scheduled
transfer date) will serve as negative notice.
5. Telephone notice. If a financial institution uses the
telephone notice option, the institution should be able in most
instances to verify during a consumer's initial call whether a
transfer was received. The institution must respond within two
business days to any inquiry not answered immediately.
6. Phone number for passbook accounts. The financial
institution may use any reasonable means necessary to provide the
telephone number to consumers with passbook accounts that can only
be accessed by preauthorized credits and that do not receive
periodic statements. For example, it may print the telephone number
in the passbook, or include the number with the annual error
resolution notice.
7. Telephone line availability. To satisfy the
readily-available standard, the financial institution must provide
enough telephone lines so that consumers get a reasonably prompt
response. The institution need only provide telephone service
during normal business hours. Within its primary service area, an
institution must provide a local or toll-free telephone number. It
need not provide a toll-free number or accept collect long-distance
calls from outside the area where it normally conducts
business.
10(b) Written Authorization for Preauthorized Transfers From
Consumer's Account
1. Preexisting authorizations. The financial institution
need not require a new authorization before changing from
paper-based to electronic debiting when the existing authorization
does not specify that debiting is to occur electronically or
specifies that the debiting will occur by paper means. A new
authorization also is not required when a successor institution
begins collecting payments.
2. Authorization obtained by third party. The
account-holding financial institution does not violate the
regulation when a third-party payee fails to obtain the
authorization in writing or fails to give a copy to the consumer;
rather, it is the third-party payee that is in violation of the
regulation.
3. Written authorization for preauthorized transfers. The
requirement that preauthorized EFTs be authorized by the consumer
“only by a writing” cannot be met by a payee's signing a written
authorization on the consumer's behalf with only an oral
authorization from the consumer.
4. Use of a confirmation form. A financial institution or
designated payee may comply with the requirements of this section
in various ways. For example, a payee may provide the consumer with
two copies of a preauthorization form, and ask the consumer to sign
and return one and to retain the second copy.
5. Similarly authenticated. The similarly authenticated
standard permits signed, written authorizations to be provided
electronically. The writing and signature requirements of this
section are satisfied by complying with the Electronic Signatures
in Global and National Commerce Act, 15 U.S.C. 7001 et seq.,
which defines electronic records and electronic signatures.
Examples of electronic signatures include, but are not limited to,
digital signatures and security codes. A security code need not
originate with the account-holding institution. The authorization
process should evidence the consumer's identity and assent to the
authorization. The person that obtains the authorization must
provide a copy of the terms of the authorization to the consumer
either electronically or in paper form. Only the consumer may
authorize the transfer and not, for example, a third-party merchant
on behalf of the consumer.
6. Requirements of an authorization. An authorization is
valid if it is readily identifiable as such and the terms of the
preauthorized transfer are clear and readily understandable.
7. Bona fide error. Consumers sometimes authorize
third-party payees, by telephone or online, to submit recurring
charges against a credit card account. If the consumer indicates
use of a credit card account when in fact a debit card is being
used, the payee does not violate the requirement to obtain a
written authorization if the failure to obtain written
authorization was not intentional and resulted from a bona fide
error, and if the payee maintains procedures reasonably adapted to
avoid any such error. Procedures reasonably adapted to avoid error
will depend upon the circumstances. Generally, requesting the
consumer to specify whether the card to be used for the
authorization is a debit (or check) card or a credit card is a
reasonable procedure. Where the consumer has indicated that the
card is a credit card (or that the card is not a debit or check
card), the payee may rely on the consumer's statement without
seeking further information about the type of card. If the payee
believes, at the time of the authorization, that a credit card is
involved, and later finds that the card used is a debit card (for
example, because the consumer later brings the matter to the
payee's attention), the payee must obtain a written and signed or
(where appropriate) a similarly authenticated authorization as soon
as reasonably possible, or cease debiting the consumer's
account.
10(c) Consumer's Right to Stop Payment
1. Stop-payment order. The financial institution must
honor an oral stop-payment order made at least three business days
before a scheduled debit. If the debit item is resubmitted, the
institution must continue to honor the stop-payment order (for
example, by suspending all subsequent payments to the
payee-originator until the consumer notifies the institution that
payments should resume).
2. Revocation of authorization. Once a financial
institution has been notified that the consumer's authorization is
no longer valid, it must block all future payments for the
particular debit transmitted by the designated payee-originator.
But see comment 10(c)-3. The institution may not wait for
the payee-originator to terminate the automatic debits. The
institution may confirm that the consumer has informed the
payee-originator of the revocation (for example, by requiring a
copy of the consumer's revocation as written confirmation to be
provided within 14 days of an oral notification). If the
institution does not receive the required written confirmation
within the 14-day period, it may honor subsequent debits to the
account.
3. Alternative procedure for processing a stop-payment
request. If an institution does not have the capability to
block a preauthorized debit from being posted to the consumer's
account - as in the case of a preauthorized debit made through a
debit card network or other system, for example - the institution
may instead comply with the stop-payment requirements by using a
third party to block the transfer(s), as long as the consumer's
account is not debited for the payment.
10(d) Notice of Transfers Varying in Amount 10(d)(1) Notice
1. Preexisting authorizations. A financial institution
holding the consumer's account does not violate the regulation if
the designated payee fails to provide notice of varying
amounts.
10(d)(2) Range
1. Range. A financial institution or designated payee
that elects to offer the consumer a specified range of amounts for
debiting (in lieu of providing the notice of transfers varying in
amount) must provide an acceptable range that could be anticipated
by the consumer. For example, if the transfer is for payment of a
gas bill, an appropriate range might be based on the highest bill
in winter and the lowest bill in summer.
2. Transfers to an account of the consumer held at another
institution. A financial institution need not provide a
consumer the option of receiving notice with each varying transfer,
and may instead provide notice only when a debit to an account of
the consumer falls outside a specified range or differs by more
than a specified amount from the most recent transfer, if the funds
are transferred and credited to an account of the consumer held at
another financial institution. The specified range or amount,
however, must be one that reasonably could be anticipated by the
consumer, and the institution must notify the consumer of the range
or amount at the time the consumer provides authorization for the
preauthorized transfers. For example, if the transfer is for
payment of interest for a fixed-rate certificate of deposit
account, an appropriate range might be based on a month containing
28 days and a month containing 31 days.
10(e) Compulsory Use 10(e)(1) Credit
1. General rule for loan payments. Creditors may not
require repayment of loans by electronic means on a preauthorized,
recurring basis.
2. Overdraft credit plans not accessible by hybrid
prepaid-credit cards. i. Section 1005.10(e)(1) provides an
exception from the general rule for an overdraft credit plan other
than for a covered separate credit feature accessible by a hybrid
prepaid-credit card as defined in Regulation Z, 12 CFR 1026.61. A
financial institution may therefore require the automatic repayment
of an overdraft credit plan, other than a covered separate credit
feature accessible by a hybrid prepaid-credit card, even if the
overdraft extension is charged to an open-end account that may be
accessed by the consumer in ways other than by overdrafts.
ii. Credit extended through a negative balance on the asset
feature of a prepaid account that meets the conditions of
Regulation Z, 12 CFR 1026.61(a)(4), is considered credit extended
pursuant to an overdraft credit plan for purposes of §
1005.10(e)(1). Thus, the exception for overdraft credit plans in §
1005.10(e)(1) applies to this credit.
3. Applicability to covered separate credit features
accessible by hybrid prepaid-credit cards. i. Under §
1005.10(e)(1), creditors may not require by electronic means on a
preauthorized, recurring basis repayment of credit extended under a
covered separate credit feature accessible by a hybrid
prepaid-credit card as defined in Regulation Z, 12 CFR 1026.61. The
prohibition in § 1005.10(e)(1) applies to any credit extended under
such a credit feature, including preauthorized checks. See
Regulation Z, 12 CFR 1026.61, and comment 61(a)(1)-3.
ii. Under Regulation Z, 12 CFR 1026.12(d)(1), a card issuer may
not take any action, either before or after termination of credit
card privileges, to offset a cardholder's indebtedness arising from
a consumer credit transaction under the relevant credit card plan
against funds of the cardholder held on deposit with the card
issuer. Under Regulation Z, 12 CFR 1026.12(d)(3), with respect to
covered separate credit features accessible by hybrid
prepaid-credit cards as defined in 12 CFR 1026.61, a card issuer
generally is not prohibited from periodically deducting all or part
of the cardholder's credit card debt from a deposit account (such
as a prepaid account) held with the card issuer under a plan that
is authorized in writing by the cardholder, so long as the card
issuer does not make such deductions to the plan more frequently
than once per calendar month. A card issuer is prohibited under
Regulation Z, 12 CFR 1026.12(d), from automatically deducting all
or part of the cardholder's credit card debt under a covered
separate credit feature from a deposit account (such as a prepaid
account) held with the card issuer on a daily or weekly basis, or
whenever deposits are made to the deposit account. Section
1005.10(e)(1) further restricts the card issuer from requiring
payment from a deposit account (such as a prepaid account) of
credit card balances of a covered separate credit feature
accessible by a hybrid prepaid-credit card by electronic means on a
preauthorized, recurring basis.
4. Incentives. A creditor may offer a program with a
reduced annual percentage rate or other cost-related incentive for
an automatic repayment feature, provided the program with the
automatic payment feature is not the only loan program offered by
the creditor for the type of credit involved. Examples include:
i. Mortgages with graduated payments in which a pledged savings
account is automatically debited during an initial period to
supplement the monthly payments made by the borrower.
ii. Mortgage plans calling for preauthorized biweekly payments
that are debited electronically to the consumer's account and
produce a lower total finance charge.
10(e)(2) Employment or Government Benefit
1. Payroll. An employer (including a financial
institution) may not require its employees to receive their salary
by direct deposit to any particular institution. An employer may
require direct deposit of salary by electronic means if employees
are allowed to choose the institution that will receive the direct
deposit. Alternatively, an employer may give employees the choice
of having their salary deposited at a particular institution
(designated by the employer) or receiving their salary by another
means, such as by check or cash.
2. Government benefit. A government agency may not
require consumers to receive government benefits by direct deposit
to any particular institution. A government agency may require
direct deposit of benefits by electronic means if recipients are
allowed to choose the institution that will receive the direct
deposit. Alternatively, a government agency may give recipients the
choice of having their benefits deposited at a particular
institution (designated by the government agency) or receiving
their benefits by another means.
Section 1005.11 Procedures for Resolving Errors 11(a) Definition of
Error
1. Terminal location. With regard to deposits at an ATM,
a consumer's request for the terminal location or other information
triggers the error resolution procedures, but the financial
institution need only provide the ATM location if it has captured
that information.
2. Verifying an account debit or credit. If the consumer
contacts the financial institution to ascertain whether a payment
(for example, in a home-banking or bill-payment program) or any
other type of EFT was debited to the account, or whether a deposit
made via ATM, preauthorized transfer, or any other type of EFT was
credited to the account, without asserting an error, the error
resolution procedures do not apply.
3. Loss or theft of access device. A financial
institution is required to comply with the error resolution
procedures when a consumer reports the loss or theft of an access
device if the consumer also alleges possible unauthorized use as a
consequence of the loss or theft.
4. Error asserted after account closed. The financial
institution must comply with the error resolution procedures when a
consumer properly asserts an error, even if the account has been
closed.
5. Request for documentation or information. A request
for documentation or other information must be treated as an error
unless it is clear that the consumer is requesting a duplicate copy
for tax or other record-keeping purposes.
6. Terminal receipts for transfers of $15 or less. The
fact that an institution does not make a terminal receipt available
for a transfer of $15 or less in accordance with § 1005.9(e) is not
an error for purposes of § 1005.11(a)(1)(vi) or (vii).
11(b) Notice of Error From Consumer 11(b)(1) Timing; Contents
1. Content of error notice. The notice of error is
effective even if it does not contain the consumer's account
number, so long as the financial institution is able to identify
the account in question. For example, the consumer could provide a
Social Security number or other unique means of identification.
2. Investigation pending receipt of information. While a
financial institution may request a written, signed statement from
the consumer relating to a notice of error, it may not delay
initiating or completing an investigation pending receipt of the
statement.
3. Statement held for consumer. When a consumer has
arranged for periodic statements to be held until picked up, the
statement for a particular cycle is deemed to have been transmitted
on the date the financial institution first makes the statement
available to the consumer.
4. Failure to provide statement. When a financial
institution fails to provide the consumer with a periodic
statement, a request for a copy is governed by this section if the
consumer gives notice within 60 days from the date on which the
statement should have been transmitted.
5. Discovery of error by institution. The error
resolution procedures of this section apply when a notice of error
is received from the consumer, and not when the financial
institution itself discovers and corrects an error.
6. Notice at particular phone number or address. A
financial institution may require the consumer to give notice only
at the telephone number or address disclosed by the institution,
provided the institution maintains reasonable procedures to refer
the consumer to the specified telephone number or address if the
consumer attempts to give notice to the institution in a different
manner.
7. Effect of late notice. An institution is not required
to comply with the requirements of this section for any notice of
error from the consumer that is received by the institution later
than 60 days from the date on which the periodic statement first
reflecting the error is sent. Where the consumer's assertion of
error involves an unauthorized EFT, however, the institution must
comply with § 1005.6 before it may impose any liability on the
consumer.
11(b)(2) Written Confirmation
1. Written confirmation-of-error notice. If the consumer
sends a written confirmation of error to the wrong address, the
financial institution must process the confirmation through normal
procedures. But the institution need not provisionally credit the
consumer's account if the written confirmation is delayed beyond 10
business days in getting to the right place because it was sent to
the wrong address.
11(c) Time Limits and Extent of Investigation
1. Notice to consumer. Unless otherwise indicated in this
section, the financial institution may provide the required notices
to the consumer either orally or in writing.
2. Written confirmation of oral notice. A financial
institution must begin its investigation promptly upon receipt of
an oral notice. It may not delay until it has received a written
confirmation.
3. Charges for error resolution. If a billing error
occurred, whether as alleged or in a different amount or manner,
the financial institution may not impose a charge related to any
aspect of the error-resolution process (including charges for
documentation or investigation). Since the Act grants the consumer
error-resolution rights, the institution should avoid any chilling
effect on the good-faith assertion of errors that might result if
charges are assessed when no billing error has occurred.
4. Correction without investigation. A financial
institution may make, without investigation, a final correction to
a consumer's account in the amount or manner alleged by the
consumer to be in error, but must comply with all other applicable
requirements of § 1005.11.
5. Correction notice. A financial institution may include
the notice of correction on a periodic statement that is mailed or
delivered within the 10-business-day or 45-calendar-day time limits
and that clearly identifies the correction to the consumer's
account. The institution must determine whether such a mailing will
be prompt enough to satisfy the requirements of this section,
taking into account the specific facts involved.
6. Correction of an error. If the financial institution
determines an error occurred, within either the 10-day or 45-day
period, it must correct the error (subject to the liability
provisions of §§ 1005.6(a) and (b)) including, where applicable,
the crediting of interest and the refunding of any fees imposed by
the institution. In a combined credit/EFT transaction, for example,
the institution must refund any finance charges incurred as a
result of the error. The institution need not refund fees that
would have been imposed whether or not the error occurred.
7. Extent of required investigation. A financial
institution complies with its duty to investigate, correct, and
report its determination regarding an error described in §
1005.11(a)(1)(vii) by transmitting the requested information,
clarification, or documentation within the time limits set forth in
§ 1005.11(c). If the institution has provisionally credited the
consumer's account in accordance with § 1005.11(c)(2), it may debit
the amount upon transmitting the requested information,
clarification, or documentation.
Paragraph 11(c)(2)(i)
1. Compliance with all requirements. Financial
institutions exempted from provisionally crediting a consumer's
account under §§ 1005.11(c)(2)(i)(A) and (B) must still comply with
all other requirements of § 1005.11.
11(c)(3) Extension of Time Periods
1. POS debit card transactions. The extended deadlines
for investigating errors resulting from POS debit card transactions
apply to all debit card transactions, including those for cash
only, at merchants' POS terminals, and also including mail and
telephone orders. The deadlines do not apply to transactions at an
ATM, however, even though the ATM may be in a merchant
location.
11(c)(4) Investigation
1. Third parties. When information or documentation
requested by the consumer is in the possession of a third party
with whom the financial institution does not have an agreement, the
institution satisfies the error resolution requirement by so
advising the consumer within the specified time period.
2. Scope of investigation. When an alleged error involves
a payment to a third party under the financial institution's
telephone bill-payment plan, a review of the institution's own
records is sufficient, assuming no agreement exists between the
institution and the third party concerning the bill-payment
service.
3. POS transfers. When a consumer alleges an error
involving a transfer to a merchant via a POS terminal, the
institution must verify the information previously transmitted when
executing the transfer. For example, the financial institution may
request a copy of the sales receipt to verify that the amount of
the transfer correctly corresponds to the amount of the consumer's
purchase.
4. Agreement. An agreement that a third party will honor
an access device is an agreement for purposes of this paragraph. A
financial institution does not have an agreement for purposes of §
1005.11(c)(4)(ii) solely because it participates in transactions
that occur under the Federal recurring payments programs, or that
are cleared through an ACH or similar arrangement for the clearing
and settlement of fund transfers generally, or because the
institution agrees to be bound by the rules of such an
arrangement.
5. No EFT agreement. When there is no agreement between
the institution and the third party for the type of EFT involved,
the financial institution must review any relevant information
within the institution's own records for the particular account to
resolve the consumer's claim. The extent of the investigation
required may vary depending on the facts and circumstances.
However, a financial institution may not limit its investigation
solely to the payment instructions where additional information
within its own records pertaining to the particular account in
question could help to resolve a consumer's claim. Information that
may be reviewed as part of an investigation might include:
i. The ACH transaction records for the transfer;
ii. The transaction history of the particular account for a
reasonable period of time immediately preceding the allegation of
error;
iii. Whether the check number of the transaction in question is
notably out-of-sequence;
iv. The location of either the transaction or the payee in
question relative to the consumer's place of residence and habitual
transaction area;
v. Information relative to the account in question within the
control of the institution's third-party service providers if the
financial institution reasonably believes that it may have records
or other information that could be dispositive; or
vi. Any other information appropriate to resolve the claim.
11(d) Procedures if Financial Institution Determines No Error or
Different Error Occurred
1. Error different from that alleged. When a financial
institution determines that an error occurred in a manner or amount
different from that described by the consumer, it must comply with
the requirements of both §§ 1005.11(c) and (d), as relevant. The
institution may give the notice of correction and the explanation
separately or in a combined form.
11(d)(1) Written Explanation
1. Request for documentation. When a consumer requests
copies of documents, the financial institution must provide the
copies in an understandable form. If an institution relied on
magnetic tape, it must convert the applicable data into readable
form, for example, by printing it and explaining any codes.
11(d)(2) Debiting Provisional Credit
1. Alternative procedure for debiting of credited funds.
The financial institution may comply with the requirements of this
section by notifying the consumer that the consumer's account will
be debited five business days from the transmittal of the
notification, specifying the calendar date on which the debiting
will occur.
2. Fees for overdrafts. The financial institution may not
impose fees for items it is required to honor under § 1005.11. It
may, however, impose any normal transaction or item fee that is
unrelated to an overdraft resulting from the debiting. If the
account is still overdrawn after five business days, the
institution may impose the fees or finance charges to which it is
entitled, if any, under an overdraft credit plan.
11(e) Reassertion of Error
1. Withdrawal of error; right to reassert. The financial
institution has no further error resolution responsibilities if the
consumer voluntarily withdraws the notice alleging an error. A
consumer who has withdrawn an allegation of error has the right to
reassert the allegation unless the financial institution had
already complied with all of the error resolution requirements
before the allegation was withdrawn. The consumer must do so,
however, within the original 60-day period.
Section 1005.12 Relation to Other Laws 12(a) Relation to Truth in
Lending
1. Issuance rules for access devices other than access
devices for prepaid accounts. For access devices that also
constitute credit cards (other than access devices for prepaid
accounts), the issuance rules of Regulation E apply if the only
credit feature is a preexisting credit line attached to the asset
account to cover overdrafts (or to maintain a specified minimum
balance) or an overdraft service, as defined in § 1005.17(a).
Regulation Z (12 CFR part 1026) rules apply if there is another
type of credit feature; for example, one permitting direct
extensions of credit that do not involve the asset account.
2. Overdraft services. The addition of an overdraft
service, as that term is defined in § 1005.17(a), to an accepted
access device does not constitute the addition of a credit feature
subject to Regulation Z. Instead, the provisions of Regulation E
apply, including the liability limitations (§ 1005.6) and the
requirement to obtain consumer consent to the service before any
fees or charges for paying an overdraft may be assessed on the
account (§ 1005.17).
3. Issuance of prepaid access devices that can access a
covered separate credit feature subject to Regulation Z. An
access device for a prepaid account cannot access a covered
separate credit feature as defined in Regulation Z, 12 CFR 1026.61,
when the access device is issued if the access device is issued
prior to the expiration of the 30-day period set forth in 12 CFR
1026.61(c). Regulation Z, 12 CFR 1026.61(c), provides that with
respect to a covered separate credit feature that could be
accessible by a hybrid prepaid-credit card at any point, a card
issuer must not do any of the following until 30 days after the
prepaid account has been registered: (1) Open a covered separate
credit feature accessible by the hybrid prepaid-credit card; (2)
make a solicitation or provide an application to open a covered
separate credit feature accessible by the hybrid prepaid-credit
card; or (3) allow an existing credit feature that was opened prior
to the consumer to become a covered separate credit feature
accessible by the hybrid prepaid-credit card. An access device for
a prepaid account that is not a hybrid prepaid-credit card as that
term is defined in Regulation Z, 12 CFR 1026.61, is subject to the
issuance rules in Regulation E.
4. Addition of a covered separate credit feature to an
existing access device for a prepaid account. Regulation Z
governs the addition of a covered separate credit feature as that
term is defined in Regulation Z, 12 CFR 1026.61, to an existing
access device for a prepaid account. In this case, the access
device would become a hybrid prepaid-credit card under Regulation Z
(12 CFR part 1026). A covered separate credit feature may be added
to a previously issued access device for a prepaid account only
upon the consumer's application or specific request as described in
Regulation Z, 12 CFR 1026.12(a)(1), and only in compliance with 12
CFR 1026.61(c).
5. Determining applicable regulation related to liability and
error resolution. i. Under § 1005.12(a)(1)(iv)(B), with respect
to a transaction that involves a covered separate credit feature
and an asset feature on a prepaid account that are both accessible
by a hybrid prepaid-credit card as those terms are defined in
Regulation Z, 12 CFR 1026.61, where credit is extended under a
covered separate credit feature accessible by a hybrid
prepaid-credit card that is incident to an electronic fund transfer
when the hybrid prepaid-credit card accesses both funds in the
asset feature of a prepaid account and credit extensions from the
credit feature with respect to a particular transaction, Regulation
E's liability limitations and error resolution provisions apply to
the transaction, in addition to Regulation Z, 12 CFR 1026.13(d) and
(g) (which apply because of the extension of credit associated with
the covered separate credit feature). Section 1005.12(a)(1)(iv)(C)
provides that with respect to transactions that involves credit
extended through a negative balance to the asset feature of a
prepaid account that meets the conditions set forth in Regulation
Z, 12 CFR 1026.61(a)(4), these transactions are governed solely by
the liability limitations and error resolution procedures in
Regulation E, and Regulation Z does not apply. Section
1005.12(a)(1)(iv)(D) and (a)(2)(iii), taken together, provide that
with respect to transactions involving a prepaid account and a
non-covered separate credit feature as defined in Regulation Z, 12
CFR 1026.61, a financial institution must comply with Regulation
E's liability limitations and error resolution procedures with
respect to transactions that access the prepaid account as
applicable, and the creditor must comply with Regulation Z's
liability limitations and error resolution procedures with respect
to transactions that access the non-covered separate credit
feature, as applicable.
ii. Under § 1005.12(a)(1)(iv)(A), with respect to an account
(other than a prepaid account) where credit is extended incident to
an electronic fund transfer under an agreement to extend overdraft
credit between the consumer and the financial institution,
Regulation E's liability limitations and error resolution
provisions apply to the transaction, in addition to Regulation Z,
12 CFR 1026.13(d) and (g) (which apply because of the extension of
credit associated with the overdraft feature on the asset
account).
iii. For transactions involving access devices that also
function as credit cards under Regulation Z (12 CFR part 1026),
whether Regulation E or Regulation Z applies depends on the nature
of the transaction. For example, if the transaction solely involves
an extension of credit, and does not access funds in a consumer
asset account, such as a checking account or prepaid account, the
liability limitations and error resolution requirements of
Regulation Z apply. If the transaction accesses funds in an asset
account only (with no credit extended), the provisions of
Regulation E apply. If the transaction access funds in an asset
account but also involves an extension of credit under the
overdraft credit feature subject to Regulation Z attached to the
account, Regulation E's liability limitations and error resolution
provisions apply, in addition to Regulation Z, 12 CFR 1026.13(d)
and (g) (which apply because of the extension of credit associated
with the overdraft feature on the asset account). If a consumer's
access device is also a credit card and the device is used to make
unauthorized withdrawals from an asset account, but also is used to
obtain unauthorized cash advances directly from a credit feature
that is subject to Regulation Z that is separate from the asset
account, both Regulation E and Regulation Z apply.
iv. The following examples illustrate these principles:
A. A consumer has a card that can be used either as a credit
card or an access device that draws on the consumer's checking
account. When used as a credit card, the card does not first access
any funds in the checking account but draws only on a separate
credit feature subject to Regulation Z. If the card is stolen and
used as a credit card to make purchases or to get cash advances at
an ATM from the line of credit, the liability limits and error
resolution provisions of Regulation Z apply; Regulation E does not
apply.
B. In the same situation, if the card is stolen and is used as
an access device to make purchases or to get cash withdrawals at an
ATM from the checking account, the liability limits and error
resolution provisions of Regulation E apply; Regulation Z does not
apply.
C. In the same situation, assume the card is stolen and used
both as an access device for the checking account and as a credit
card; for example, the thief makes some purchases using the card to
access funds in the checking account and other purchases using the
card as a credit card. Here, the liability limits and error
resolution provisions of Regulation E apply to the unauthorized
transactions in which the card was used as an access device for the
checking account, and the corresponding provisions of Regulation Z
apply to the unauthorized transactions in which the card was used
as a credit card.
D. Assume a somewhat different type of card, one that draws on
the consumer's checking account and can also draw on an overdraft
credit feature subject to Regulation Z attached to the checking
account. The overdraft credit feature associated with the card is
accessed only when the consumer uses the card to make a purchase
(or other transaction) for which there are insufficient or
unavailable funds in the checking account. In this situation, if
the card is stolen and used to make purchases funded entirely by
available funds in the checking account, the liability limits and
the error resolution provisions of Regulation E apply. If the use
of the card results in an extension of credit that is incident to
an electronic fund transfer where the transaction is funded
partially by funds in the consumer's asset account and partially by
credit extended under the overdraft credit feature, the error
resolution provisions of Regulation Z, 12 CFR 1026.13(d) and (g),
apply in addition to the Regulation E provisions, but the other
liability limit and error resolution provisions of Regulation Z do
not. Relatedly, if the use of the card is funded entirely by credit
extended under the overdraft credit feature, the transaction is
governed solely by the liability limitations and error resolution
requirements of Regulation Z. See Regulation Z, 12 CFR
1026.13(i).
E. The same principles in comment 12(a)-5.iv.A, B, C, and D
apply to an access device for a prepaid account that also is a
hybrid prepaid-credit card with respect to a covered separate
credit feature under Regulation Z, 12 CFR 1026.61. See also
Regulation Z, 12 CFR 1026.13(i)(2) and comment 13(i)-4.
12(b) Preemption of Inconsistent State Laws
1. Specific determinations. The regulation prescribes
standards for determining whether state laws that govern EFTs, and
state laws regarding gift certificates, store gift cards, or
general-use prepaid cards that govern dormancy, inactivity, or
service fees, or expiration dates, are preempted by the Act and the
regulation. A state law that is inconsistent may be preempted even
if the Bureau has not issued a determination. However, nothing in §
1005.12(b) provides a financial institution with immunity for
violations of state law if the institution chooses not to make
state disclosures and the Bureau later determines that the state
law is not preempted.
2. Preemption determinations generally. The Bureau
recognizes state law preemption determinations made by the Board of
Governors of the Federal Reserve System prior to July 21, 2011,
until and unless the Bureau makes and publishes any contrary
determination.
3. Preemption determination - Michigan. The Board of
Governors of the Federal Reserve System determined that certain
provisions in the state law of Michigan are preempted by the
Federal law, effective March 30, 1981:
i. Definition of unauthorized use. Section 488.5(4) of
the state law of Michigan, governing electronic fund transfers, is
preempted to the extent that it relates to the section of state law
governing consumer liability for unauthorized use of an access
device.
ii. Consumer liability for unauthorized use of an
account. Section 488.14 of the state law of Michigan, governing
electronic fund transfers, is preempted because it is inconsistent
with § 1005.6 and is less protective of the consumer than the
Federal law. The state law places liability on the consumer for the
unauthorized use of an account in cases involving the consumer's
negligence. Under the Federal law, a consumer's liability for
unauthorized use is not related to the consumer's negligence and
depends instead on the consumer's promptness in reporting the loss
or theft of the access device.
iii. Error resolution. Section 488.15 of the state law of
Michigan, governing electronic fund transfers, is preempted because
it is inconsistent with § 1005.11 and is less protective of the
consumer than the Federal law. The state law allows financial
institutions up to 70 days to resolve errors, whereas the Federal
law generally requires errors to be resolved within 45 days.
iv. Receipts and periodic statements. Sections 488.17 and
488.18 of the state law of Michigan, governing electronic fund
transfers, are preempted because they are inconsistent with §
1005.9, other than for transfers of $15 or less pursuant to §
1005.9(e). The state provisions require a different disclosure of
information than does the Federal law. The receipt provision is
also preempted because it allows the consumer to be charged for
receiving a receipt if a machine cannot furnish one at the time of
a transfer.
4. Preemption determination - Tennessee. The Bureau
determined that the following provision in the state law of
Tennessee is preempted by the Federal law, effective April 25,
2013:
i. Gift certificates, store gift cards, and general-use
prepaid cards. Section 66-29-116 of Tennessee's Uniform
Disposition of Unclaimed (Personal) Property Act is preempted to
the extent that it permits gift certificates, store gift cards, and
general-use prepaid cards, as defined in § 1005.20(a), to be
declined at the point-of-sale sooner than the gift certificates,
store gift cards, or general-use prepaid cards and their underlying
funds are permitted to expire under § 1005.20(e).
Section 1005.13 Administrative Enforcement; Record Retention 13(b)
Record Retention
1. Requirements. A financial institution need not retain
records that it has given disclosures and documentation to each
consumer; it need only retain evidence demonstrating that its
procedures reasonably ensure the consumers' receipt of required
disclosures and documentation.
Section 1005.14 Electronic Fund Transfer Service Provider Not
Holding Consumer's Account 14(a) Electronic Fund Transfer Service
Providers Subject to Regulation
1. Applicability. This section applies only when a
service provider issues an access device to a consumer for
initiating transfers to or from the consumer's account at a
financial institution and the two entities have no agreement
regarding this EFT service. If the service provider does not issue
an access device to the consumer for accessing an account held by
another institution, it does not qualify for the treatment accorded
by § 1005.14. For example, this section does not apply to an
institution that initiates preauthorized payroll deposits to
consumer accounts on behalf of an employer. By contrast, § 1005.14
can apply to an institution that issues a code for initiating
telephone transfers to be carried out through the ACH from a
consumer's account at another institution. This is the case even if
the consumer has accounts at both institutions.
2. ACH agreements. The ACH rules generally do not
constitute an agreement for purposes of this section. However, an
ACH agreement under which members specifically agree to honor each
other's debit cards is an “agreement,” and thus this section does
not apply.
14(b) Compliance by Electronic Fund Transfer Service Provider
1. Liability. The service provider is liable for
unauthorized EFTs that exceed limits on the consumer's liability
under § 1005.6.
14(b)(1) Disclosures and Documentation
1. Periodic statements from electronic fund transfer service
provider. A service provider that meets the conditions set
forth in this paragraph does not have to issue periodic statements.
A service provider that does not meet the conditions need only
include on periodic statements information about transfers
initiated with the access device it has issued.
14(b)(2) Error Resolution
1. Error resolution. When a consumer notifies the service
provider of an error, the EFT service provider must investigate and
resolve the error in compliance with § 1005.11 as modified by §
1005.14(b)(2). If an error occurred, any fees or charges imposed as
a result of the error, either by the service provider or by the
account-holding institution (for example, overdraft or dishonor
fees) must be reimbursed to the consumer by the service
provider.
14(c) Compliance by Account-Holding Institution 14(c)(1)
Documentation
1. Periodic statements from account-holding institution.
The periodic statement provided by the account-holding institution
need only contain the information required by § 1005.9(b)(1).
Section 1005.15 - Electronic Fund Transfer of Government Benefits
15(c) Pre-Acquisition Disclosure Requirements
1. Disclosing the short and long form before acquisition.
Section 1005.15(c)(1) requires that, before a consumer acquires an
account governed by § 1005.15, a government agency must comply with
the pre-acquisition disclosure requirements applicable to prepaid
accounts as set forth in § 1005.18(b). Section 1005.18(b)(1)(i)
generally requires delivery of both the short form disclosure
required by § 1005.18(b)(2), accompanied by the information in §
1005.18(b)(5), and the long form disclosure required by §
1005.18(b)(4) before a consumer acquires a prepaid account. For
purposes of § 1005.15(c), a consumer is deemed to have received the
disclosures required by § 1005.18(b) prior to acquisition when the
consumer receives the disclosures before choosing to receive
benefits via the government benefit account. The following example
illustrates when a consumer receives disclosures before acquisition
of an account for purposes of § 1005.15(c):
i. A government agency informs a consumer that she can receive
distribution of benefits via a government benefit account in the
form of a prepaid card. The consumer receives the prepaid card and
the disclosures required by § 1005.18(b) to review at the time the
consumer receives benefits eligibility information from the agency.
After receiving the disclosures, the consumer chooses to receive
benefits via the government benefit account. These disclosures were
provided to the consumer pre-acquisition, and the agency has
complied with § 1005.15(c). By contrast, if the consumer does not
receive the disclosures required by § 1005.18(b) to review until
the time at which the consumer received the first benefit payment
deposited into the government benefit account, these disclosures
were provided to the consumer post-acquisition, and were not
provided in compliance with § 1005.15(c).
2. Acquisition and disclosures given during the same
appointment. The disclosures and notice required by §
1005.15(c) may be given in the same process or appointment during
which the consumer receives a government benefit card. When a
consumer receives benefits eligibility information and enrolls to
receive benefits during the same process or appointment, a
government agency that gives the disclosures and notice required by
§ 1005.15(c) before the consumer chooses to receive the first
benefit payment on the card complies with the timing requirements
of § 1005.15(c).
3. Form and formatting requirements for government benefit
account disclosures. The form and formatting requirements for
government benefit accounts in § 1005.15(c) correspond to those for
payroll card accounts set forth in § 1005.18(b). See comments
18(b)(2)(xiv)(A)-1 and 18(b)(2)(xiv)(B)-1 for additional guidance
regarding the requirements set forth in § 1005.15(c)(2)(i) and
(ii), respectively.
4. Disclosure requirements outside the short form
disclosure. Section 1005.18(b)(5) requires that the name of the
financial institution be disclosed outside the short form
disclosure. For government benefit accounts, the financial
institution that must be disclosed pursuant to § 1005.18(b)(5) is
the financial institution that directly holds the account or issues
the account's access device. The disclosure provided outside the
short form disclosure may, but is not required to, also include the
name of the government agency that established the government
benefit account.
15(d) Access to Account Information
1. Access to account information. For guidance, see
comments 18(c)-1 through -3 and 18(c)-5 through -9.
15(e) Modified Disclosure, Limitations on Liability, and Error
Resolution Requirements
1. Modified limitations on liability and error resolution
requirements. For guidance, see comments 18(e)-1 through
-3.
15(f) Disclosure of Fees and Other Information
1. Disclosures on prepaid account access devices.
Pursuant to § 1005.18(f)(3), the name of the financial institution
and the Web site URL and a telephone number a consumer can use to
contact the financial institution about the prepaid account must be
disclosed on the prepaid account access device. For government
benefit accounts, the financial institution whose name and contact
information must be disclosed pursuant to § 1005.18(f)(3) is the
financial institution that directly holds the account or issues the
account's access device.
Section 1005.17 Requirements for Overdraft Services 17(a)
Definition
1. Exempt securities- and commodities-related lines of
credit. The definition of “overdraft service” does not include
the payment of transactions in a securities or commodities account
pursuant to which credit is extended by a broker-dealer registered
with the Securities and Exchange Commission or the Commodity
Futures Trading Commission.
17(b) Opt-In Requirement
1. Scope. i. Account-holding institutions. Section
1005.17(b) applies to ATM and one-time debit card transactions made
with a debit card issued by or on behalf of the account-holding
institution. Section 1005.17(b) does not apply to ATM and one-time
debit card transactions made with a debit card issued by or through
a third party unless the debit card is issued on behalf of the
account-holding institution.
ii. Coding of transactions. A financial institution
complies with the rule if it adapts its systems to identify debit
card transactions as either one-time or recurring. If it does so,
the financial institution may rely on the transaction's coding by
merchants, other institutions, and other third parties as a
one-time or a preauthorized or recurring debit card
transaction.
iii. One-time debit card transactions. The opt-in applies
to any one-time debit card transaction, whether the card is used,
for example, at a point-of-sale, in an online transaction, or in a
telephone transaction.
iv. Application of fee prohibition. The prohibition on
assessing overdraft fees under § 1005.17(b)(1) applies to all
institutions. For example, the prohibition applies to an
institution that has a policy and practice of declining to
authorize and pay any ATM or one-time debit card transactions when
the institution has a reasonable belief at the time of the
authorization request that the consumer does not have sufficient
funds available to cover the transaction. However, the institution
is not required to comply with §§ 1005.17(b)(1)(i)-(iv), including
the notice and opt-in requirements, if it does not assess overdraft
fees for paying ATM or one-time debit card transactions that
overdraw the consumer's account. Assume an institution does not
provide an opt-in notice, but authorizes an ATM or one-time debit
card transaction on the reasonable belief that the consumer has
sufficient funds in the account to cover the transaction. If, at
settlement, the consumer has insufficient funds in the account (for
example, due to intervening transactions that post to the
consumer's account), the institution is not permitted to assess an
overdraft fee or charge for paying that transaction.
2. No affirmative consent. A financial institution may
pay overdrafts for ATM and one-time debit card transactions even if
a consumer has not affirmatively consented or opted in to the
institution's overdraft service. If the institution pays such an
overdraft without the consumer's affirmative consent, however, it
may not impose a fee or charge for doing so. These provisions do
not limit the institution's ability to debit the consumer's account
for the amount overdrawn if the institution is permitted to do so
under applicable law.
3. Overdraft transactions not required to be authorized or
paid. Section 1005.17 does not require a financial institution
to authorize or pay an overdraft on an ATM or one-time debit card
transaction even if the consumer has affirmatively consented to an
institution's overdraft service for such transactions.
4. Reasonable opportunity to provide affirmative consent.
A financial institution provides a consumer with a reasonable
opportunity to provide affirmative consent when, among other
things, it provides reasonable methods by which the consumer may
affirmatively consent. A financial institution provides such
reasonable methods, if:
i. By mail. The institution provides a form for the
consumer to fill out and mail to affirmatively consent to the
service.
ii. By telephone. The institution provides a
readily-available telephone line that consumers may call to provide
affirmative consent.
iii. By electronic means. The institution provides an
electronic means for the consumer to affirmatively consent. For
example, the institution could provide a form that can be accessed
and processed at its Web site, where the consumer may click on a
check box to provide consent and confirm that choice by clicking on
a button that affirms the consumer's consent.
iv. In person. The institution provides a form for the
consumer to complete and present at a branch or office to
affirmatively consent to the service.
5. Implementing opt-in at account-opening. A financial
institution may provide notice regarding the institution's
overdraft service prior to or at account-opening. A financial
institution may require a consumer, as a necessary step to opening
an account, to choose whether or not to opt into the payment of ATM
or one-time debit card transactions pursuant to the institution's
overdraft service. For example, the institution could require the
consumer, at account opening, to sign a signature line or check a
box on a form (consistent with comment 17(b)-6) indicating whether
or not the consumer affirmatively consents at account opening. If
the consumer does not check any box or provide a signature, the
institution must assume that the consumer does not opt in. Or, the
institution could require the consumer to choose between an account
that does not permit the payment of ATM or one-time debit card
transactions pursuant to the institution's overdraft service and an
account that permits the payment of such overdrafts, provided that
the accounts comply with § 1005.17(b)(2) and § 1005.17(b)(3).
6. Affirmative consent required. A consumer's affirmative
consent, or opt-in, to a financial institution's overdraft service
must be obtained separately from other consents or acknowledgements
obtained by the institution, including a consent to receive
disclosures electronically. An institution may obtain a consumer's
affirmative consent by providing a blank signature line or check
box that the consumer could sign or select to affirmatively
consent, provided that the signature line or check box is used
solely for purposes of evidencing the consumer's choice whether or
not to opt into the overdraft service and not for other purposes.
An institution does not obtain a consumer's affirmative consent by
including preprinted language about the overdraft service in an
account disclosure provided with a signature card or contract that
the consumer must sign to open the account and that acknowledges
the consumer's acceptance of the account terms. Nor does an
institution obtain a consumer's affirmative consent by providing a
signature card that contains a pre-selected check box indicating
that the consumer is requesting the service.
7. Confirmation. A financial institution may comply with
the requirement in § 1005.17(b)(1)(iv) to provide confirmation of
the consumer's affirmative consent by mailing or delivering to the
consumer a copy of the consumer's completed opt-in notice, or by
mailing or delivering a letter or notice to the consumer
acknowledging that the consumer has elected to opt into the
institution's service. The confirmation, which must be provided in
writing, or electronically if the consumer agrees, must include a
statement informing the consumer of the right to revoke the opt-in
at any time. See § 1005.17(d)(6), which permits institutions
to include the revocation statement on the initial opt-in notice.
An institution complies with the confirmation requirement if it has
adopted reasonable procedures designed to ensure that overdraft
fees are assessed only in connection with transactions paid after
the confirmation has been mailed or delivered to the consumer.
8. Outstanding Negative Balance. If a fee or charge is
based on the amount of the outstanding negative balance, an
institution is prohibited from assessing any such fee if the
negative balance is solely attributable to an ATM or one-time debit
card transaction, unless the consumer has opted into the
institution's overdraft service for ATM or one-time debit card
transactions. However, the rule does not prohibit an institution
from assessing such a fee if the negative balance is attributable
in whole or in part to a check, ACH, or other type of transaction
not subject to the prohibition on assessing overdraft fees in §
1005.17(b)(1).
9. Daily or Sustained Overdraft, Negative Balance, or Similar
Fee or Charge i. Daily or sustained overdraft, negative
balance, or similar fees or charges. If a consumer has not
opted into the institution's overdraft service for ATM or one-time
debit card transactions, the fee prohibition in § 1005.17(b)(1)
applies to all overdraft fees or charges for paying those
transactions, including but not limited to daily or sustained
overdraft, negative balance, or similar fees or charges. Thus,
where a consumer's negative balance is solely attributable to an
ATM or one-time debit card transaction, the rule prohibits the
assessment of such fees unless the consumer has opted in. However,
the rule does not prohibit an institution from assessing daily or
sustained overdraft, negative balance, or similar fees or charges
if a negative balance is attributable in whole or in part to a
check, ACH, or other type of transaction not subject to the fee
prohibition. When the negative balance is attributable in part to
an ATM or one-time debit card transaction, and in part to a check,
ACH, or other type of transaction not subject to the fee
prohibition, the date on which such a fee may be assessed is based
on the date on which the check, ACH, or other type of transaction
is paid into overdraft.
ii. Examples. The following examples illustrate how an
institution complies with the fee prohibition. For each example,
assume the following: (a) The consumer has not opted into the
payment of ATM or one-time debit card overdrafts; (b) these
transactions are paid into overdraft because the amount of the
transaction at settlement exceeded the amount authorized or the
amount was not submitted for authorization; (c) under the account
agreement, the institution may charge a per-item fee of $20 for
each overdraft, and a one-time sustained overdraft fee of $20 on
the fifth consecutive day the consumer's account remains overdrawn;
(d) the institution posts ATM and debit card transactions before
other transactions; and (e) the institution allocates deposits to
account debits in the same order in which it posts debits.
A. Assume that a consumer has a $50 account balance on March 1.
That day, the institution posts a one-time debit card transaction
of $60 and a check transaction of $40. The institution charges an
overdraft fee of $20 for the check overdraft but cannot assess an
overdraft fee for the debit card transaction. At the end of the
day, the consumer has an account balance of negative $70. The
consumer does not make any deposits to the account, and no other
transactions occur between March 2 and March 6. Because the
consumer's negative balance is attributable in part to the $40
check (and associated overdraft fee), the institution may charge a
sustained overdraft fee on March 6 in connection with the
check.
B. Same facts as in A., except that on March 3, the consumer
deposits $40 in the account. The institution allocates the $40 to
the debit card transaction first, consistent with its posting order
policy. At the end of the day on March 3, the consumer has an
account balance of negative $30, which is attributable to the check
transaction (and associated overdraft fee). The consumer does not
make any further deposits to the account, and no other transactions
occur between March 4 and March 6. Because the remaining negative
balance is attributable to the March 1 check transaction, the
institution may charge a sustained overdraft fee on March 6 in
connection with the check.
C. Assume that a consumer has a $50 account balance on March 1.
That day, the institution posts a one-time debit card transaction
of $60. At the end of that day, the consumer has an account balance
of negative $10. The institution may not assess an overdraft fee
for the debit card transaction. On March 3, the institution pays a
check transaction of $100 and charges an overdraft fee of $20. At
the end of that day, the consumer has an account balance of
negative $130. The consumer does not make any deposits to the
account, and no other transactions occur between March 4 and March
8. Because the consumer's negative balance is attributable in part
to the check, the institution may assess a $20 sustained overdraft
fee. However, because the check was paid on March 3, the
institution must use March 3 as the start date for determining the
date on which the sustained overdraft fee may be assessed. Thus,
the institution may charge a $20 sustained overdraft fee on March
8.
iii. Alternative approach. For a consumer who does not
opt into the institution's overdraft service for ATM and one-time
debit card transactions, an institution may also comply with the
fee prohibition in § 1005.17(b)(1) by not assessing daily or
sustained overdraft, negative balance, or similar fees or charges
unless a consumer's negative balance is attributable solely to
check, ACH or other types of transactions not subject to the fee
prohibition while that negative balance remains outstanding. In
such case, the institution would not have to determine how to
allocate subsequent deposits that reduce but do not eliminate the
negative balance. For example, if a consumer has a negative balance
of $30, of which $10 is attributable to a one-time debit card
transaction, an institution complies with the fee prohibition if it
does not assess a sustained overdraft fee while that negative
balance remains outstanding.
17(b)(2) Conditioning Payment of Other Overdrafts on Consumer's
Affirmative Consent
1. Application of the same criteria. The prohibitions on
conditioning in § 1005.17(b)(2) generally require an institution to
apply the same criteria for deciding when to pay overdrafts for
checks, ACH transactions, and other types of transactions, whether
or not the consumer has affirmatively consented to the
institution's overdraft service with respect to ATM and one-time
debit card overdrafts. For example, if an institution's internal
criteria would lead the institution to pay a check overdraft if the
consumer had affirmatively consented to the institution's overdraft
service for ATM and one-time debit card transactions, it must also
apply the same criteria in a consistent manner in determining
whether to pay the check overdraft if the consumer has not opted
in.
2. No requirement to pay overdrafts on checks, ACH
transactions, or other types of transactions. The prohibition
on conditioning in § 1005.17(b)(2) does not require an institution
to pay overdrafts on checks, ACH transactions, or other types of
transactions in all circumstances. Rather, the rule simply
prohibits institutions from considering the consumer's decision not
to opt in when deciding whether to pay overdrafts for checks, ACH
transactions, or other types of transactions.2>17(b)(3) Same
Account Terms, Conditions, and Features
1. Variations in terms, conditions, or features. A
financial institution may not vary the terms, conditions, or
features of an account provided to a consumer who does not
affirmatively consent to the payment of ATM or one-time debit card
transactions pursuant to the institution's overdraft service. This
includes, but is not limited to:
i. Interest rates paid and fees assessed;
ii. The type of ATM or debit card provided to the consumer. For
instance, an institution may not provide consumers who do not opt
in a PIN-only card while providing a debit card with both PIN and
signature-debit functionality to consumers who opt in;
iii. Minimum balance requirements; or
iv. Account features such as online bill payment services.
2. Limited-feature bank accounts. Section 1005.17(b)(3)
does not prohibit institutions from offering deposit account
products with limited features, provided that a consumer is not
required to open such an account because the consumer did not opt
in. For example, § 1005.17(b)(3) does not prohibit an institution
from offering a checking account designed to comply with state
basic banking laws, or designed for consumers who are not eligible
for a checking account because of their credit or checking account
history, which may include features limiting the payment of
overdrafts. However, a consumer who applies, and is otherwise
eligible, for a full-service or other particular deposit account
product may not be provided instead with the account with more
limited features because the consumer has declined to opt in.
17(c) Timing
1. Permitted fees or charges. Fees or charges for ATM and
one-time debit card overdrafts may be assessed only for overdrafts
paid on or after the date the financial institution receives the
consumer's affirmative consent to the institution's overdraft
service. See also comment 17(b)-7.
17(d) Content and Format
1. Overdraft service. The description of the
institution's overdraft service should indicate that the consumer
has the right to affirmatively consent, or opt into payment of
overdrafts for ATM and one-time debit card transactions. The
description should also disclose the institution's policies
regarding the payment of overdrafts for other transactions,
including checks, ACH transactions, and automatic bill payments,
provided that this content is not more prominent than the
description of the consumer's right to opt into payment of
overdrafts for ATM and one-time debit card transactions. As
applicable, the institution also should indicate that it pays
overdrafts at its discretion, and should briefly explain that if
the institution does not authorize and pay an overdraft, it may
decline the transaction.
2. Maximum fee. If the amount of a fee may vary from
transaction to transaction, the financial institution may indicate
that the consumer may be assessed a fee “up to” the maximum fee.
The financial institution must disclose all applicable overdraft
fees, including but not limited to:
i. Per item or per transaction fees;
ii. Daily overdraft fees;
iii. Sustained overdraft fees, where fees are assessed when the
consumer has not repaid the amount of the overdraft after some
period of time (for example, if an account remains overdrawn for
five or more business days); or
iv. Negative balance fees.
3. Opt-in methods. The opt-in notice must include the
methods by which the consumer may consent to the overdraft service
for ATM and one-time debit card transactions. Institutions may
tailor Model Form A-9 to the methods offered to consumers for
affirmatively consenting to the service. For example, an
institution need not provide the tear-off portion of Model Form A-9
if it is only permitting consumers to opt-in telephonically or
electronically. Institutions may, but are not required, to provide
a signature line or check box where the consumer can indicate that
he or she declines to opt in.
4. Identification of consumer's account. An institution
may use any reasonable method to identify the account for which the
consumer submits the opt-in notice. For example, the institution
may include a line for a printed name and an account number, as
shown in Model Form A-9. Or, the institution may print a bar code
or use other tracking information. See also comment 17(b)-6,
which describes how an institution obtains a consumer's affirmative
consent.
5. Alternative plans for covering overdrafts. If the
institution offers both a line of credit subject to Regulation Z
(12 CFR part 1026) and a service that transfers funds from another
account of the consumer held at the institution to cover
overdrafts, the institution must state in its opt-in notice that
both alternative plans are offered. For example, the notice might
state “We also offer overdraft protection plans, such as a
link to a savings account or to an overdraft line of credit, which
may be less expensive than our standard overdraft practices.” If
the institution offers one, but not the other, it must state in its
opt-in notice the alternative plan that it offers. If the
institution does not offer either plan, it should omit the
reference to the alternative plans.
17(f) Continuing Right To Opt-In or To Revoke the Opt-In
1. Fees or charges for overdrafts incurred prior to
revocation. Section 1005.17(f)(1) provides that a consumer may
revoke his or her prior consent at any time. If a consumer does so,
this provision does not require the financial institution to waive
or reverse any overdraft fees assessed on the consumer's account
prior to the institution's implementation of the consumer's
revocation request.
17(g) Duration of Opt-In
1. Termination of overdraft service. A financial
institution may, for example, terminate the overdraft service when
the consumer makes excessive use of the service.
Section 1005.18 - Requirements for Financial Institutions Offering
Prepaid Accounts 18(a) Coverage
1. Issuance of access device. Consistent with § 1005.5(a)
and except as provided, as applicable, in § 1005.5(b), a financial
institution may issue an access device only in response to an oral
or written request for the device, or as a renewal or substitute
for an accepted access device. A consumer is deemed to request an
access device for a payroll card account when the consumer chooses
to receive salary or other compensation through a payroll card
account. A consumer is deemed to request an access device for a
prepaid account when, for example, the consumer acquires a prepaid
account offered for sale at a retail location or applies for a
prepaid account by telephone or online. If an access device for a
prepaid account is provided on an unsolicited basis where the
prepaid account is used for disbursing funds to a consumer, and the
financial institution or third party making the disbursement does
not offer any alternative means for the consumer to receive those
funds in lieu of accepting the prepaid account, in order to satisfy
§ 1005.5(b)(2), the financial institution must inform the consumer
that the consumer has no other means by which to initially receive
the funds in the prepaid account other than by accepting the access
device, as well as the consequences of disposing of the access
device.
2. Application to employers and service providers.
Typically, employers and third-party service providers do not meet
the definition of a “financial institution” subject to the
regulation because they neither hold prepaid accounts (including
payroll card accounts) nor issue prepaid cards and agree with
consumers to provide EFT services in connection with prepaid
accounts. However, to the extent an employer or a service provider
undertakes either of these functions, it would be deemed a
financial institution under the regulation.
18(b) Pre-Acquisition Disclosure Requirements
1. Written and electronic pre-acquisition disclosures.
Section 1005.4(a)(1) generally requires that disclosures be made in
writing; written disclosures may be provided in electronic form in
accordance with the Electronic Signatures in Global and National
Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). Because
§ 1005.18(b)(6)(i)(B) provides that electronic disclosures required
by § 1005.18(b) need not meet the consumer consent or other
applicable provisions of the E-Sign Act, § 1005.18(b) addresses
certain requirements for written and electronic pre-acquisition
disclosures separately. Section 1005.18(b) also addresses specific
requirements for pre-acquisition disclosures provided orally.
2. Currency. Fee amounts required to be disclosed by §
1005.18(b) may be disclosed in a foreign currency for a prepaid
account denominated in that foreign currency, other than the fee
for the purchase price required by § 1005.18(b)(5). For example, a
prepaid account sold in a U.S. airport intended for use in England
may disclose in pound sterling (£) the fees required to be
disclosed in the short form and long form disclosures and outside
the short form disclosure, except for the purchase price.
18(b)(1)(i) General
1. Disclosing the short form and long form before
acquisition. Section 1005.18(b)(1)(i) generally requires
delivery of a short form disclosure as described in §
1005.18(b)(2), accompanied by the information required to be
disclosed by § 1005.18(b)(5), and a long form disclosure as
described in § 1005.18(b)(4) before a consumer acquires a prepaid
account.
i. For purposes of § 1005.18(b)(1)(i), a consumer acquires a
prepaid account by purchasing, opening or choosing to be paid via a
prepaid account, as illustrated by the following examples:
A. A consumer inquires about obtaining a prepaid account at a
branch location of a bank. A consumer then receives the disclosures
required by § 1005.18(b). After receiving the disclosures, a
consumer then opens a prepaid account with the bank. This consumer
received the short form and long form pre-acquisition in accordance
with § 1005.18(b)(1)(i).
B. A consumer learns that he or she can receive wages via a
payroll card account, at which time the consumer is provided with a
payroll card and the disclosures required by § 1005.18(b) to
review. The consumer then chooses to receive wages via a payroll
card account. These disclosures were provided pre-acquisition in
compliance with § 1005.18(b)(1)(i). By contrast, if a consumer
receives the disclosures required by § 1005.18(b) to review at the
end of the first pay period, after the consumer received the first
payroll payment on the payroll card, these disclosures were
provided to a consumer post-acquisition, and thus not provided in
compliance with § 1005.18(b)(1)(i).
ii. Section 1005.18(b)(1)(i) permits delivery of the disclosures
required by § 1005.18(b) at the time the consumer receives the
prepaid account, rather than prior to acquisition, for prepaid
accounts that are used for disbursing funds to consumers when the
financial institution or third party making the disbursement does
not offer any alternative means for the consumer to receive those
funds in lieu of accepting the prepaid account. For example, a
utility company refunds consumers' initial deposits for its utility
services via prepaid accounts delivered to consumers by mail.
Neither the utility company nor the financial institution that
issues the prepaid accounts offer another means for a consumer to
receive that refund other than by accepting the prepaid account. In
this case, the financial institution may provide the disclosures
required by § 1005.18(b) together with the prepaid account
(e.g., in the same envelope as the prepaid account); it is
not required to deliver the disclosures separately prior to
delivery of the prepaid account.
2. Disclosures provided electronically. Disclosures
required by § 1005.18(b) may be provided before or after a consumer
has initiated the process of acquiring a prepaid account
electronically. When the disclosures required by § 1005.18(b) are
presented after a consumer has initiated the process for acquiring
a prepaid account online or via a mobile device, but before a
consumer chooses to accept the prepaid account, such disclosures
are also made pre-acquisition in accordance with §
1005.18(b)(1)(i). The disclosures required by § 1005.18(b) that are
provided electronically when a consumer acquires a prepaid account
electronically are not considered to be given pre-acquisition
unless a consumer must view the web page containing the disclosures
before choosing to accept the prepaid account. The following
examples illustrate several methods by which a financial
institution may present § 1005.18(b) disclosures before a consumer
acquires a prepaid account electronically in compliance with §
1005.18(b)(1)(i):
i. A financial institution presents the short form disclosure
required by § 1005.18(b)(2), together with the information required
by § 1005.18(b)(5), and the long form disclosure required by §
1005.18(b)(4) on the same web page. A consumer must view the web
page before choosing to accept the prepaid account.
ii. A financial institution presents the short form disclosure
required by § 1005.18(b)(2), together with the information required
by § 1005.18(b)(5), on a web page. The financial institution
includes, after the short form disclosure or as part of the
statement required by § 1005.18(b)(2)(xiii), a link that directs
the consumer to a separate web page containing the long form
disclosure required by § 1005.18(b)(4). The consumer must view the
web page containing the long form disclosure before choosing to
accept the prepaid account.
iii. A financial institution presents on a web page the short
form disclosure required by § 1005.18(b)(2), together with the
information required by § 1005.18(b)(5), followed by the initial
disclosures required by § 1005.7(b), which contains the long form
disclosure required by § 1005.18(b)(4), in accordance with §
1005.18(f)(1). The financial institution includes, after the short
form disclosure or as part of the statement required by §
1005.18(b)(2)(xiii), a link that directs the consumer to the
section of the initial disclosures containing the long form
disclosure pursuant to § 1005.18(b)(4). A consumer must view this
web page before choosing to accept the prepaid account.
18(b)(1)(ii) Disclosures for Prepaid Accounts Acquired in Retail
Locations
1. Retail locations. Section 1005.18(b)(1)(ii) sets forth
an alternative timing regime for pre-acquisition disclosures for
prepaid accounts acquired in person at retail locations. For
purposes of § 1005.18(b)(1)(ii), a retail location is a store or
other physical site where a consumer can purchase a prepaid account
in person and that is operated by an entity other than the
financial institution that issues the prepaid account. A branch of
a financial institution that offers its own prepaid accounts is not
a retail location with respect to those accounts and, thus, both
the short form and the long form disclosure must be provided
pre-acquisition pursuant to the timing requirement set forth in §
1005.18(b)(1)(i).
2. Disclosures provided inside prepaid account access device
packaging material. Except when providing the long form
disclosure post-acquisition in accordance with the retail location
exception set forth in § 1005.18(b)(1)(ii), the disclosures
required by § 1005.18(b)(2), (4), and (5) must be provided to a
consumer pre-acquisition in compliance with § 1005.18(b)(1)(i). A
short form disclosure is not considered to have been provided
pre-acquisition if, for example, it is inside the packaging
material accompanying a prepaid account access device such that the
consumer cannot see or access the disclosure before acquiring the
prepaid account.
3. Consumers working in retail locations. A payroll card
account offered to consumers working in retail locations is not
eligible for the retail location exception in § 1005.18(b)(1)(ii);
thus, a consumer employee must receive both the short form and long
form disclosures for the payroll card account pre-acquisition
pursuant to the timing requirement set forth in §
1005.18(b)(1)(i).
4. Providing the long form disclosure by telephone and
website pursuant to the retail location exception. Pursuant to
§ 1005.18(b)(1)(ii), a financial institution may provide the long
form disclosure described in § 1005.18(b)(4) after a consumer
acquires a prepaid account in a retail location, if the conditions
set forth in § 1005.18(b)(1)(ii)(A) through (D) are met. Pursuant
to § 1005.18(b)(1)(ii)(C), a financial institution must make the
long form disclosure accessible to consumers by telephone and via a
website when not providing a written version of the long form
disclosure pre-acquisition. A financial institution may, for
example, provide the long form disclosure by telephone using an
interactive voice response or similar system or by using a customer
service agent. A financial institution that has not obtained the
consumer's contact information is not required to comply with the
requirements set forth in § 1005.18(b)(1)(ii)(D). A financial
institution is able to contact the consumer when, for example, it
has the consumer's mailing address or email address.
18(b)(1)(iii) Disclosures for Prepaid Accounts Acquired Orally by
Telephone
1. Prepaid accounts acquired by telephone. Section
1005.18(b)(1)(iii) sets forth requirements for prepaid accounts
acquired orally by telephone. For purposes of § 1005.18(b)(1)(iii),
a prepaid account is considered to have been acquired orally by
telephone when a consumer speaks to a customer service agent or
communicates with an automated system, such as an interactive voice
response system, to provide personally identifiable information to
acquire a prepaid account. Prepaid accounts acquired using a mobile
device without speaking to a customer service agent or
communicating with an automated system are not considered to have
been acquired orally by telephone.
18(b)(2) Short Form Disclosure Content
1. Disclosures that are not applicable or are free. The
short form disclosures required by § 1005.18(b)(2) must always be
provided prior to prepaid account acquisition, even when a
particular feature is free or is not applicable to a specific
prepaid account product. For example, if a financial institution
does not charge a fee to a consumer for withdrawing money at an
automated teller machine in the financial institution's network or
an affiliated network, which is required to be disclosed pursuant
to § 1005.18(b)(2)(iii), the financial institution would list “ATM
withdrawal in-network” on the short form disclosure and list “$0”
as the fee. If, however, the financial institution does not have
its own network or an affiliated network from which a consumer can
withdraw money via automated teller machine, the financial
institution would list “ATM withdrawal in-network” on the short
form disclosure but instead of disclosing a fee amount, state
“N/A.” (The financial institution must still disclose any fee it
charges for out-of-network ATM withdrawals.)
2. Prohibition on disclosure of finance charges. Pursuant
to § 1005.18(b)(3)(vi), a financial institution may not include in
the short form disclosure finance charges as described in
Regulation Z, 12 CFR 1026.4(b)(11), imposed in connection with a
covered separate credit feature accessible by a hybrid
prepaid-credit card as defined in § 1026.61. See also
comment 18(b)(3)(vi)-1.
18(b)(2)(i) Periodic Fee
1. Periodic fee variation. If the amount of a fee
disclosed on the short form could vary, the financial institution
must disclose in the short form the information required by §
1005.18(b)(3)(i). If the amount of the periodic fee could vary, the
financial institution may opt instead to use an alternative
disclosure pursuant to § 1005.18(b)(3)(ii). See comments
18(b)(3)(i)-1 and 18(b)(3)(ii)-1.
18(b)(2)(iii) ATM Withdrawal Fees
1. International ATM withdrawal fees. Pursuant to §
1005.18(b)(2)(iii), a financial institution must disclose the fees
imposed when a consumer uses an automated teller machine to
initiate a withdrawal of cash in the United States from the prepaid
account, both within and outside of the financial institution's
network or a network affiliated with the financial institution. A
financial institution may not disclose its fee (if any) for using
an automated teller machine to initiate a withdrawal of cash in a
foreign country in the disclosure required by § 1005.18(b)(2)(iii),
although it may be required to disclose that fee as an additional
fee type pursuant to § 1005.18(b)(2)(ix).
18(b)(2)(iv) Cash Reload Fee
1. Total of all charges. Pursuant to § 1005.18(b)(2)(iv),
a financial institution must disclose the total of all charges
imposed when a consumer reloads cash into a prepaid account,
including charges imposed by the financial institution as well as
any charges that may be imposed by third parties for the cash
reload. The cash reload fee includes the cost of adding cash to the
prepaid account at a point-of-sale terminal, the cost of purchasing
an additional card or other device on which cash is loaded and then
transferred into the prepaid account, or any other method a
consumer may use to reload cash into the prepaid account. For
example, a financial institution does not have its own proprietary
cash reload network and instead contracts with a third-party reload
network for this service. The financial institution itself does not
charge any fee related to cash reloads but the third-party reload
network charges a fee of $3.95 per cash reload. The financial
institution must disclose the cash reload fee as $3.95. If the
financial institution offers more than one method to reload cash
into the prepaid account, § 1005.18(b)(3)(i) requires disclosure of
the highest cash reload fee. For example, a financial institution
contracts with two third-party cash reload networks; one third
party charges $3.95 for a point-of-sale reload and the other third
party charges $2.95 for purchase of a reload pack. In addition to
the third-party cash reload charge, the financial institution
charges a $1 fee for every cash reload. The financial institution
must disclose the cash reload fee on the short form as $4.95, that
is, the highest third-party fee plus the financial institution's $1
fee. See comment 18(b)(3)(v)-1 for additional guidance regarding
third-party fees for cash reloads.
2. Cash deposit fee. If a financial institution does not
permit cash reloads via a third-party reload network but instead
permits cash deposits, for example, in a bank branch, the term
“cash deposit” may be substituted for “cash reload.”
18(b)(2)(v) ATM Balance Inquiry Fees
1. International ATM balance inquiry fees. Pursuant to §
1005.18(b)(2)(v), a financial institution must disclose the fees
imposed when a consumer uses an automated teller machine to check
the balance of the prepaid account in the United States, both
within and outside of the financial institution's network or a
network affiliated with the financial institution. A financial
institution may not disclose its fee (if any) for using an
automated teller machine to check the balance of the prepaid
account in a foreign country in the disclosure required by §
1005.18(b)(2)(v), although it may be required to disclose that fee
as an additional fee type pursuant to § 1005.18(b)(2)(ix).
18(b)(2)(vii) Inactivity Fee
1. Inactivity fee conditions. Section 1005.18(b)(2)(vii)
requires disclosure of any fee for non-use, dormancy, or inactivity
of the prepaid account as well as the conditions that trigger the
financial institution to impose that fee. For example, a financial
institution that imposes an inactivity fee of $1 per month after 12
months without any transactions on the prepaid account would
disclose on the short form “Inactivity (after 12 months with no
transactions)” and “$1.00 per month.”
18(b)(2)(viii) Statements Regarding Additional Fee Types
18(b)(2)(viii)(A) Statement Regarding Number of Additional Fee
Types Charged
1. Fee types counted in total number of additional fee
types. Section 1005.18(b)(2)(viii)(A) requires a statement
disclosing the number of additional fee types the financial
institution may charge consumers with respect to the prepaid
account, using the following clause or a substantially similar
clause: “We charge [x] other types of fees.” The number of
additional fee types disclosed must reflect the total number of fee
types under which the financial institution may charge fees,
excluding fees required to be disclosed pursuant to §
1005.18(b)(2)(i) through (vii) and (b)(5) and any finance charges
as described in Regulation Z, 12 CFR 1026.4(b)(11), imposed in
connection with a covered separate credit feature accessible by a
hybrid prepaid-credit card as defined in 12 CFR 1026.61. The
following clarify which fee types to include in the total number of
additional fee types:
i. Fee types excluded from the number of additional fee
types. The number of additional fee types required to be
disclosed pursuant to § 1005.18(b)(2)(viii)(A) does not include the
fees otherwise required to be disclosed in the short form pursuant
to § 1005.18(b)(2)(i) through (vii), nor any purchase fee or
activation fee required to be disclosed outside the short form
pursuant to § 1005.18(b)(5). It also does not include any finance
charges as described in Regulation Z, 12 CFR 1026.4(b)(11), imposed
in connection with a credit feature defined in 12 CFR 1026.61. The
number of additional fee types includes only fee types under which
the financial institution may charge fees; accordingly, third-party
fees are not included unless they are imposed for services
performed on behalf of the financial institution. In addition, the
number of additional fee types includes only fee types the
financial institution may charge consumers with respect to the
prepaid account; accordingly, additional fee types does not include
other revenue sources such as interchange fees or fees paid by
employers for payroll card programs, government agencies for
government benefit programs, or other entities sponsoring prepaid
account programs for financial disbursements.
ii. Fee types counted in the number of additional fee
types. Fee types that bear a relationship to, but are separate
from, the static fee types disclosed in the short form must be
counted as additional fees for purposes of § 1005.18(b)(2)(viii).
For example, the ATM withdrawal and ATM balance inquiry fee types
required to be disclosed respectively by § 1005.18(b)(2)(iii) and
(v) that are excluded from the number of additional fee types
pursuant to § 1005.18(b)(2)(viii) do not include such services
outside of the United States. Thus, any international ATM fees
charged by the financial institution for ATM withdrawal or balance
inquiries must each be counted in the total number of additional
fee types. Similarly, any fees for reloading funds into a prepaid
account in a form other than cash (such as electronic reload and
check reload, as described in comment 18(b)(2)(viii)(A)-2) must be
counted in the total number of additional fee types because §
1005.18(b)(2)(iv) is limited to cash reloads. Also, additional fee
types disclosed in the short form pursuant to § 1005.18(b)(2)(ix)
must be counted in the total number of additional fee types.
2. Examples of fee types and fee variations. The term fee
type, as used in § 1005.18(b)(2)(viii) and (ix), is a general
category under which a financial institution charges fees to
consumers. A financial institution may charge only one fee within a
particular fee type, or may charge two or more variations of fees
within the same fee type. The following is a list of examples of
fee types a financial institution may use when determining both the
number of additional fee types charged pursuant to §
1005.18(b)(2)(viii)(A) and any additional fee types to disclose
pursuant to § 1005.18(b)(2)(ix). A financial institution may create
an appropriate name for other additional fee types.
i. Fee types related to reloads of funds. Fee types for
reloading funds into a prepaid account. Fees for cash reloads are
required to be disclosed in the short form pursuant to §
1005.18(b)(2)(iv) and that such fees are not counted in the total
number of additional fee types or disclosed as an additional fee
type pursuant to § 1005.18(b)(2)(ix). Fee types for other methods
to reload funds, such as Electronic reload or Check reload, would
be counted in the total number of additional fee types and may be
required to be disclosed as additional fee types pursuant to §
1005.18(b)(2)(ix).
A. Electronic reload. Fees for reloading a prepaid
account through electronic methods. Fee variations within this fee
type may include fees for transferring funds from a consumer's bank
account via ACH, reloads conducted using a debit card or credit
card, and for incoming wire transfers.
B. Check reload. Fees for reloading a prepaid account
using checks. Fee variations within this fee type may include fees
for depositing checks at an ATM, depositing checks with a teller at
the financial institution's branch location, mailing checks to the
financial institution for deposit, and depositing checks using
remote deposit capture.
ii. Fee types related to withdrawals of funds. Fee types
for withdrawing funds from a prepaid account. Per purchase fees and
ATM withdrawal fees within the United States are fee types required
to be disclosed in the short form respectively pursuant to §
1005.18(b)(2)(ii) and (iii) and thus such fees are not counted in
the total number of additional fee types or disclosed as an
additional fee type pursuant to § 1005.18(b)(2)(ix). Fee types for
other methods to withdraw funds, such as Electronic withdrawal,
Teller withdrawal, Cash back at point of sale (POS), and Account
closure would be counted in the total of additional fee types and
may be required to be disclosed as additional fee types pursuant to
§ 1005.18(b)(2)(ix).
A. Electronic withdrawal. Fees for withdrawing funds from
a prepaid account through electronic methods other than an ATM. Fee
variations within this fee type may include fees for transferring
funds from the prepaid account to a consumer's bank account or
other destination.
B. Teller withdrawal. Fees for withdrawing funds from a
prepaid account in person with a teller at a bank or credit union.
Fee variations within this fee type may include fees for
withdrawing funds, whether at the financial institution's own
branch locations or at another bank or credit union.
C. Cash back at POS. Fees for withdrawing cash from a
prepaid account via cash back at a merchant's point-of-sale
terminal.
D. Account closure. Fees for closing out a prepaid
account, such as for a check refund. Fee variations within this fee
type may include fees for regular and expedited delivery of
close-out funds.
iii. Fee types related to international transactions. Fee
types for international transactions and ATM activity.
A. International ATM withdrawal. Fees for withdrawing
funds at an ATM outside the United States. This fee type does not
include fees for ATM withdrawals in the United States, as such fees
are required to be disclosed in the short form pursuant to §
1005.18(b)(2)(iii).
B. International ATM balance inquiry. Fees for balance
inquiries at an ATM outside the United States. This fee type does
not include fees for ATM balance inquiries in the United States, as
such fees are required to be disclosed in the short form pursuant
to § 1005.18(b)(2)(v).
C. International transaction (excluding ATM withdrawal and
balance inquiry). Fees for transactions outside the United
States. Fee variations within this fee type may include fees for
currency conversion, foreign exchange processing, and other charges
for transactions outside of the United States.
iv. Bill payment. Fees for bill payment services. Fee
variations within this fee type may include fees for ACH bill
payment, paper check bill payment, check cancellation, and
expedited delivery of paper check.
v. Person-to-person or card-to-card transfer of funds.
Fees for transferring funds from one prepaid account to another
prepaid account. Fee variations within this fee type may include
fees for transferring funds to another prepaid account within or
outside of a specified prepaid account program, transferring funds
to another cardholder within the United States or outside the
United States, and expedited transfer of funds.
vi. Paper checks. Fees for providing paper checks that
draw on the prepaid account. Fee variations within this fee type
may include fees for providing checks and associated shipping
costs. This does not include checks issued as part of a bill pay
service, which are addressed in comment 18(b)(2)(viii)(A)-2.iv
above.
vii. Stop payment. Fees for stopping payment of a
preauthorized transfer of funds.
viii. Fee types related to card services. Fee types for
card services.
A. Card replacement. Fees for replacing or reissuing a
prepaid card that has been lost, stolen, damaged, or that has
expired. Fee variations within this fee types may include fees for
replacing the card, regular or expedited delivery of the
replacement card, and international card replacement.
B. Secondary card. Fees for issuing an additional access
device assigned to a particular prepaid account.
C. Personalized card. Fees for customizing or
personalizing a prepaid card.
ix. Legal. Fees for legal process. Fee variations within
this fee type may include fees for garnishments, attachments,
levies, and other court or administrative orders against a prepaid
account.
3. Multiple service plans. Pursuant to §
1005.18(b)(2)(vi), a financial institution using the multiple
service plan short form disclosure pursuant to §
1005.18(b)(6)(iii)(B)(2) must disclose only the fee for
calling customer service via a live agent. Thus, pursuant to §
1005.18(b)(2)(viii), any charge for calling customer service via an
interactive voice response system must be counted in the total
number of additional fee types.
4. Consistency in additional fee type categorization. A
financial institution must use the same categorization of fee types
in the number of additional fee types disclosed pursuant to §
1005.18(b)(2)(viii) and in its determination of which additional
fee types to disclose pursuant to § 1005.18(b)(2)(ix).
18(b)(2)(viii)(B) Statement Directing Consumers to Disclosure of
Additional Fee Types
1. Statement clauses. Section 1005.18(b)(2)(viii)(B)
requires, if a financial institution makes a disclosure of
additional fee types pursuant to § 1005.18(b)(2)(ix), it must
include in the short form a statement directing consumers to that
disclosure, located after but on the same line of text as the
statement regarding the number of additional fee types required by
§ 1005.18(b)(2)(viii)(A), using the following clause or a
substantially similar clause: “Here are some of them:”. A financial
institution that makes no disclosure pursuant to §
1005.18(b)(2)(ix) may not include a disclosure pursuant to §
1005.18(b)(2)(viii)(B). The following examples provide guidance
regarding substantially similar clauses a financial institution may
use in certain circumstances to make its disclosures under §
1005.18(b)(2)(viii)(A) and (B):
i. A financial institution that has one additional fee type and
discloses that additional fee type pursuant to § 1005.18(b)(2)(ix)
might provide the statements required by § 1005.18(b)(2)(viii)(A)
and (B) together as: “We charge 1 other type of fee. It is:”.
ii. A financial institution that has five additional fee types
and discloses one of those additional fee types pursuant to §
1005.18(b)(2)(ix) might provide the statements required by §
1005.18(b)(2)(viii)(A) and (B) together as: “We charge 5 other
types of fees. Here is 1 of them:”.
iii. A financial institution that has two additional fee types
and discloses both of those fee types pursuant to §
1005.18(b)(2)(ix) might provide the statement required by §
1005.18(b)(2)(viii)(A) and (B) together as: “We charge 2 other
types of fees. They are:”.
18(b)(2)(ix) Disclosure of Additional Fee Types 18(b)(2)(ix)(A)
Determination of Which Additional Fee Types To Disclose
1. Number of fee types to disclose. Section
1005.18(b)(2)(ix)(A) requires disclosure of the two fee types that
generate the highest revenue from consumers for the prepaid account
program or across prepaid account programs that share the same fee
schedule during the time period provided in § 1005.18(b)(2)(ix)(D)
and (E), excluding the categories set forth in §
1005.18(b)(2)(ix)(A)(1) through (3). See comment
18(b)(2)(viii)(A)-2 for guidance on and examples of fee types. If a
prepaid account program has two fee types that satisfy the criteria
in § 1005.18(b)(2)(ix)(A), it must disclose both fees. If a prepaid
account program has three or more fee types that potentially
satisfy the criteria in § 1005.18(b)(2)(ix)(A), the financial
institution must disclose only the two fee types that generate the
highest revenue from consumers. See comment 18(b)(2)(ix)(B)-1 for
guidance regarding the disclosure of additional fee types for a
prepaid account with fewer than two fee types that satisfy the
criteria in § 1005.18(b)(2)(ix)(A).
2. Abbreviations. Commonly accepted or readily
understandable abbreviations may be used as needed for additional
fee types and fee variations disclosed pursuant to §
1005.18(b)(2)(ix). For example, to accommodate on one line in the
short form disclosure the additional fee types “international ATM
balance inquiry” or “person-to-person transfer of funds,” with or
without fee variations, a financial institution may choose to
abbreviate the fee type name as “Int'l ATM inquiry” or “P2P
transfer.”
3. Revenue from consumers. The revenue calculation for
the disclosure of additional fee types pursuant to §
1005.18(b)(2)(ix)(A) is based on fee types that the financial
institution may charge consumers with respect to the prepaid
account. The calculation excludes other revenue sources such as
revenue generated from interchange fees and fees paid by employers
for payroll card programs, government agencies for government
benefit programs, and other entities sponsoring prepaid account
programs for financial disbursements. It also excludes third-party
fees, unless they are imposed for services performed on behalf of
the financial institution.
4. Assessing revenue within and across prepaid account
programs to determine disclosure of additional fee types.
Pursuant to § 1005.18(b)(2)(ix)(A), the disclosure of the two fee
types that generate the highest revenue from consumers must be
determined for each prepaid account program or across prepaid
account programs that share the same fee schedule. Thus, if a
financial institution offers more than one prepaid account program,
unless the programs share the same fee schedule, the financial
institution must consider the fee revenue data separately for each
prepaid account program and not consolidate the fee revenue data
across prepaid account programs. Prepaid account programs are
deemed to have the same fee schedules if they charge the same fee
amounts, including offering the same fee waivers and fee reductions
for the same features. The following examples illustrate how to
assess revenue within and across prepaid account programs to
determine the disclosure of additional fee types:
i. Prepaid account programs with different fee schedules.
A financial institution offers multiple prepaid account programs
and each program has a different fee schedule. The financial
institution must consider the revenue from consumers for each
program separately; it may not consider the revenue from all of its
prepaid account programs together in determining the disclosure of
additional fee types for its programs.
ii. Prepaid account programs with identical fee
schedules. A financial institution offers multiple prepaid
account programs and they all share the same fee schedule. The
financial institution may consider the revenue across all of its
prepaid account programs together in determining the disclosure of
additional fee types for its programs.
iii. Prepaid account programs with both different fee
schedules and identical fee schedules. A financial institution
offers multiple prepaid account programs, some of which share the
same fee schedule. The financial institution may consider the
revenue across all prepaid account programs with identical fee
schedules in determining the disclosure of additional fee types for
those programs. The financial institution must separately consider
the revenue from each of the prepaid account programs with unique
fee schedules.
iv. Multiple service plan prepaid account programs. A
financial institution that discloses multiple service plans on a
short form disclosure as permitted by §
1005.18(b)(6)(iii)(B)(2) must consider revenue across all of
those plans in determining the disclosure of additional fee types
for that program. If, however, the financial institution instead is
disclosing the default service plan pursuant to §
1005.18(b)(6)(iii)(B)(1), the financial institution must
consider the revenue generated from consumers for the default
service plan only. See § 1005.18(b)(6)(iii)(B)(2) and
comment 18(b)(6)(iii)(B)(2)-1 for guidance on what
constitutes multiple service plans.
5. Exclusions. Once the financial institution has
calculated the fee revenue data for the prepaid account program or
across prepaid account programs that share the same fee schedule
during the appropriate time period, it must remove from
consideration the categories excluded pursuant to §
1005.18(b)(2)(ix)(A)(1) through (3) before
determining the fee types, if any, that generated the highest
revenue.
i. Exclusion for fee types required to be disclosed
elsewhere. Fee types otherwise required to be disclosed in or
outside the short form are excluded from the additional fee types
required to be disclosed pursuant to §
1005.18(b)(2)(ix)(A)(1). Thus, the following fee types are
excluded: Periodic fee, per purchase fee, ATM withdrawal fees (for
ATM withdrawals in the United States), cash reload fee, ATM balance
inquiry fees (for ATM balance inquiries in the United States),
customer service fees, and inactivity fee. However, while the cash
reload fee type is excluded, other reload fee types, such as
electronic reload and check reload, are not excluded under §
1005.18(b)(2)(ix)(A)(1) and thus may be disclosed as
additional fee types pursuant to § 1005.18(b)(2)(ix). Similarly,
while the fee types ATM withdrawal and ATM balance inquiry in the
United States are excluded, international ATM withdrawal and
international ATM balance inquiry fees are not excluded under §
1005.18(b)(2)(ix)(A)(1) and thus may be disclosed as
additional fee types pursuant to § 1005.18(b)(2)(ix). Also pursuant
to § 1005.18(b)(2)(ix)(A)(1), the purchase price and
activation fee, if any, required to be disclosed outside the short
form disclosure pursuant to § 1005.18(b)(5), are excluded from the
additional fee types required to be disclosed pursuant to §
1005.18(b)(2)(ix).
ii. De minimis exclusion. Any fee types that generated
less than 5 percent of the total revenue from consumers for the
prepaid account program or across prepaid account programs that
share the same fee schedule during the time period provided in §
1005.18(b)(2)(ix)(D) and (E) are excluded from the additional fee
types required to be disclosed pursuant to §
1005.18(b)(2)(ix)(A)(2). For example, for a particular
prepaid account program over the appropriate time period, bill
payment, check reload, and card replacement are the only fee types
that generated 5 percent or more of the total revenue from
consumers at, respectively, 15 percent, 10 percent, and 7 percent.
Two other fee types, legal fee and personalized card, generated
revenue below 1 percent of the total revenue from consumers. The
financial institution must disclose bill payment and check reload
as the additional fee types for that particular prepaid account
program because those two fee types generated the highest revenue
from consumers from among the categories not excluded from
disclosure as additional fee types. For a different prepaid account
program over the appropriate time period, bill payment is the only
fee type that generated 5 percent or more of the total revenue from
consumers. Two other fee types, check reload and card replacement,
each generated revenue below 5 percent of the total revenue from
consumers. The financial institution must disclose bill payment as
an additional fee type for that particular prepaid account program
because it is the only fee type that satisfies the criteria of §
1005.18(b)(2)(ix)(A). The financial institution may, but is not
required to, disclose either check reload or card replacement on
the short form as well, pursuant to § 1005.18(b)(2)(ix)(B).
See comment 18(b)(2)(ix)(B)-1.
iii. Exclusion for credit-related fees. Any finance
charges as described in Regulation Z, 12 CFR 1026.4(b)(11), imposed
in connection with a covered separate credit feature accessible by
a hybrid prepaid-credit card as defined in 12 CFR 1026.61, are
excluded from the additional fee types required to be disclosed
pursuant to § 1005.18(b)(2)(ix)(A)(3). Pursuant to §
1005.18(b)(2)(viii)(A)(2), such finance charges are also
excluded from the number of additional fee types disclosed.
18(b)(2)(ix)(B) Disclosure of Fewer Than Two Additional Fee Types
1. Disclosure of one or no additional fee types. The
following examples provide guidance on the additional fee types
disclosure pursuant to § 1005.18(b)(2)(ix)(B) for a prepaid account
with fewer than two fee types that satisfy the criteria in §
1005.18(b)(2)(ix)(A):
i. A financial institution has a prepaid account program with
only one fee type that satisfies the criteria in §
1005.18(b)(2)(ix)(A) and thus, pursuant to § 1005.18(b)(2)(ix)(A),
the financial institution must disclose that one fee type. The
prepaid account program has three other fee types that generate
revenue from consumers, but they do not exceed the de minimis
threshold or otherwise satisfy the criteria in §
1005.18(b)(2)(ix)(B). Pursuant to § 1005.18(b)(2)(ix)(B), the
financial institution is not required to make any additional
disclosure, but it may choose to disclose one of the three fee
types that do not meet the criteria in § 1005.18(b)(2)(ix)(A).
ii. A financial institution has a prepaid account program with
four fee types that generate revenue from consumers, but none
exceeds the de minimis threshold or otherwise satisfy the criteria
in § 1005.18(b)(2)(ix)(A). Pursuant to § 1005.18(b)(2)(ix)(B), the
financial institution is not required to make any disclosure, but
it may choose to disclose one or two of the fee types that do not
meet the criteria in § 1005.18(b)(2)(ix)(A).
2. No disclosure of finance charges as an additional fee
type. Pursuant to § 1005.18(b)(3)(vi), a financial institution
may not disclose any finance charges as a voluntary additional fee
disclosure under § 1005.18(b)(2)(ix)(B).
18(b)(2)(ix)(C) Fee Variations in Additional Fee Types
1. Two or more fee variations. Section
1005.18(b)(2)(ix)(C) specifies how to disclose additional fee types
with two fee variations, more than two fee variations, and for
multiple service plans pursuant to §
1005.18(b)(6)(iii)(B)(2). See comment 18(b)(2)(viii)(A)-2
for guidance on and examples of fee types and fee variations within
those fee types. The following examples illustrate how to disclose
two-tier fees and other fee variations in additional fee types:
i. Two fee variations with different fee amounts. A
financial institution charges a fee of $1 for providing a card
replacement using standard mail service and charges a fee of $5 for
providing a card replacement using expedited delivery. The
financial institution must calculate the total revenue generated
from consumers for all card replacements, both via standard mail
service and expedited delivery, during the required time period to
determine whether it is required to disclose card replacement as an
additional fee type pursuant to § 1005.18(b)(2)(ix). Because there
are only two fee variations for the fee type “card replacement,” if
card replacement is required to be disclosed as an additional fee
type pursuant to § 1005.18(b)(2)(ix)(A), the financial institution
must disclose both fee variations pursuant to §
1005.18(b)(2)(ix)(C). Thus, the financial institution would
disclose on the short form the fee type and two variations as “Card
replacement (regular or expedited delivery)” and the fee amount as
“$1.00 or $5.00”.
ii. More than two fee variations. A financial institution
offers two methods of bill payment - via ACH and paper check - and
offers two modes of delivery for bill payments made by paper check
- regular standard mail service and expedited delivery. The
financial institution charges $0.25 for bill pay via ACH, $0.50 for
bill pay via paper check sent by regular standard mail service, and
$3 for bill pay via paper check sent via expedited delivery. The
financial institution must calculate the total revenue generated
from consumers for all methods of bill pay and all modes of
delivery during the required time period to determine whether it
must disclose bill payment as an additional fee type pursuant to §
1005.18(b)(2)(ix). Because there are more than two fee variations
for the fee type “bill payment,” if bill payment is required to be
disclosed as an additional fee type pursuant to §
1005.18(b)(2)(ix)(A), the financial institution has two options for
the disclosure. The financial institution may disclose the highest
fee, $3, followed by a symbol, such as an asterisk, linked to a
statement explaining that the fee could be lower depending on how
and where the prepaid account is used, pursuant to §
1005.18(b)(3)(i). Thus, the financial institution would disclose on
the short form the fee type as “Bill payment” and the fee amount as
“$3.00*”. Alternatively, the financial institution may consolidate
the fee variations into two categories, such as regular delivery
and expedited delivery. In this case, the financial institution
would make this disclosure on the short form as: “Bill payment
(regular or expedited delivery)” and the fee amount as “$0.50* or
$3.00”.
iii. Two fee variations with like fee amounts. A
financial institution offers two methods of check reload for which
it charges a fee - depositing checks at an ATM and depositing
checks with a teller at the financial institution's branch
locations. There is a fee of $0.50 for both methods of check
deposit. The financial institution must calculate the total revenue
generated from both of these check reload methods during the
required time period to determine whether it must disclose this fee
type as an additional fee type pursuant to § 1005.18(b)(2)(ix).
Because the fee amounts are the same for the two methods of check
deposit, if the fee type is required to be disclosed as an
additional fee type, the financial institution's options for
disclosing this fee type in accordance with § 1005.18(b)(2)(ix)(C)
and (b)(3)(iii) include: “Check reload (ATM or teller check dep)”
and the fee amount as “$0.50” or “Check reload” and the fee amount
as “$0.50”.
iv. Multiple service plans. A financial institution
provides a short form disclosure for multiple service plans
pursuant to § 1005.18(b)(6)(iii)(B)(2). Notwithstanding that
an additional fee type has only two fee variations, a financial
institution must disclose the highest fee in accordance with §
1005.18(b)(3)(i).
2. One fee variation under a particular fee type. Section
1005.18(b)(2)(ix)(C) provides in part that, if a financial
institution only charges one fee under a particular fee type, the
financial institution must disclose the name of the additional fee
type and the fee amount; it may, but is not required to, disclose
also the name of the one fee variation, if any, for which the fee
amount is charged, in a format substantially similar to that used
to disclose the two-tier fees required by § 1005.18(b)(2)(v) and
(vi), except that the financial institution must disclose only the
one fee variation name and fee amount instead of two. For example,
a financial institution offers one method of electronic reload for
which it charges a fee - electronic reload conducted using a debit
card. The financial institution must calculate the total revenue
generated from consumers for the fee type electronic reload
(i.e., in this case, electronic reloads conducted using a
debit card) during the required time period to determine whether it
must disclose electronic reload as an additional fee type pursuant
to § 1005.18(b)(2)(ix). Because the financial institution only
charges one fee variation under the fee type electronic reload, if
this fee type is required to be disclosed as an additional fee
type, the financial institution has two options for disclosing this
fee type in accordance with § 1005.18(b)(2)(ix)(C): “Electronic
reload (debit card)” and the fee amount as “$1.00” or “Electronic
reload” and the fee amount as “$1.00”.
18(b)(2)(ix)(D) Timing of Initial Assessment of Additional Fee
Types Disclosure 18(b)(2)(ix)(D)(1) Existing Prepaid Account
Programs as of April 1, 2019
1. 24 month period with available data. Section
1005.18(b)(2)(ix)(D)(1) requires for a prepaid account
program in effect as of April 1, 2019 the financial institution
must disclose additional fee types based on revenue for a 24-month
period that begins no earlier than October 1, 2014. Thus, a prepaid
account program that was in existence as of April 1, 2019 must
assess its additional fee types disclosure from data collected
during a consecutive 24-month period that took place between
October 1, 2014 and April 1, 2019. For example, an existing prepaid
account program was first offered to consumers on January 1, 2012
and provides its first short form disclosure on April 1, 2019. The
earliest 24-month period from which that financial institution
could calculate its first additional fee types disclosure would be
from October 1, 2014 to September 30, 2016.
18(b)(2)(ix)(D)(2) Existing Prepaid Account Programs as of April 1,
2019 With Unavailable Data
1. 24 month period without available data. Section
1005.18(b)(2)(ix)(D)(2) requires that if a financial
institution does not have 24 months of fee revenue data for a
particular prepaid account program from which to calculate the
additional fee types disclosure in advance of April 1, 2019, the
financial institution must disclose the additional fee types based
on revenue it reasonably anticipates the prepaid account program
will generate over the 24-month period that begins on April 1,
2019. For example, a financial institution begins offering to
consumers a prepaid account program six months before April 1,
2019. Because the prepaid account program will not have 24 months
of fee revenue data prior to April 1, 2019, pursuant to §
1005.18(b)(2)(ix)(D)(2) the financial institution must
disclose the additional fee types it reasonably anticipates the
prepaid account program will generate over the 24-month period that
begins on April 1, 2019. The financial institution would take into
account the data it had accumulated at the time of its calculation
to arrive at the reasonably anticipated additional fee types for
the prepaid account program.
18(b)(2)(ix)(E) Timing of Periodic Reassessment and Update of
Additional Fee Types Disclosure 18(b)(2)(ix)(E)(2) Periodic
Reassessment
1. Periodic reassessment and, if applicable, update of
additional fee types disclosure. Pursuant to §
1005.18(b)(2)(ix)(E)(2), a financial institution must
reassess whether its previously disclosed additional fee types
continue to comply with the requirements of § 1005.18(b)(2)(ix)
every 24 months based on revenue for the previous 24-month period.
The financial institution must complete this reassessment and
update its disclosure, if applicable, within three months of the
end of the 24-month period, except as provided in the update
printing exception in § 1005.18(b)(2)(ix)(E)(4). The
following examples provide guidance on the periodic assessment and,
if applicable, update of the disclosure of additional fee types
pursuant to § 1005.18(b)(2)(ix)(E)(2):
i. Reassessment with no change in the additional fee types
disclosed. A financial institution disclosed two additional fee
types (bill payment and card replacement) for a particular prepaid
account program on April 1, 2019. Starting on April 1, 2021, the
financial institution assessed the fee revenue data it collected
over the previous 24 months, and the two additional fee types
previously disclosed continue to qualify as additional fee types
pursuant to § 1005.18(b)(2)(ix). The financial institution is not
required to take any action with regard to the disclosure of
additional fee types for that prepaid account program.
ii. Reassessment with a change in the additional fee types
disclosed. A financial institution disclosed two additional fee
types (bill payment and card replacement) for a particular prepaid
account program on April 1, 2019. Starting on April 1, 2021, the
financial institution assessed the fee revenue data it collected
over the previous 24 months, and bill payment continued to qualify
as an additional fee type pursuant to § 1005.18(b)(2)(ix) but check
reload qualified as the second additional fee type instead of card
replacement. The financial institution must update the additional
fee types disclosure in its short form disclosures provided
electronically, orally, and in writing (other than for printed
materials that qualify for the update printing exception in §
1005.18(b)(2)(ix)(E)(4)) no later than July 1, 2021, which
is three months after the end of the 24-month period.
iii. Reassessment with the addition of an additional fee type
already voluntarily disclosed. A financial institution
disclosed one additional fee type (bill payment) and voluntarily
disclosed one other additional fee type (card replacement, both for
regular and expedited delivery) for a particular prepaid account
program on April 1, 2019. Starting on April 1, 2021, the financial
institution assessed the fee revenue data it collected over the
previous 24 months, and bill payment continued to qualify as an
additional fee type pursuant to § 1005.18(b)(2)(ix) and card
replacement now qualified as the second additional fee type.
Because the financial institution already had disclosed its card
replacement fees in the format required for an additional fee type
disclosure, the financial institution is not required to take any
action with regard to the additional fee types disclosure in the
short form for that prepaid account program.
2. Reassessment more frequently than every 24 months.
Pursuant to § 1005.18(b)(2)(ix)(E)(2), a financial
institution may, but is not required to, carry out the reassessment
and update, if applicable, more frequently than every 24 months, at
which time a new 24-month period commences. A financial institution
may choose to do this, for example, to sync its reassessment
process for additional fee types with its financial reporting
schedule or other financial analysis it performs regarding the
particular prepaid account program. If a financial institution
chooses to reassess its additional fee types disclosure more
frequently than every 24 months, it is still required to use 24
months of fee revenue data to conduct the reassessment. For
example, a financial institution first offered a particular prepaid
account program on April 1, 2018 and thus was required to estimate
its initial additional fee types disclosure pursuant to §
1005.18(b)(2)(ix)(D)(2). If the financial institution
chooses to begin its reassessment of its fee revenue data on April
1, 2020, it would use the data it collected over the previous 24
months (April 1, 2018 to March 31, 2020) and complete its
reassessment and its update, if applicable, by July 1, 2020.
18(b)(2)(ix)(E)(3) Fee Schedule Change
1. Revised prepaid account programs. Section
1005.18(b)(2)(ix)(E)(3) requires that if a financial
institution revises the fee schedule for a prepaid account program,
it must determine whether it reasonably anticipates that the
previously disclosed additional fee types will continue to comply
with the requirements of § 1005.18(b)(2)(ix) for the 24 months
following implementation of the fee schedule change. A fee schedule
change resets the 24-month period for assessment; a financial
institution must comply with the requirements of §
1005.18(b)(2)(ix)(E)(2) at the end of the 24-month period
following implementation of the fee schedule change. If the
financial institution reasonably anticipates that the previously
disclosed additional fee types will not comply with the
requirements of § 1005.18(b)(2)(ix), it must update the disclosure
based on its reasonable anticipation of what those additional fee
types will be at the time the fee schedule change goes into effect,
except as provided in the update printing exception in §
1005.18(b)(2)(ix)(E)(4). For example, if a financial
institution lowers its card replacement fee from $4 to $3 on June
1, 2019 after having first assessed its additional fee types
disclosure as of April 1, 2019, the financial institution would
assess whether it reasonably anticipates that the existing
additional fee types disclosure will continue to reflect the
additional fee types that generate the highest revenue from
consumers for that prepaid account program for the next 24 months
(until June 1, 2021). If the financial institution reasonably
anticipates that its additional fee types will remain unchanged
over the next 24 months, the financial institution is not required
to take any action with regard to the additional fee types
disclosure for that prepaid account program. In the same example,
if the financial institution reasonably anticipates that the
previously disclosed additional fee types will not comply with the
requirements of § 1005.18(b)(2)(ix) for the 24 months following
implementation of the fee schedule change, the financial
institution must update the listing of additional fee types at the
time the fee schedule change goes into effect, except as provided
in the update printing exception pursuant to §
1005.18(b)(2)(ix)(E)(4).
18(b)(2)(ix)(E)(4) Update Printing Exception
1. Application of the update printing exception to prepaid
accounts sold in retail locations. Pursuant to §
1005.18(b)(2)(ix)(E)(4), notwithstanding the requirements to
update the additional fee types disclosure in §
1005.18(b)(2)(ix)(E), a financial institution is not required to
update the listing of additional fee types that are provided on,
in, or with prepaid account packaging materials that were
manufactured, printed, or otherwise produced prior to a periodic
reassessment and update pursuant to §
1005.18(b)(2)(ix)(E)(2) or prior to a fee schedule change
pursuant to § 1005.18(b)(2)(ix)(E)(3). For prepaid accounts
sold in retail locations, for example, §
1005.18(b)(2)(ix)(E)(4) permits a financial institution to
implement any necessary updates to the listing of the additional
fee types on the short form disclosure that appear on its physical
prepaid account packaging materials at the time the financial
institution prints new materials. Section
1005.18(b)(2)(ix)(E)(4) does not require financial
institutions to destroy existing inventory in retail locations or
elsewhere in the distribution channel, to the extent the
disclosures on such packaging materials are otherwise accurate, to
comply with this requirement. For example, a financial institution
determines that an additional fee type listed on a short form
disclosure in a retail location no longer qualifies as an
additional fee type pursuant to § 1005.18(b)(2)(ix). The financial
institution must update any electronic and oral short form
disclosures pursuant to the timing requirements set forth in §
1005.18(b)(2)(ix)(E). Pursuant to § 1005.18(b)(2)(ix)(E)(4),
the financial institution may continue selling any previously
printed prepaid account packages that contain the prior listing of
additional fee types; prepaid account packages printed after that
time must contain the updated listing of additional fee types.
18(b)(2)(x) Statement Regarding Overdraft Credit Features
1. Short form disclosure when overdraft credit feature may be
offered. Section 1005.18(b)(2)(x) requires disclosure of a
statement if a covered separate credit feature accessible by a
hybrid prepaid-credit card as defined in Regulation Z, 12 CFR
1026.61, may be offered at any point to a consumer in connection
with the prepaid account. This statement must be provided on the
short form disclosures for all prepaid accounts that may offer such
a feature, regardless of whether some consumers may never be
solicited or qualify to enroll in such a feature.
18(b)(2)(xi) Statement Regarding Registration and FDIC or NCUA
Insurance
1. Disclosure of FDIC or NCUA insurance. Section
1005.18(b)(2)(xi) requires a statement regarding the prepaid
account program's eligibility for FDIC deposit insurance or NCUA
share insurance, as appropriate, and directing the consumer to
register the prepaid account for insurance and other account
protections, where applicable. If the consumer's prepaid account
funds are held at a credit union, the disclosure must indicate NCUA
insurance eligibility. If the consumer's prepaid account funds are
held at a financial institution other than a credit union, the
disclosure must indicate FDIC insurance eligibility.
2. Consumer identification and verification processes.
For additional guidance on the timing of consumer identification
and verification processes, and on prepaid account programs for
which there is no consumer identification and verification process
for any prepaid accounts within the prepaid account program, see §
1005.18(e)(3) and comments 18(e)-4 through 6.
18(b)(2)(xiii) Statement Regarding Information on All Fees and
Services
1. Financial institution's telephone number. For a
financial institution offering prepaid accounts at a retail
location pursuant to the retail location exception in §
1005.18(b)(1)(ii), the statement required by § 1005.18(b)(2)(xiii)
must also include a telephone number (and the website URL) that a
consumer may use to directly access an oral version of the long
form disclosure. To provide the long form disclosure by telephone,
a financial institution could use a live customer service agent or
an interactive voice response system. The financial institution
could use a telephone number specifically dedicated to providing
the long form disclosure or a more general customer service
telephone number for the prepaid account program. For example, a
financial institution would be deemed to provide direct access
pursuant to § 1005.18(b)(2)(xiii) if a consumer navigates one or
two prompts to reach the oral long form disclosure via a live
customer service agent or an interactive voice response system
using either a specifically dedicated telephone number of a more
general customer service telephone number.
2. Financial institution's website. For a financial
institution offering prepaid accounts at a retail location pursuant
to the retail location exception in § 1005.18(b)(1)(ii), the
statement required by § 1005.18(b)(2)(xiii) must also include a
website URL (and a telephone number) that a consumer may use to
directly access an electronic version of the long form disclosure.
For example, a financial institution that requires a consumer to
navigate various other web pages before viewing the long form
disclosure would not be deemed to provide direct access pursuant to
§ 1005.18(b)(2)(xiii). Trademark and product names and their
commonly accepted or readily understandable abbreviations comply
with the requirement in § 1005.18(b)(2)(xiii) that the URL be
meaningfully named. For example, ABC or ABCard would be readily
understandable abbreviations for a prepaid account program named
the Alpha Beta Card.
18(b)(2)(xiv) Additional Content for Payroll Card Accounts
18(b)(2)(xiv)(A) Statement Regarding Wage or Salary Payment Options
1. Statement options for payroll card accounts. Section
1005.18(b)(2)(xiv)(A) requires a financial institution to include
at the top of the short form disclosure for payroll card accounts,
above the information required by § 1005.18(b)(2)(i) through (iv),
one of two statements regarding wage payment options. Financial
institutions offering payroll card accounts may choose which of the
two statements required by § 1005.18(b)(2)(xiv)(A) to use in the
short form disclosure. The list of other options required in the
second statement might include the following, as applicable: Direct
deposit to the consumer's bank account, direct deposit to the
consumer's own prepaid account, paper check, or cash. A financial
institution may, but is not required to, provide more specificity
as to whom consumers must ask or inform of their choice of wage
payment method, such as specifying the employer's Human Resources
Department.
2. Statement options for government benefit accounts. See
§ 1005.15(c)(2)(i) for statement options for government benefit
accounts.
3. Statement permitted for other prepaid accounts. A
financial institution offering a prepaid account other than a
payroll card account or government benefit account may, but is not
required to, include a statement in the short form disclosure
regarding payment options that is similar to either of the
statements required for payroll card accounts pursuant to §
1005.18(b)(2)(xiv)(A) or government benefit accounts pursuant to §
1005.15(c)(2)(i). For example, a financial institution issuing a
prepaid account to disburse student financial aid proceeds may
disclose a statement such as the following: “You have several
options to receive your financial aid payments: Direct deposit to
your bank account, direct deposit to your own prepaid card, paper
check, or this prepaid card. Tell your school which option you
choose.”
18(b)(2)(xiv)(B) Statement Regarding State-Required Information or
Other Fee Discounts and Waivers
1. Statement options for state-required information or other
fee discounts or waivers. Section 1005.18(b)(2)(xiv)(B)
permits, but does not require, a financial institution to include
in the short form disclosure for payroll card accounts one
additional line of text directing the consumer to a particular
location outside the short form disclosure for information on ways
the consumer may access payroll card account funds and balance
information for free or for a reduced fee. For example, a financial
institution might include the following line of text in the short
form disclosure: “See below for free ways to access your funds and
balance information” and then list below, but on the same page as,
the short form disclosure several ways consumers can access their
prepaid account funds and balance information for free.
Alternatively, the financial institution might direct the consumer
to another location for that information, such as by stating “See
the cardholder agreement for free ways to access your funds and
balance information.” A similar statement is permitted for
government benefit accounts pursuant to § 1005.15(c)(2)(ii).
18(b)(3) Short Form Disclosure of Variable Fees and Third-Party
Fees and Prohibition on Disclosure of Finance Charges 18(b)(3)(i)
General Disclosure of Variable Fees
1. Short form disclosure of variable fees. Section
1005.18(b)(3)(i) requires disclosure in the short form of the
highest fee when a fee can vary, followed by a symbol, such as an
asterisk, linked to a statement explaining that the fee could be
lower depending on how and where the prepaid account is used. For
example, a financial institution provides interactive voice
response (IVR) customer service for free and provides the first
three live agent customer service calls per month for free, after
which it charges $0.50 for each additional live agent customer
service call during that month. Pursuant to § 1005.18(b)(2)(vi),
the financial institution must disclose both its IVR and live agent
customer service fees on the short form disclosure. The financial
institution would disclose the IVR fee as $0 and the live agent
customer service fee as $0.50, followed by an asterisk (or other
symbol) linked to a statement explaining that the fee can be lower
depending on how and where the prepaid account is used. Except as
described in § 1005.18(b)(3)(ii), § 1005.18(b)(3)(i) does not
permit a financial institution to describe in the short form
disclosure the specific conditions under which a fee may be reduced
or waived, but the financial institution could use, for example,
any other part of the prepaid account's packaging or other printed
materials to disclose that information. The conditions under which
a fee may be lower are required to be disclosed in the long form
disclosure pursuant to § 1005.18(b)(4)(ii).
18(b)(3)(ii) Disclosure of Variable Periodic Fee
1. Periodic fee variation alternative. If the amount of
the periodic fee disclosed in the short form pursuant to §
1005.18(b)(2)(i) could vary, a financial institution has two
alternatives for disclosing the variation, as set forth in §
1005.18(b)(3)(i) and (ii). For example, a financial institution
charges a monthly fee of $4.95, but waives this fee if a consumer
receives direct deposit into the prepaid account or conducts 30 or
more transactions during that month. Pursuant to §
1005.18(b)(3)(ii), the financial institution could list its monthly
fee of $4.95 on the short form disclosure followed by a dagger
symbol that links to a statement that states, for example, “No
monthly fee with direct deposit or 30 transactions per month.” This
statement may take up no more than one line of text in the short
form disclosure and must be located directly above or in place of
the linked statement required by § 1005.18(b)(3)(i). Alternatively,
pursuant to § 1005.18(b)(3)(i), the financial institution could
list its monthly fee of $4.95 on the short form disclosure followed
by an asterisk that links to a statement that states, “This fee can
be lower depending on how and where this card is used.”
18(b)(3)(iii) Single Disclosure for Like Fees
1. Alternative for two-tier fees in the short form
disclosure. Pursuant to § 1005.18(b)(3)(iii), a financial
institution may opt to disclose one fee instead of the two fees
required by § 1005.18(b)(2)(iii), (v), and (vi) and any two-tier
fee required by § 1005.18(b)(2)(ix), when the amount is the same
for both fees. The following examples illustrate how to provide a
single disclosure for like fees on both the short form disclosure
and the multiple service plan short form disclosure:
i. A financial institution charges $1 for both in-network and
out-of-network automated teller machine withdrawals in the United
States. The financial institution may list the $1 fee once under
the general heading “ATM withdrawal” required by §
1005.18(b)(2)(iii); in that case, it need not disclose the terms
“in-network” or “out-of-network.”
ii. A financial institution using the multiple service plan
short form disclosure pursuant to § 1005.18(b)(6)(iii)(B)(2)
charges $1 under each of its service plans for both in-network and
out-of-network automated teller machine withdrawals in the United
States. The financial institution may disclose the ATM withdrawal
fee on one line, instead of two, using the general heading “ATM
withdrawal” required by § 1005.18(b)(2)(iii); in that case, it need
not disclose the terms “in-network” or “out-of-network.”
18(b)(3)(iv) Third-Party Fees in General
1. General prohibition on disclosure of third-party fees in
the short form. Section 1005.18(b)(3)(iv) states that a
financial institution may not include any third-party fees in a
disclosure made pursuant to § 1005.18(b)(2), except for, as
provided by § 1005.18(b)(3)(v), the cash reload fee required to be
disclosed by § 1005.18(b)(2)(iv). Fees imposed by another party,
such as a program manager, for services performed on behalf of the
financial institution are not third-party fees and therefore must
be disclosed pursuant to § 1005.18(b)(3)(iv). For example, if a
program manager performs customer service functions for a financial
institution's prepaid account program, and charges a fee for live
agent customer service, that fee must be disclosed pursuant to §
1005.18(b)(2)(iv).
18(b)(3)(v) Third-Party Cash Reload Fees
1. Updating third-party fees. Section 1005.18(b)(3)(v)
provides that a financial institution is not required to revise its
short form disclosure to reflect a cash reload fee change by a
third party until such time that the financial institution
manufactures, prints, or otherwise produces new prepaid account
packaging materials or otherwise updates the short form disclosure.
For example, at the time a financial institution first prints
packaging material for its prepaid account program, it discloses on
the short form the $3.99 fee charged by the third-party reload
network with which it contracts to provide cash reloads. Ten months
later, the third-party reload network raises its cash reload fee to
$4.25. The financial institution is not required to update its
on-package disclosures to reflect the change in the cash reload fee
until the financial institution next prints packaging materials for
that prepaid account program. With respect to that financial
institution's electronic and oral disclosures for that prepaid
account program, the financial institution may, but is not required
to, update its short form disclosure immediately upon learning of
the third-party reload network's change to its cash reload fee.
Alternatively, the financial institution may wait to update its
electronic and oral short form disclosures to reflect the change in
the cash reload fee until it otherwise updates those
disclosures.
18(b)(3)(vi) Prohibition on Disclosure of Finance Charges
1. No disclosure of finance charges in the short form.
Section 1005.18(b)(3)(vi) provides that a financial institution may
not include in a disclosure made pursuant to § 1005.18(b)(2)(i)
through (ix) any finance charges as described in Regulation Z, 12
CFR 1026.4(b)(11), imposed in connection with a covered separate
credit feature accessible by a hybrid prepaid-credit card as
defined in 12 CFR 1026.61. If a financial institution imposes a
higher fee or charge on the asset feature of a prepaid account with
a covered separate credit feature accessible by a hybrid
prepaid-credit card than the amount of a comparable fee or charge
it imposes on any prepaid account in the same prepaid account
program that does not have such a credit feature, it must disclose
on the short form for purposes of § 1005.18(b)(2)(i) through (vii)
and (ix) the amount of the comparable fee rather than the higher
fee. See, e.g., § 1005.18(g)(2) and related commentary.
18(b)(4) Long Form Disclosure Content 18(b)(4)(ii) Fees
1. Disclosure of all fees. Section 1005.18(b)(4)(ii)
requires a financial institution to disclose in the long form all
fees that may be imposed in connection with a prepaid account, not
just fees for electronic fund transfers or the right to make
transfers. The requirement to disclose all fees in the long form
includes any finance charges imposed on the prepaid account as
described in Regulation Z, 12 CFR 1026.4(b)(11)(ii), in connection
with a covered separate credit feature accessible by a hybrid
prepaid-credit card as defined in 12 CFR 1026.61 but does not
include finance charges imposed on the covered separate credit
feature as described in 12 CFR 1026.4(b)(11)(i). See comment
18(b)(7)(i)(B)-2 for guidance on disclosure of finance charges as
part of the § 1005.18(b)(4)(ii) fee disclosure in the long form. A
financial institution may also be required to include finance
charges in the Regulation Z disclosures required pursuant to §
1005.18(b)(4)(vii).
2. Disclosure of conditions. Section 1005.18(b)(4)(ii)
requires a financial institution to disclose the amount of each fee
and the conditions, if any, under which the fee may be imposed,
waived, or reduced. For example, if a financial institution charges
a cash reload fee, the financial institution must list the amount
of the cash reload fee and also specify any circumstances under
which a consumer can qualify for a lower fee. Similarly, if a
financial institution discloses both a periodic fee and an
inactivity fee, it must indicate whether the inactivity fee will be
charged in addition to, or instead of, the periodic fee. A
financial institution may, but is not required to, also include on
the long form disclosure additional information or limitations
related to the service or feature for which a fee is charged, such
as, for cash reloads, any limit on the amount of cash a consumer
may load into the prepaid account in a single transaction or during
a particular time period. The general requirement in §
1005.18(b)(4)(ii) does not apply to individual fee waivers or
reductions granted to a particular consumer or group of consumers
on a discretionary or case-by-case basis.
3. Disclosure of a service or feature without a charge.
Pursuant to § 1005.18(b)(4)(ii), a financial institution may, but
is not required to, list in the long form disclosure any service or
feature it provides or offers at no charge to the consumer. For
example, a financial institution may list “online bill pay” in its
long form disclosure and indicate a fee amount of “$0” when the
financial institution does not charge consumers a fee for that
feature. By contrast, where a fee is waived or reduced under
certain circumstances or where a service or feature is available
for an introductory period without a fee, the financial institution
may not list the fee amount as “$0”. Rather, the financial
institution must list the highest fee, accompanied by an
explanation of the waived or reduced fee amount and any conditions
for the waiver or discount. For example, if a financial institution
waives its monthly fee for any consumer who receives direct deposit
payments into the prepaid account or conducts 30 or more
transactions in a given month, the long form disclosure must list
the regular monthly fee amount along with an explanation that the
monthly fee is waived if the consumer receives direct deposit or
conducts 30 or more transactions each month. Similarly, for an
introductory fee, the financial institution would list the highest
fee, and explain the introductory fee amount, the duration of the
introductory period, and any conditions that apply during the
introductory period.
4. Third-party fees. Section 1005.18(b)(4)(ii) requires
disclosure in the long form of any third-party fee amounts known to
the financial institution that may apply. Fees imposed by another
party, such as a program manager, for services performed on behalf
of the financial institution are not third-party fees and therefore
must be disclosed on the long form pursuant to § 1005.18(b)(4)(ii).
Also pursuant to § 1005.18(b)(4)(ii), for any third-party fee
disclosed, a financial institution may, but is not required to,
include either or both a statement that the fee is accurate as of
or through a specific date or that the third-party fee is subject
to change. For example, a financial institution that contracts with
a third-party remote deposit capture service must include in the
long form disclosure the amount of the fee known to the financial
institution that is charged by the third party for remote deposit
capture services. The financial institution may, but is not
required to, also state that the third-party remote deposit capture
fee is accurate as of or through a specific date, such as the date
the financial institution prints the long form disclosure. The
financial institution may also state that the fee is subject to
change. Section 1005.18(b)(4)(ii) also provides that, if a
third-party fee may apply but the amount of the fee is not known by
the financial institution, it must include a statement indicating
that a third-party fee may apply without specifying the fee amount.
For example, a financial institution that permits out-of-network
ATM withdrawals would disclose that, for ATM withdrawals that occur
outside the financial institution's network, the ATM operator may
charge the consumer a fee for the withdrawal, but the financial
institution is not required to disclose the out-of-network ATM
operator's fee amount if it does not know the amount of the
fee.
18(b)(4)(iii) Statement Regarding Registration and FDIC or NCUA
Insurance
1. Statement regarding registration and FDIC or NCUA
insurance, including implications thereof. Section
1005.18(b)(4)(iii) requires that the long form disclosure include
the same statement regarding prepaid account registration and FDIC
or NCUA insurance eligibility required by § 1005.18(b)(2)(xi) in
the short form disclosure, together with an explanation of FDIC or
NCUA insurance coverage and the benefit of such coverage or the
consequence of the lack of such coverage, as applicable.
i. Bank disclosure of FDIC insurance. For example, XYZ
Bank offers a prepaid account program for sale at retail locations
that is set up to be eligible for FDIC deposit insurance, but does
not conduct consumer identification and verification before
consumers purchase the prepaid account. XYZ Bank may disclose the
required statements as “Register your card for FDIC insurance
eligibility and other protections. Your funds will be held at or
transferred to XYZ Bank, an FDIC-insured institution. Once there,
your funds are insured up to $250,000 by the FDIC in the event XYZ
Bank fails, if specific deposit insurance requirements are met and
your card is registered. See
fdic.gov/deposit/deposits/prepaid.html for details.”
Conversely, if XYZ Bank offers another prepaid account program for
sale at retail locations for which it conducts consumer
identification and verification after purchase of the prepaid
account, but the program is not set up to be eligible for FDIC
insurance, XYZ Bank may disclose the required statements as “Not
FDIC insured. Your funds will be held at or transferred to XYZ
Bank. If XYZ Bank fails, you are not protected by FDIC deposit
insurance and could lose some or all of your money. Register your
card for other protections.”
ii. Credit union disclosure of NCUA insurance. For
example, ABC Credit Union offers a prepaid account program for sale
at its own branches that is set up to be eligible for NCUA share
insurance, but does not conduct consumer identification and
verification before consumers purchase the prepaid account. ABC
Credit Union may disclose the requirement statements as “Register
your card for NCUA insurance, if eligible, and other protections.
Your funds will be held at or transferred to ABC Credit Union, an
NCUA-insured institution. Once there, if specific share insurance
requirements are met and your card is registered, your funds are
insured up to $250,000 by the NCUA in the event ABC Credit Union
fails.” See comment 18(b)(2)(xi)-1 for guidance as to when NCUA
insurance coverage should be disclosed instead of FDIC insurance
coverage.
18(b)(4)(vii) Regulation Z Disclosures for Overdraft Credit
Features
1. Long form Regulation Z disclosure of overdraft credit
features. Section 1005.18(b)(4)(vii) requires that the long
form include the disclosures described in Regulation Z, 12 CFR
1026.60(e)(1), in accordance with the requirements for such
disclosures in 12 CFR 1026.60, if, at any point, a covered separate
credit feature accessible by a hybrid prepaid-credit card as
defined in Regulation Z, 12 CFR 1026.61, may be offered to a
consumer in connection with the prepaid account. If the financial
institution includes the disclosures described in Regulation Z, 12
CFR 1026.60(e)(1), pursuant to § 1005.18(b)(7)(i)(B), such
disclosures must appear below the statements required by §
1005.18(b)(4)(vi). If the disclosures provided pursuant to
Regulation Z, 12 CFR 1026.60(e)(1), are provided in writing, these
disclosures must be provided in the form required by 12 CFR
1026.60(a)(2), and to the extent possible, on the same page as the
other disclosures required by § 1005.18(b)(4).
2. Updates to the long form for changes to the Regulation Z
disclosures. Pursuant to § 1005.18(b)(4)(vii), a financial
institution is not required to revise the disclosure required by
that paragraph to reflect a change in the fees or other terms
disclosed therein until such time as the financial institution
manufactures, prints, or otherwise produces new prepaid account
packaging materials or otherwise updates the long form disclosure.
This exception does not extend to any finance charges imposed on
the prepaid account as described in Regulation Z, 12 CFR
1026.4(b)(11)(ii), in connection with a covered separate credit
feature accessible by a hybrid prepaid-credit card as defined in 12
CFR 1026.61 that are required to be disclosed on the long form
pursuant to § 1005.18(b)(4)(ii). See comment
18(b)(4)(ii)-1.
18(b)(5) Disclosure Requirements Outside the Short Form Disclosure
1. Content of disclosure. Section 1005.18(b)(5) requires
that the name of the financial institution, the name of the prepaid
account program, and any purchase price or activation fee for the
prepaid account be disclosed outside the short form disclosure. A
financial institution may, but is not required to, also disclose
the name of the program manager or other service provider involved
in the prepaid account program.
2. Location of disclosure. In addition to setting forth
the required content for disclosures outside the short form
disclosure, § 1005.18(b)(5) requires that, in a setting other than
a retail location, the information required by § 1005.18(b)(5) must
be disclosed in close proximity to the short form. For example, if
the financial institution provides the short form disclosure
online, the information required by § 1005.18(b)(5) is deemed
disclosed in close proximity to the short form if it appears on the
same web page as the short form disclosure. If the financial
institution offers the prepaid account in its own branch locations
and provides the short form disclosure on the exterior of its
preprinted packaging materials, the information required by §
1005.18(b)(5) is deemed disclosed in close proximity to the short
form disclosure if it appears on the exterior of the packaging. If
the financial institution provides a written short form disclosure
in a manner other than on preprinted packaging materials, such as
on paper, the information required by § 1005.18(b)(5) is deemed
disclosed in close proximity if it appears on the same piece of
paper as the short form disclosure. If the financial institution
provides the short form disclosure orally, the information required
by § 1005.18(b)(5) is deemed disclosed in close proximity to the
short form disclosure if it is provided immediately before or after
disclosing the fees and information required pursuant to §
1005.18(b)(2). For prepaid accounts sold in a retail location
pursuant to the retail location exception in § 1005.18(b)(1)(ii), §
1005.18(b)(5) requires the information other than purchase price be
disclosed on the exterior of the access device's packaging
material. If the purchase price, if any, is not also disclosed on
the exterior of the packaging, disclosure of the purchase price on
or near the sales rack or display for the packaging material is
deemed in close proximity to the access device's packaging
material.
18(b)(6) Form of Pre-Acquisition Disclosures 18(b)(6)(i) General
1. Written pre-acquisition disclosures. If a financial
institution provides the disclosures required by § 1005.18(b) in
written form prior to acquisition pursuant to § 1005.18(b)(1)(i),
they need not also be provided electronically or orally. For
example, an employer distributes to new employees printed copies of
the disclosures required by § 1005.18(b) for a payroll card
account, together with instructions to complete the payroll card
account acquisition process online if the employee wishes to be
paid via a payroll card account. The financial institution is not
required to provide the § 1005.18(b) disclosures electronically via
the website because the consumer has already received the
disclosures pre-acquisition in written form.
18(b)(6)(i)(B) Electronic Disclosures
1. Providing pre-acquisition disclosures electronically.
Unless provided in written form prior to acquisition pursuant to §
1005.18(b)(1)(i), § 1005.18(b)(6)(i)(B) requires electronic
delivery of the disclosures required by § 1005.18(b) when a
consumer acquires a prepaid account through electronic means,
including via a website or mobile application, and, among other
things, in a manner which is reasonably expected to be accessible
in light of how a consumer is acquiring the prepaid account. For
example, if a consumer is acquiring a prepaid account via a website
or mobile application, it would be reasonable to expect that a
consumer would be able to access the disclosures required by §
1005.18(b) on the first page or via a direct link from the first
page of the website or mobile application or on the first page that
discloses the details about the specific prepaid account program.
See comment 18(b)(1)(i)-2 for additional guidance on placement of
the short form and long form disclosures on a web page.
2. Disclosures responsive to smaller screens. In
accordance with the requirement in § 1005.18(b)(6)(i)(B) that
electronic disclosures be provided in a responsive form, electronic
disclosures provided pursuant to § 1005.18(b) must be provided in a
way that responds to different screen sizes, for example, by
stacking elements of the disclosures in a manner that accommodates
consumer viewing on smaller screens, while still meeting the other
formatting requirements set forth in § 1005.18(b)(7). For example,
the disclosures permitted by § 1005.18(b)(2)(xiv)(B) or (b)(3)(ii)
must take up no more than one additional line of text in the short
form disclosure. If a consumer is acquiring a prepaid account using
a mobile device with a screen too small to accommodate these
disclosures on one line of text in accordance with the size
requirements set forth in § 1005.18(b)(7)(ii)(B), a financial
institution is permitted to display the disclosures permitted by §
1005.18(b)(2)(xiv)(B) and (b)(3)(ii), for example, by stacking
those disclosures in a way that responds to smaller screen sizes,
while still meeting the other formatting requirements in §
1005.18(b)(7).
3. Machine-readable text. Section 1005.18(b)(6)(i)(B)
requires that electronic disclosures must be provided using
machine-readable text that is accessible via both Web browsers (or
mobile applications, as applicable) and screen readers. A
disclosure would not be deemed to comply with this requirement if
it was not provided in a form that can be read automatically by
internet search engines or other computer systems.
18(b)(6)(i)(C) Oral Disclosures
1. Disclosures for prepaid accounts acquired by
telephone. Unless it provides disclosures in written form prior
to acquisition pursuant to § 1005.18(b)(1)(i), a financial
institution must disclose the information required by §
1005.18(b)(2) and (5) orally before a consumer acquires a prepaid
account orally by telephone pursuant to the exception in §
1005.18(b)(1)(iii). A financial institution may, for example,
provide these disclosures by using an interactive voice response or
similar system or by using a customer service agent, after the
consumer has initiated the purchase of a prepaid account by
telephone, but before the consumer acquires the prepaid account. In
addition, a financial institution must provide the initial
disclosures required by § 1005.7, as modified by § 1005.18(f)(1),
before the first electronic fund transfer is made involving the
prepaid account.
18(b)(6)(ii) Retainable Form
1. Retainable disclosures. Section 1005.18(b)(6)(ii)
requires that, except for disclosures provided orally pursuant to §
1005.18(b)(1)(ii) or (iii), long form disclosures provided via SMS
as permitted by § 1005.18(b)(2)(xiii) for a prepaid account sold at
retail locations pursuant to the retail location exception in §
1005.18(b)(1)(ii), and the disclosure of a purchase price pursuant
to § 1005.18(b)(5) that is not disclosed on the exterior of the
packaging material for a prepaid account sold at a retail location
pursuant to the retail location exception in § 1005.18(b)(1)(ii),
disclosures provided pursuant to § 1005.18(b) must be made in a
form that a consumer may keep. For example, a short form disclosure
with a tear strip running though it would not be deemed retainable
because use of the tear strip to gain access to the prepaid account
access device inside the packaging would destroy part of the short
form disclosure. Electronic disclosures are deemed retainable if
the consumer is able to print, save, and email the disclosures from
the Web site or mobile application on which they are displayed.
18(b)(6)(iii) Tabular Format 18(b)(6)(iii)(B) Multiple Service
Plans 18(b)(6)(iii)(B)(1) Short Form Disclosure for Default Service
Plan
1. Disclosure of default service plan excludes short-term or
promotional service plans. Section
1005.18(b)(6)(iii)(B)(1) provides that when a financial
institution offers multiple service plans within a particular
prepaid account program and each plan has a different fee schedule,
the information required by final § 1005.18(b)(2)(i) through (ix)
may be provided in the tabular format described in final §
1005.18(b)(6)(iii)(A) for the service plan in which a consumer is
initially enrolled by default upon acquiring a prepaid account.
Pursuant to the requirement in § 1005.18(b)(3)(i) to disclose the
highest amount a financial institution may impose for a fee
disclosed pursuant to § 1005.18(b)(2)(i) through (vii) and (ix), a
financial institution would not be permitted to disclose any
short-term or promotional service plans as a default service
plan.
18(b)(6)(iii)(B)(2) Short Form Disclosure for Multiple Service
Plans
1. Disclosure of multiple service plans. The multiple
service plan disclosure requirements in §
1005.18(b)(6)(iii)(B)(2) apply when a financial institution
offers more than one service plan within a particular prepaid
account program, each plan has a different fee schedule, and the
financial institution opts not to disclose the default service plan
pursuant to § 1005.18(b)(6)(iii)(B)(1). See Model
Form A-10(e). For example, a financial institution that offers a
prepaid account program with one service plan for which a consumer
pays no periodic fee but instead pays a fee for each transaction,
and another plan that includes a monthly fee but no per transaction
fee may use the short form disclosure for multiple service plans
pursuant to § 1005.18(b)(6)(iii)(B)(2). Similarly, a
financial institution that offers a prepaid account program with
preferred rates or fees for the prepaid accounts of consumers who
also use another non-prepaid service (e.g., a mobile phone
service), often referred to as “loyalty plans,” may also use the
short form disclosure for multiple service plans pursuant to §
1005.18(b)(6)(iii)(B)(2). Pricing variations based on
whether a consumer elects to use a specific feature of a prepaid
account, such as waiver of the monthly fee for consumers electing
to receive direct deposit, does not constitute multiple service
plans or a loyalty plan. See comment 18(b)(3)(iii)-1.ii for
guidance on providing a single disclosure for like fees for
multiple service plan short form disclosures.
18(b)(7) Specific Formatting Requirements for Pre-Acquisition
Disclosures 18(b)(7)(i) Grouping 18(b)(7)(i)(B) Long Form
Disclosure
1. Conditions must be in close proximity to fee amount.
Pursuant to § 1005.18(b)(4)(ii), the long form disclosure generally
must disclose all fees that may be imposed in connection with a
prepaid account, including the amount of the fee and any conditions
under which the fee may be imposed, waived, or reduced. Pursuant to
§ 1005.18(b)(7)(i)(B), text describing the conditions under which a
fee may be imposed must appear in the table in the long form
disclosure in close proximity to the fee amount disclosed pursuant
to § 1005.18(b)(4)(ii). For example, a financial institution is
deemed to comply with this requirement if the text describing the
conditions is located directly to the right of the fee amount in
the long form disclosure, as illustrated in Sample Form A-10(f).
See comment 18(b)(6)(i)(B)-2 regarding stacking of electronic
disclosures for display on smaller screen sizes.
2. Category of function for finance charges. Section
1005.18(b)(7)(i)(B) requires that the information required by §
1005.18(b)(4)(ii) must be generally grouped together and organized
under subheadings by the categories of function for which a
financial institution may impose the fee. If any finance charges
may be imposed on the prepaid account as described in Regulation Z,
12 CFR 1026.4(b)(11)(ii), in connection with a covered separate
credit feature accessible by a hybrid prepaid-credit card as
defined in 12 CFR 1026.61, the financial institution may, but is
not required to, group all finance charges together under a single
subheading. This includes situations where the financial
institution imposes a higher fee or charge on the asset feature of
a prepaid account with a covered separate credit feature accessible
by a hybrid prepaid-credit card than the amount of a comparable fee
or charge it imposes on any prepaid account in the same prepaid
account program that does not have such a credit feature. For
example, if a financial institution charges on the prepaid account
a $0.50 per transaction fee for each transaction that accesses
funds in the asset feature of a prepaid account and a $1.25 per
transaction fee for each transaction where the hybrid
prepaid-credit card accesses credit from the covered separate
credit feature in the course of the transaction, the financial
institution is permitted to disclose the $0.50 per transaction fee
under a general transactional subheading and disclose the
additional $0.75 per transaction fee under a separate subheading
together with any other finance charges that may be imposed on the
prepaid account.
18(b)(7)(ii) Prominence and Size
1. Minimum type size. Section 1005.18(b)(7)(ii) sets
forth minimum point/pixel size requirements for each element of the
disclosures required by § 1005.18(b)(2), (b)(3)(i) and (ii), and
(b)(4). A financial institution may provide disclosures in a type
size larger than the required minimum to enhance consumer
comprehension in any acquisition scenario, as long as the financial
institution complies with the point/pixel size hierarchy set forth
in § 1005.18(b)(7)(ii).
2. “Point” refers to printed disclosures and “pixel”
refers to electronic disclosures. References in §
1005.18(b)(7)(ii) to “point” size correspond to printed disclosures
and references to “pixel” size correspond to disclosures provided
via electronic means.
18(b)(7)(ii)(A) General
1. Contrast required between type color and background of
disclosures. Section § 1005.18(b)(7)(ii)(A) requires that all
text used to disclose information in the short form or in the long
form disclosure pursuant to § 1005.18(b)(2), (b)(3)(i) and (ii),
and (b)(4) must be in a single, easy-to-read type that is all black
or one color and printed on a background that provides a clear
contrast. A financial institution complies with the color
requirements if, for example, it provides the disclosures required
by § 1005.18(b)(2), (b)(3)(i) and (ii), and (b)(4) printed in black
type on a white background or white type on a black background.
Also, pursuant to § 1005.18(b)(7)(ii)(A), the type and color may
differ between the short form disclosure and the long form
disclosure provided for a particular prepaid account program. For
example, a financial institution may use one font/type style for
the short form disclosure for a particular prepaid account program
and use a different font/type style for the long form disclosure
for that same prepaid account program. Similarly, a financial
institution may use black type for the short form disclosure for a
particular prepaid account program and use blue type for the long
form disclosure for that same prepaid account program.
18(b)(7)(iii) Segregation
1. Permitted information outside the short form and long form
disclosures. Section 1005.18(b)(7)(iii) requires that the short
form and long form disclosures required by § 1005.18(b)(2) and (4)
be segregated from other information and contain only information
that is required or permitted for those disclosures by §
1005.18(b). This segregation requirement does not prohibit the
financial institution from providing information elsewhere on the
same page as the short form disclosure, such as the information
required by § 1005.18(b)(5), additional disclosures required by
state law for payroll card accounts, or any other information the
financial institution wishes to provide about the prepaid account.
Similarly, the segregation requirement does not prohibit a
financial institution from providing the long form disclosure on
the same page as other disclosures or information, or as part of a
larger document, such as the prepaid account agreement. See
also § 1005.18(b)(1) and (f)(1).
18(b)(8) Terminology of Pre-Acquisition Disclosures
1. Consistent terminology. Section 1005.18(b)(8) requires
that fee names and other terms be used consistently within and
across the disclosures required by § 1005.18(b). For example, a
financial institution may not name the fee required to be disclosed
by § 1005.18(b)(2)(vii) an “inactivity fee” in the short form
disclosure and a “dormancy fee” in the long form disclosure.
However, a financial institution may substitute the term prepaid
“account” for the term prepaid “card,” as appropriate, wherever it
is used in § 1005.18(b).
18(b)(9) Prepaid Accounts Acquired in Foreign Languages
1. Prepaid accounts acquired in foreign languages.
Section 1005.18(b)(9)(i) requires a financial institution to
provide the pre-acquisition disclosures required by § 1005.18(b) in
a foreign language in certain circumstances.
i. Examples of situations in which foreign language
disclosures are required. The following examples illustrate
situations in which a financial institution must provide the
pre-acquisition disclosures in a foreign language in connection
with the acquisition of that prepaid account:
A. The financial institution principally uses a foreign language
on the packaging material of a prepaid account sold in a retail
location or distributed at a bank or credit union branch, even
though a few words appear in English on the packaging.
B. The financial institution principally uses a foreign language
in a television advertisement for a prepaid account. That
advertisement includes a telephone number a consumer can call to
acquire the prepaid account, whether by speaking to a customer
service representative or interacting with an interactive voice
response (IVR) system.
C. The financial institution principally uses a foreign language
in an online advertisement for a prepaid account. That
advertisement includes a website URL through which a consumer can
acquire the prepaid account.
D. The financial institution principally uses a foreign language
on a printed advertisement for a prepaid account. That
advertisement includes a telephone number or a website URL a
consumer can call or visit to acquire the prepaid account. The
pre-acquisition disclosures must be provided to the consumer in
that same foreign language prior to the consumer acquiring the
prepaid account.
E. The financial institution does not principally use a foreign
language on prepaid account packaging material nor does it
principally use a foreign language to advertise, solicit, or market
a prepaid account. A consumer calls the financial institution and
has the option to proceed with the prepaid account acquisition
process in a foreign language, whether by speaking to a customer
service representative or interacting with an IVR system. (But see
§ 1005.18(b)(9)(i)(C), which limits the obligation to provide
foreign language disclosures for payroll card accounts and
government benefit accounts acquired orally by telephone in certain
circumstances.)
F. The financial institution does not principally use a foreign
language on prepaid account packaging material nor does it
principally use a foreign language to advertise, solicit, or market
a prepaid account. A consumer visits the financial institution's
website. On that website, the consumer has the option to proceed
with the prepaid account acquisition process in a foreign
language.
ii. Examples of situations in which foreign language
disclosures are not required. The following examples illustrate
situations in which a financial institution is not required to
provide the pre-acquisition disclosures in a foreign language:
A. A consumer visits the financial institution's branch location
in person and speaks to an employee in a foreign language about
acquiring a prepaid account. The consumer proceeds with the
acquisition process in that foreign language.
B. The financial institution does not principally use a foreign
language on prepaid account packaging material nor does it
principally use a foreign language to advertise, solicit, or market
a prepaid account. A consumer calls the financial institution's
customer service line and speaks to a customer service
representative in a foreign language. However, if the customer
service representative proceeds with the prepaid account
acquisition process over the telephone, the financial institution
would be required to provide the pre-acquisition disclosures in
that foreign language. (But see § 1005.18(b)(9)(i)(C), which limits
the obligation to provide foreign language disclosures for payroll
card accounts and government benefit accounts acquired orally by
telephone in certain circumstances.)
C. The financial institution principally uses a foreign language
in an advertisement for a prepaid account. That advertisement
includes a telephone number a consumer can call to acquire the
prepaid account. The consumer calls the telephone number provided
on the advertisement and has the option to proceed with the prepaid
account acquisition process in English or in a foreign language.
The consumer chooses to proceed with the acquisition process in
English.
D. A consumer calls a government agency to enroll in a
government benefits program. The government agency does not offer
through its telephone system an option for consumers to proceed in
a foreign language. An employee of the government agency assists
the consumer with the enrollment process, including helping the
consumer acquire a government benefits account. The employee also
happens to speak the foreign language in which the consumer is most
comfortable communicating, and chooses to communicate with the
consumer in that language to facilitate the enrollment process. In
this case, the employee offered language interpretation assistance
on an informal or ad hoc basis to accommodate the prospective
government benefits account holder.
2. Principally used. All relevant facts and circumstances
determine whether a foreign language is principally used by the
financial institution to advertise, solicit, or market under §
1005.18(b)(9). Whether a foreign language is principally used is
determined at the packaging material, advertisement, solicitation,
or marketing communication level, not at the prepaid account
program level or across the financial institution's activities as a
whole. A financial institution that advertises a prepaid account
program in multiple languages would evaluate its use of foreign
language in each advertisement to determine whether it has
principally used a foreign language therein.
3. Advertise, solicit, or market a prepaid account. Any
commercial message, appearing in any medium, that promotes directly
or indirectly the availability of prepaid accounts constitutes
advertising, soliciting, or marketing for purposes of §
1005.18(b)(9). Examples illustrating advertising, soliciting, or
marketing include, but are not limited to:
i. Messages in a leaflet, promotional flyer, newspaper, or
magazine.
ii. Electronic messages, such as on a website or mobile
application.
iii. Telephone solicitations.
iv. Solicitations sent to the consumer by mail or email.
v. Television or radio commercials.
4. Information in the long form disclosure in English.
Section 1005.18(b)(9)(ii) states that a financial institution
required to provide pre-acquisition disclosures in a foreign
language pursuant to § 1005.18(b)(9)(i) must also provide the
information required to be disclosed in its pre-acquisition long
form disclosure pursuant to § 1005.18(b)(4) in English upon a
consumer's request and on any part of the website where it
discloses this information in a foreign language. A financial
institution may, but is not required to, provide the English
version of the information required by § 1005.18(b)(4) in
accordance with the formatting, grouping, size and other
requirements set forth in § 1005.18(b) for the long form
disclosure.
18(c) Access to Prepaid Account Information
1. Posted transactions. The electronic and written
history of the consumer's account transactions provided under §
1005.18(c)(1)(ii) and (iii), respectively, shall reflect transfers
once they have been posted to the account. Thus, a financial
institution does not need to include transactions that have been
authorized but that have not yet posted to the account.
2. Electronic history. The electronic history required
under § 1005.18(c)(1)(ii) must be made available in a form that the
consumer may keep, as required under § 1005.4(a)(1). Financial
institutions may satisfy this requirement if they make the
electronic history available in a format that is capable of being
retained. For example, a financial institution satisfies the
requirement if it provides electronic history on a website in a
format that is capable of being printed or stored electronically
using a web browser.
3. Written history. Requests that exceed the requirements
of § 1005.18(c)(1)(iii) for providing written account transaction
history, and which therefore a financial institution may charge a
fee, include the following:
i. A financial institution may assess a fee or charge to a
consumer for responding to subsequent requests for written account
transaction history made in a single calendar month. For example,
if a consumer requests written account transaction history on June
1 and makes another request on August 5, the financial institution
may not assess a fee or charge to the consumer for responding to
either request. However, if the consumer requests written account
transaction history on June 1 and then makes another request on
June 15, the financial institution may assess a fee or charge to
the consumer for responding to the request made on June 15, as this
is the second response in the same month.
ii. If a financial institution maintains more than 24 months of
written account transaction history, it may assess a fee or charge
to the consumer for providing a written history for transactions
occurring more than 24 months preceding the date the financial
institution receives the consumer's request, provided the consumer
specifically requests the written account transaction history for
that time period.
iii. If a financial institution offers a consumer the ability to
request automatic mailings of written account transaction history
on a monthly or other periodic basis, it may assess a fee or charge
for such automatic mailings but not for the written account
transaction history requested pursuant to § 1005.18(c)(1)(iii).
See comment 18(c)-6.
4. 12 months of electronic account transaction history.
Section 1005.18(c)(1)(ii) requires a financial institution to make
available at least 12 months of account transaction history
electronically. If a prepaid account has been opened for fewer than
12 months, the financial institution need only provide electronic
account transaction history pursuant to § 1005.18(c)(1)(ii) since
the time of account opening. If a prepaid account is closed or
becomes inactive, as defined by the financial institution, the
financial institution need not make available electronic account
transaction history. See comment 9(b)-3. If an inactive
account becomes active, the financial institution must again make
available 12 months of electronic account transaction history.
5. 24 months of written account transaction history.
Section 1005.18(c)(1)(iii) requires a financial institution to
provide at least 24 months of account transaction history in
writing upon the consumer's request. A financial institution may
provide fewer than 24 months of written account transaction history
if the consumer requests a shorter period of time. If a prepaid
account has been opened for fewer than 24 months, the financial
institution need only provide written account transaction history
pursuant to § 1005.18(c)(1)(iii) since the time of account opening.
Even if a prepaid account is closed or becomes inactive, the
financial institution must continue to provide upon request at
least 24 months of written account transaction history preceding
the date the request is received. When a prepaid account has been
closed or inactive for 24 months or longer, the financial
institution is no longer required to provide any written account
transaction history pursuant to § 1005.18(c)(1)(iii).
6. Periodic statement alternative for unverified prepaid
accounts. For prepaid accounts that are not payroll card
accounts or government benefit accounts, a financial institution is
not required to provide a written history of the consumer's account
transactions for any prepaid account for which the financial
institution has not completed its consumer identification and
verification process as described in § 1005.18(e)(3)(ii)(A) through
(C). If a prepaid account is verified, a financial institution must
provide written account transaction history upon the consumer's
request that includes the period during which the account was not
verified, provided that the period is within the 24-month time
frame specified in § 1005.18(c)(1)(iii).
7. Inclusion of all fees charged. A financial institution
that furnishes a periodic statement pursuant to § 1005.9(b) for a
prepaid account must disclose the amount of any fees assessed
against the account, whether for electronic fund transfers or
otherwise, on the periodic statement as well as on any electronic
or written account transaction history the financial institution
makes available or provides to the consumer. For example, if a
financial institution sends periodic statements and also makes
available the consumer's electronic account transaction history on
its website, the financial institution must disclose the amount of
any fees assessed against the account, whether for electronic fund
transfers or otherwise, on the periodic statement and on the
consumer's electronic account transaction history made available on
its website. Likewise, a financial institution that follows the
periodic statement alternative in § 1005.18(c)(1) must disclose the
amount of any fees assessed against the account, whether for
electronic fund transfers or otherwise, on the electronic history
of the consumer's account transactions made available pursuant to §
1005.18(c)(1)(ii) and any written history of the consumer's account
transactions provided pursuant to § 1005.18(c)(1)(iii).
8. Summary totals of fees. Section 1005.18(c)(5) requires
a financial institution to disclose a summary total of the amount
of all fees assessed by the financial institution against a prepaid
account for the prior calendar month and for the calendar year to
date.
i. Generally. A financial institution that furnishes a
periodic statement pursuant to § 1005.9(b) for a prepaid account
must display the monthly and annual fee totals on the periodic
statement as well as on any electronic or written account
transaction history the financial institution makes available or
provides to the consumer. For example, if a financial institution
sends periodic statements and also makes available the consumer's
electronic account transaction history on its website, the
financial institution must display the monthly and annual fee
totals on the periodic statement and on the consumer's electronic
account transaction history made available on its website.
Likewise, a financial institution that follows the periodic
statement alternative in § 1005.18(c)(1) must display the monthly
and annual fee totals on the electronic history of the consumer's
account transactions made available pursuant to § 1005.18(c)(1)(ii)
and any written history of the consumer's account transactions
provided pursuant to § 1005.18(c)(1)(iii). If a financial
institution provides periodic statements pursuant to § 1005.9(b),
fee totals may be disclosed for each statement period rather than
each calendar month, if different. The summary totals of fees
should be net of any fee reversals.
ii. Third-party fees. A financial institution may, but is
not required to, include third-party fees in its summary totals of
fees provided pursuant to § 1005.18(c)(5). For example, a financial
institution must include in the summary totals of fees the fee it
charges a consumer for using an out-of-network ATM, but it need not
include any fee charged by an ATM operator, with whom the financial
institution has no relationship, for the consumer's use of that
operator's ATM. Similarly, a financial institution need not include
in the summary totals of fees the fee charged by a third-party
reload network for the service of adding cash to a prepaid account
at a point-of-sale terminal. A financial institution may, but is
not required to, inform consumers of third-party fees such as by
providing a disclaimer to indicate that the summary totals do not
include certain third-party fees or to explain when third-party
fees may occur or through some other method.
9. Display of summary totals of fees. A financial
institution may, but is not required to, also include sub-totals of
the types of fees that make up the summary totals of fees as
required by § 1005.18(c)(5). For example, if a financial
institution distinguishes optional fees (e.g., custom card
design fees) from fees to use the account, in displaying the
summary totals of fees, the financial institution may include
sub-totals of those fees, provided the financial institution also
presents the combined totals of all fees.
18(e) Modified Limitations on Liability and Error Resolution
Requirements
1. Error resolution safe harbor provision. Institutions
that choose to investigate notices of error provided up to 120 days
from the date a transaction has posted to a consumer's account may
still disclose the error resolution time period required by the
regulation (as set forth in the model clause in paragraph (b) of
appendix A-7 of this part). Specifically, an institution may
disclose to prepaid account holders that the institution will
investigate any notice of error provided within 60 days of the
consumer electronically accessing an account or receiving a written
history upon request that reflects the error, even if, for some or
all transactions, the institution investigates any notice of error
provided up to 120 days from the date that the transaction alleged
to be in error has posted to the consumer's account. Similarly, an
institution's summary of the consumer's liability (as required
under § 1005.7(b)(1)) may disclose that liability is based on the
consumer providing notice of error within 60 days of the consumer
electronically accessing an account or receiving a written history
reflecting the error, even if, for some or all transactions, the
institution allows a consumer to assert a notice of error up to 120
days from the date of posting of the alleged error.
2. Electronic access. A consumer is deemed to have
accessed a prepaid account electronically when the consumer enters
a user identification code or password or otherwise complies with a
security procedure used by an institution to verify the consumer's
identity and to provide access to a website or mobile application
through which account information can be viewed. An institution is
not required to determine whether a consumer has in fact accessed
information about specific transactions to trigger the beginning of
the 60-day periods for liability limits and error resolution under
§§ 1005.6 and 1005.11. A consumer is not deemed to have accessed a
prepaid account electronically when the consumer receives an
automated text message or other automated account alert, or checks
the account balance by telephone.
3. Untimely notice of error. An institution that provides
a transaction history under § 1005.18(c)(1) is not required to
comply with the requirements of § 1005.11 for any notice of error
from the consumer received more than 60 days after the earlier of
the date the consumer electronically accesses the account
transaction history or the date the financial institution sends a
written account transaction history upon the consumer's request.
(Alternatively, as provided in § 1005.18(e)(2)(ii), an institution
need not comply with the requirements of § 1005.11 with respect to
any notice of error received from the consumer more than 120 days
after the date of posting of the transfer allegedly in error.)
Where the consumer's assertion of error involves an unauthorized
EFT, however, the institution must comply with § 1005.6 (including
the extension of time limits in § 1005.6(b)(4)) before it may
impose any liability on the consumer.
4. Verification of accounts. Section 1005.18(e)(3)(i)
provides that for prepaid accounts that are not payroll card
accounts or government benefit accounts, a financial institution is
not required to comply with the liability limits and error
resolution requirements in §§ 1005.6 and 1005.11 for any prepaid
account for which it has not successfully completed its consumer
identification and verification process. Consumer identifying
information may include the consumer's full name, address, date of
birth, and Social Security number or other government-issued
identification number. Section 1005.18(e)(3)(iii) provides that
once a financial institution successfully completes its consumer
identification and verification process with respect to a prepaid
account, the financial institution must limit the consumer's
liability for unauthorized transfers and resolve errors that occur
following verification in accordance with § 1005.6 or § 1005.11, or
the modified timing requirements in § 1005.18(e), as applicable. A
financial institution is not required to limit a consumer's
liability for unauthorized transfers or resolve errors that occur
prior to the financial institution's successful completion of its
consumer identification and verification process with respect to a
prepaid account.
5. Financial institution has not successfully completed
verification. Section 1005.18(e)(3)(ii)(A) states that,
provided it discloses to the consumer the risks of not registering
and verifying a prepaid account, a financial institution has not
successfully completed its consumer identification and verification
process where it has not concluded the process with respect to a
particular prepaid account. For example, a financial institution
initiates its consumer identification and verification process by
collecting identifying information about a consumer, and attempts
to verify the consumer's identity. The financial institution is
unable to conclude the process because of conflicting information
about the consumer's current address. The financial institution
informs the consumer about the nature of the information at issue
and requests additional documentation, but the consumer does not
provide the requested documentation. As long as the information
needed to complete the verification process remains outstanding,
the financial institution has not concluded its consumer
identification and verification process with respect to that
consumer. A financial institution may not delay completing its
consumer identification and verification process or refuse to
verify a consumer's identity based on the consumer's assertion of
an error.
6. Account verification prior to acquisition. A financial
institution that collects and verifies consumer identifying
information, or that obtains such information after it has been
collected and verified by a third party, prior to or as part of the
account acquisition process, is deemed to have successfully
completed its consumer identification and verification process with
respect to that account. For example, a university contracts with a
financial institution to disburse financial aid to students via the
financial institution's prepaid accounts. To facilitate the
accurate disbursal of aid awards, the university provides the
financial institution with identifying information about the
university's students, whose identities the university had
previously verified. The financial institution is deemed to have
successfully completed its consumer identification and verification
process with respect to those accounts.
18(f) Disclosure of Fees and Other Information
1. Initial disclosure of fees and other information.
Section 1005.18(f)(1) requires a financial institution to include,
as part of the initial disclosures given pursuant to § 1005.7, all
of the information required to be disclosed in its pre-acquisition
long form disclosure pursuant to § 1005.18(b)(4). Section
1005.18(b)(4)(ii) requires a financial institution to disclose in
its pre-acquisition long form disclosure all fees imposed in
connection with a prepaid account. Section 1005.18(b)(4) also
contains several specific statements that must be provided as part
of the long form disclosure. A financial institution may, but is
not required to, disclose the information required by §
1005.18(b)(4) in accordance with the formatting, grouping, size and
other requirements set forth in § 1005.18(b) for the long form
disclosure as part of its initial disclosures provided pursuant to
§ 1005.7; a financial institution may choose to do so, however, in
order to satisfy other requirements in § 1005.18. See, e.g.,
§ 1005.18(b)(1)(ii) regarding the retail location exception.
2. Changes to the Regulation Z disclosures for overdraft
credit features. Pursuant to § 1005.18(f)(2), if a financial
institution provides pursuant § 1005.18(f)(1) the Regulation Z
disclosures required by § 1005.18(b)(4)(vii) for an overdraft
credit feature, the financial institution is not required to
provide a change-in-terms notice solely to reflect a change in the
fees or other terms disclosed therein. This exception does not
extend to any finance charges imposed on the prepaid account as
described in Regulation Z, 12 CFR 1026.4(b)(11)(ii), in connection
with a covered separate credit feature accessible by a hybrid
prepaid-credit card as defined in 12 CFR 1026.61 that are required
to be disclosed pursuant to § 1005.18(b)(4)(ii). See comment
18(b)(4)(ii)-1.
3. Web site and telephone number on a prepaid account access
device. Section 1005.18(f)(3) requires that the name of a
financial institution and the Web site URL and a telephone number
that a consumer can use to contact the financial institution about
the prepaid account must be disclosed on the prepaid account access
device. A disclosure made on an accompanying document, such as a
terms and conditions document, on packaging material surrounding an
access device, or on a sticker or other label affixed to an access
device does not constitute a disclosure on the access device. The
financial institution must provide this information to allow
consumers to, for example, contact the financial institution to
learn about the terms and conditions of the prepaid account, obtain
prepaid account balance information, request a copy of transaction
history pursuant to § 1005.18(c)(1)(iii) if the financial
institution does not provide periodic statements pursuant to §
1005.9(b), or to notify the financial institution when the consumer
believes that an unauthorized electronic fund transfer has occurred
as required by §§ 1005.7(b)(2) and 1005.18(d)(1)(ii).
18(g) Prepaid Accounts Accessible by Hybrid Prepaid-Credit Cards
1. Covered separate credit feature accessible by a hybrid
prepaid-credit card. Regulation Z, 12 CFR 1026.61, defines the
term covered separate credit feature accessible by a hybrid
prepaid-credit card.
2. Asset feature. i. Regulation Z, 12 CFR
1026.61(a)(5)(ii), defines the term asset feature.
ii. Section 1005.18(g) applies to account terms, conditions, and
features that apply to the asset feature of the prepaid account.
Section 1005.18(g) does not apply to the account terms, conditions,
or features that apply to the covered separate credit feature,
regardless of whether it is structured as a separate credit account
or as a credit subaccount of the prepaid account that is separate
from the asset feature of the prepaid account.
3. Scope of § 1005.18(g). Under § 1005.18(g), a financial
institution may offer different terms on different prepaid account
programs. For example, the terms may differ between a prepaid
account program where a covered separate credit feature accessible
by a hybrid prepaid-credit card is not offered in connection with
any prepaid accounts within the prepaid account program, and a
prepaid account program where a covered separate credit feature
accessible by a hybrid prepaid-credit card may be offered to some
consumers in connection with their prepaid accounts.
4. Variation in account terms, conditions, or features.
i. Account terms, conditions, and features subject to § 1005.18(g)
include, but are not limited to:
A. Interest paid on funds deposited into the asset feature of
the prepaid account, if any;
B. Fees or charges imposed on the asset feature of the prepaid
account. See comment 18(g)-5 for additional guidance on how §
1005.18(g) applies to fees or charges imposed on the asset feature
of the prepaid account.
C. The type of access device provided to the consumer. For
instance, an institution may not provide a PIN-only card on prepaid
accounts without a covered separate credit feature that is
accessible by a hybrid prepaid-credit card, while providing a
prepaid card with both PIN and signature-debit functionality for
prepaid accounts in the same prepaid account program with such a
credit feature;
D. Minimum balance requirements on the asset feature of the
prepaid account; or
E. Account features offered in connection with the asset feature
of the prepaid account, such as online bill payment services.
5. Fees. i. With respect to a prepaid account program
where consumers may be offered a covered separate credit feature
accessible by a hybrid prepaid-credit card as defined by Regulation
Z, 12 CFR 1026.61, § 1005.18(g) only permits a financial
institution to charge the same or higher fees on the asset feature
of a prepaid account with a covered separate credit feature than
the amount of a comparable fee it charges on prepaid accounts in
the same prepaid account program that do not have a such a credit
feature. Section 1005.18(g) prohibits a financial institution from
imposing a lower fee or charge on prepaid accounts with a covered
separate credit feature than the amount of a comparable fee or
charge it charges on prepaid accounts in the same prepaid account
program without such a credit feature. With regard to a covered
separate credit feature and an asset feature of a prepaid account
that are both accessible by a hybrid prepaid-credit card as defined
in Regulation Z, 12 CFR 1026.61, a fee or charge imposed on the
asset feature of the prepaid account generally is a finance charge
under Regulation Z (12 CFR part 1026) to the extent that the amount
of the fee or charge exceeds the amount of a comparable fee or
charge imposed on prepaid accounts in the same prepaid account
program that do not have such a credit feature. See
Regulation Z, 12 CFR 1026.4(b)(11)(ii). With regard to a covered
separate credit feature and an asset feature of a prepaid account
that are both accessible by a hybrid prepaid-credit card as defined
in Regulation Z, 12 CFR 1026.61, this comment below provides
illustrations of how § 1005.18(g) applies to fees or charges
imposed on the asset feature of a prepaid account. The term
“non-covered separate credit feature” refers to a separate credit
feature that is not accessible by a hybrid prepaid-credit card as
defined in Regulation Z, 12 CFR 1026.61.
ii. The following examples illustrate how § 1005.18(g) applies
to per transaction fees for each transaction to access funds
available in the asset feature of the prepaid account.
A. Assume that a consumer has selected a prepaid account program
where a covered separate credit feature accessible by a hybrid
prepaid-credit card may be offered. For prepaid accounts without
such a credit feature, the financial institution charges $0.50 for
each transaction conducted that accesses funds available in the
prepaid account. For prepaid accounts with a credit feature, the
financial institution also charges $0.50 on the asset feature for
each transaction conducted that accesses funds available in the
asset feature of the prepaid account. In this case, for purposes of
§ 1005.18(g), the financial institution is imposing the same fee
for each transaction that accesses funds in the asset feature of
the prepaid account, regardless of whether the prepaid account has
a covered separate credit feature accessible by a hybrid
prepaid-credit card. Also, with regard to a covered separate credit
feature and an asset feature of a prepaid account that are both
accessible by a hybrid prepaid-credit card as those terms are
defined in Regulation Z, 12 CFR 1026.61, the $0.50 per transaction
fee imposed on the asset feature for each transaction that accesses
funds available in the asset feature of the prepaid account is not
a finance charge under 12 CFR 1026.4(b)(11)(ii). See Regulation Z,
12 CFR 1026.4(b)(11)(ii) and comment 4(b)(11)(ii)-1, for a
discussion of the definition of finance charge with respect to fees
or charges imposed on the asset feature of a prepaid account with
regard to a covered separate credit feature and an asset feature of
a prepaid account that are both accessible by a hybrid
prepaid-credit card as defined in 12 CFR 1026.61.
B. Same facts as in paragraph A, except that for prepaid
accounts with a covered separate credit feature, the financial
institution imposes a $1.25 fee for each transaction conducted that
accesses funds available in the asset feature of the prepaid
account. In this case, the financial institution is permitted to
charge a higher fee under § 1005.18(g)(2) on prepaid accounts with
a covered separate credit feature than it charges on prepaid
accounts without such a credit feature. The $0.75 excess is a
finance charge under Regulation Z, 12 CFR 1026.4(b)(11)(ii).
C. Same facts as in paragraph A, except that for prepaid
accounts with a covered separate credit feature, the financial
institution imposes a $0.25 fee for each transaction conducted that
accesses funds available in the asset feature of the prepaid
account. In this case, the financial institution is in violation of
§ 1005.18(g) because it is imposing a lower fee on the asset
feature of a prepaid account with a covered separate credit feature
than it imposes on prepaid accounts in the same program without
such a credit feature.
iii. Where the hybrid prepaid-credit card accesses credit from a
covered separate credit feature in the course of authorizing,
settling, or otherwise completing a transaction conducted with the
card to obtain goods or services, obtain cash, or conduct
person-to-person transfers, any per transaction fees imposed on the
asset feature of prepaid accounts, including load and transfer
fees, with such a credit feature are comparable only to per
transaction fees for each transaction to access funds in the asset
feature of a prepaid account that are imposed on prepaid accounts
in the same prepaid account program that does not have such a
credit feature. Per transaction fees for a transaction that is
conducted to load or draw funds into a prepaid account from a
source other than the funds in the asset feature are not comparable
for purposes of § 1005.18(g). To illustrate:
A. Assume a financial institution charges $0.50 on prepaid
accounts for each transaction that accesses funds in the asset
feature of the prepaid accounts without a covered separate credit
feature. Also, assume that the financial institution charges $0.50
per transaction on the asset feature of prepaid accounts in the
same prepaid program where the hybrid prepaid-credit card accesses
credit from a covered separate credit feature in the course of a
transaction. In this case, for purposes of § 1005.18(g), the
financial institution is imposing the same fee for each transaction
it pays, regardless of whether the transaction accesses funds
available in the asset feature of the prepaid accounts without a
covered separate credit feature, or is paid from credit from a
covered separate credit feature in the course of authorizing,
settling, or otherwise completing a transaction conducted with the
card to obtain goods or services, obtain cash, or conduct
person-to-person transfers. Also, for purposes of Regulation Z, 12
CFR 1026.4(b)(11)(ii), the $0.50 per transaction fee imposed on the
asset feature of the prepaid account with a covered separate credit
feature is not a finance charge.
B. Assume same facts as in paragraph A above, except that assume
the financial institution charges $1.25 on the asset feature of a
prepaid account for each transaction where the hybrid
prepaid-credit card accesses credit from the covered separate
credit feature in the course of the transaction. The financial
institution is permitted to charge the higher fee under §
1005.18(g) for transactions that access the covered separate credit
feature in the course of the transaction than the amount of the
comparable fee it charges for each transaction that accesses funds
available in the asset feature of the prepaid accounts without such
a credit feature. The $0.75 excess is a finance charge under
Regulation Z, 12 CFR 1026.4(b)(11)(ii).
C. Same facts as in paragraph A, except that the financial
institution imposes $0.25 on the asset feature of the prepaid
account for each transaction conducted where the hybrid
prepaid-credit card accesses credit from the covered separate
credit feature in the course of the transaction. In this case, the
financial institution is in violation of § 1005.18(g) because it is
imposing a lower fee on the asset feature of a prepaid account with
a covered separate credit feature than the amount of the comparable
fee it imposes on prepaid accounts in the same program without such
a credit feature.
D. Assume a financial institution charges $0.50 on prepaid
accounts for each transaction that accesses funds in the asset
feature of the prepaid accounts without a covered separate credit
feature. Assume also that the financial institution charges both a
$0.50 per transaction fee and a $1.25 transfer fee on the asset
feature of prepaid accounts in the same prepaid program where the
hybrid prepaid-credit card accesses credit from a covered separate
credit feature in the course of a transaction. In this case, both
fees charged on a per-transaction basis for the credit transaction
(i.e., a combined fee of $1.75 per transaction) must be
compared to the $0.50 per transaction fee to access funds in the
asset feature of the prepaid account without a covered separate
credit feature. The financial institution is permitted to charge a
higher fee under § 1005.18(g) for transactions that access the
covered separate credit feature in the course of the transaction
than the amount of the comparable fee it charges for each
transaction that accesses funds available in the asset feature of
the prepaid accounts without such a credit feature. The $1.25
excess is a finance charge under Regulation Z, 12 CFR
1026.4(b)(11)(ii).
E. Assume same facts as in paragraph D above, except that assume
the financial institution also charges a load fee of $1.25 whenever
funds are transferred or loaded from a separate asset account, such
as from a deposit account via a debit card, in the course of a
transaction on prepaid accounts without a covered separate credit
feature, in addition to charging a $0.50 per transaction fee. In
this case, both fees charged on a per-transaction basis for the
credit transaction (i.e., a combined fee of $1.75 per
transaction) must be compared to the per transaction fee
(i.e., the fee of $0.50) to access funds available in the
asset feature of the prepaid accounts on a prepaid account without
a covered separate credit feature. Per transaction fees for a
transaction that is conducted by drawing funds into a prepaid
account from some other source (i.e., the fee of $1.25) are
not comparable for purposes of § 1005.18(g). The financial
institution is permitted to charge a higher fee under § 1005.18(g)
for transactions that access the covered separate credit feature in
the course of the transaction than the amount of the comparable fee
it charges for each transaction to access funds available in the
asset feature of the prepaid accounts without such a credit
feature. The $1.25 excess is a finance charge under Regulation Z,
12 CFR 1026.4(b)(11)(ii).
iv. A consumer may choose in a particular circumstance to draw
or transfer credit from the covered separate credit feature outside
the course of a transaction conducted with the card to obtain goods
or service, obtain cash, or conduct person-to-person transfers. For
example, a consumer may use the prepaid card at the financial
institution's Web site to load funds from the covered separate
credit feature outside the course of a transaction conducted with
the card to obtain goods or services, obtain cash, or conduct
person-to-person transfers. See Regulation Z, 12 CFR
1026.61(a)(2)(i)(B) and comment 61(a)(2)-4.ii. In these situations,
load or transfer fees imposed for draws or transfers of credit from
the covered separate credit feature outside the course of a
transaction are compared only with fees, if any, to load funds as a
direct deposit of salary from an employer or a direct deposit of
government benefits that are charged on prepaid accounts without a
covered separate credit feature. Fees imposed on prepaid accounts
without a covered separate credit feature for a one-time load or
transfer of funds from a separate asset account or from a
non-covered separate credit feature are not comparable for purposes
of § 1005.18(g). To illustrate:
A. Assume a financial institution charges a $1.25 load fee to
transfer funds from a non-covered separate credit feature, such as
a non-covered separate credit card account, into prepaid accounts
that do not have a covered separate credit feature and does not
charge a fee for a direct deposit of salary from an employer or a
direct deposit of government benefits on those prepaid accounts.
Assume the financial institution charges $1.25 on the asset feature
of a prepaid account with a covered separate credit feature to load
funds from the covered separate credit feature outside the course
of a transaction. In this case, the load or transfer fees imposed
for draws or transfers of credit from the covered separate credit
feature outside the course of a transaction (i.e., the fee
of $1.25) is compared with the fees to load funds as a direct
deposit of salary from an employer or a direct deposit of
government benefits that are charged on prepaid accounts without a
covered separate credit feature (i.e., the fee of $0). Fees
imposed on prepaid accounts without a covered separate credit
feature for a one-time load or transfer of funds from a separate
asset account (i.e., the fee of $1.25) is not comparable for
purposes of § 1005.18(g). In this case, the financial institution
is permitted to charge a higher fee under § 1005.18(g) for
transactions that access the covered separate credit feature on
prepaid accounts with a credit feature than the amount of the
comparable fee it charges on prepaid accounts in the same program
without such a credit feature. The $1.25 fee imposed on the asset
feature of the prepaid account with a separate credit feature is a
finance charge under Regulation Z, 12 CFR 1026.4(b)(11)(ii).
B. Assume that a financial institution charges a $1.25 load fee
for a one-time transfer of funds from a separate asset account,
such as from a deposit account via a debit card, to a prepaid
account without a covered separate credit feature and does not
charge a fee for a direct deposit of salary from an employer or a
direct deposit of government benefits on those prepaid accounts.
Assume the financial institution charges $1.25 on the asset feature
of a prepaid account with a covered separate credit feature to load
funds from the covered separate credit feature outside the course
of a transaction. In this case, the load or transfer fees imposed
for draws or transfers of credit from the covered separate credit
feature outside the course of a transaction (i.e., the fee
of $1.25) is compared with the fees to load funds as a direct
deposit of salary from an employer or a direct deposit of
government benefits that are charged on prepaid accounts without a
covered separate credit feature (i.e., the fee of $0). Fees
imposed on prepaid accounts without a covered separate credit
feature for a one-time load or transfer of funds from a separate
asset account (i.e., the fee of $1.25) is not comparable for
purposes of § 1005.18(g). In this case, the financial institution
is permitted to charge a higher fee under § 1005.18(g) for
transactions that access the covered separate credit feature on
prepaid accounts with a credit feature than the amount of the
comparable fee it charges on prepaid accounts in the same program
without such a credit feature. The $1.25 fee imposed on the asset
feature of the prepaid account with a covered separate credit
feature is a finance charge under Regulation Z, 12 CFR
1026.4(b)(11)(ii).
18(h) Effective Date and Special Transition Rules for Disclosure
Provisions
1. Disclosures not on prepaid account access devices and
prepaid account packaging materials. Section 1005.18(h)(1)
provides that, except as provided in § 1005.18(h)(2) and (3), the
disclosure requirements of subpart A, as modified by § 1005.18,
apply to prepaid accounts as defined in § 1005.2(b)(3), including
government benefit accounts subject to § 1005.15, beginning April
1, 2019. This effective date applies to disclosures made available
or provided to consumers electronically, orally by telephone, or in
a form other than on pre-printed materials, such as disclosures
printed on paper by a financial institution upon a consumer's
request.
2. Disclosures on prepaid account access devices and prepaid
account packaging materials. Section 1005.18(h)(2)(i) provides
that the disclosure requirements of subpart A, as modified by §
1005.18, do not apply to any disclosures that are provided, or that
would otherwise be required to be provided, on prepaid account
access devices, or on, in, or with prepaid account packaging
materials that were manufactured, printed, or otherwise produced in
the normal course of business prior to April 1, 2019. This
includes, for example, disclosures contained on or in packages for
prepaid accounts sold at retail, or disclosures for payroll card
accounts or government benefit accounts that are distributed to
employees or benefits recipients in packages or envelopes.
Disclosures on, in, or with access devices or packaging materials
that are manufactured, printed, or otherwise produced on or after
April 1, 2019 must comply with all the requirements of subpart
A.
3. Form of notice to consumers. A financial institution
that is required to notify consumers of a change in terms and
conditions pursuant to § 1005.18(h)(2)(ii) or (iii), or that
otherwise provides updated initial disclosures as a result of §
1005.18(h)(1) taking effect, may provide the notice or disclosures
either as a separate document or included in another notice or
mailing that the consumer receives regarding the prepaid account to
the extent permitted by other laws and regulations.
4. Ability to contact the consumer. A financial
institution that has not obtained the consumer's contact
information is not required to comply with the requirements set
forth in § 1005.18(h)(2)(ii) or (iii). A financial institution is
able to contact the consumer when, for example, it has the
consumer's mailing address or email address.
5. Closed and inactive prepaid accounts. The requirements
of § 1005.18(h)(2)(iii) do not apply to prepaid accounts that are
closed or inactive, as defined by the financial institution.
However, if an inactive account becomes active, the financial
institution must comply with the requirements of §
1005.18(h)(2)(ii) within 30 days of the account becoming active
again in order to avail itself of the timing requirements and
accommodations set forth in § 1005.18(h)(2)(iii) and (iv).
6. Account information not available on April 1, 2019. i.
Electronic and written account transaction history. A
financial institution following the periodic statement alternative
in § 1005.18(c) must make available 12 months of electronic account
transaction history pursuant to § 1005.18(c)(1)(ii) and must
provide 24 months of written account transaction history upon
request pursuant to § 1005.18(c)(1)(iii) beginning April 1, 2019.
If, on April 1, 2019, the financial institution does not have
readily accessible the data necessary to make available or provide
the account histories for the required time periods, the financial
institution may make available or provide such histories using the
data for the time period it has until the financial institution has
accumulated the data necessary to comply in full with the
requirements set forth in § 1005.18(c)(1)(ii) and (iii). For
example, a financial institution that had been retaining only 60
days of account history before April 1, 2019 would provide 60 days
of written account transaction history upon a consumer's request on
April 1, 2019. If, on May 1, 2019, the consumer made another
request for written account transaction history, the financial
institution would be required to provide three months of account
history. The financial institution must continue to provide as much
account history as it has accumulated at the time of a consumer's
request until it has accumulated 24 months of account history.
Thus, all financial institutions must fully comply with the
electronic account transaction history requirement set forth in §
1005.18(c)(1)(ii) no later than April 1, 2020 and must fully comply
with the written account transaction history requirement set forth
in § 1005.18(c)(1)(iii) no later than April 1, 2021.
ii. Summary totals of fees. A financial institution must
display a summary total of the amount of all fees assessed by the
financial institution on the consumer's prepaid account for the
prior calendar month and for the calendar year to date pursuant to
§ 1005.18(c)(5) beginning April 1, 2019. If, on April 1, 2019, the
financial institution does not have readily accessible the data
necessary to calculate the summary totals of fees for the prior
calendar month or the calendar year to date, the financial
institution may provide the summary totals using the data it has
until the financial institution has accumulated the data necessary
to display the summary totals as required by § 1005.18(c)(5). That
is, the financial institution would first display the monthly fee
total beginning on May 1, 2019 for the month of April, and the
year-to-date fee total beginning on April 1, 2019, provided the
financial institution discloses that it is displaying the
year-to-date total beginning on April 1, 2019 rather than for the
entire calendar year 2019. On January 1, 2020, financial
institutions must begin displaying year-to-date fee totals for
calendar year 2020.
Section 1005.19 Internet Posting of Prepaid Account Agreements
19(a) Definitions 19(a)(1) Agreement
1. Provisions contained in separate documents included.
Section 1005.19(a)(1) defines a prepaid account agreement, for
purposes of § 1005.19, as the written document or documents
evidencing the terms of the legal obligation, or the prospective
legal obligation, between a prepaid account issuer and a consumer
for a prepaid account. An agreement may consist of several
documents that, taken together, define the legal obligation between
the issuer and consumer.
19(a)(2) Amends
1. Substantive changes. A change to an agreement is
substantive, and therefore is deemed an amendment of the agreement,
if it alters the rights or obligations of the parties. Section
1005.19(a)(2) provides that any change in the fee information, as
defined in § 1005.19(a)(3), is deemed to be substantive. Examples
of other changes that generally would be considered substantive
include:
i. Addition or deletion of a provision giving the issuer or
consumer a right under the agreement, such as a clause that allows
an issuer to unilaterally change the terms of an agreement.
ii. Addition or deletion of a provision giving the issuer or
consumer an obligation under the agreement, such as a clause
requiring the consumer to pay an additional fee.
iii. Changes that may affect the cost of the prepaid account to
the consumer, such as changes in a provision describing how the
prepaid account's monthly fee will be calculated.
iv. Changes that may affect how the terms of the agreement are
construed or applied, such as changes to a choice of law
provision.
v. Changes that may affect the parties to whom the agreement may
apply, such as changes to provisions regarding authorized users or
assignment of the agreement.
vi. Changes to the corporate name of the issuer or program
manager, or to the issuer's address or identifying number, such as
its RSSD ID number or tax identification number.
vii. Changes to the list of names of other relevant parties,
such as the employer for a payroll card program or the agency for a
government benefit program. But see § 1005.19(b)(2)(ii) regarding
the timing of submitting such changes to the Bureau.
viii. Changes to the name of the prepaid account program to
which the agreement applies.
2. Non-substantive changes. Changes that generally would
not be considered substantive include, for example:
i. Correction of typographical errors that do not affect the
meaning of any terms of the agreement.
ii. Changes to the issuer's corporate logo or tagline.
iii. Changes to the format of the agreement, such as conversion
to a booklet from a full-sheet format, changes in font, or changes
in margins.
iv. Reordering sections of the agreement without affecting the
meaning of any terms of the agreement.
v. Adding, removing, or modifying a table of contents or
index.
vi. Changes to titles, headings, section numbers, or
captions.
19(a)(4) Issuer
1. Issuer. Section 1005.19(a)(4) provides that, for
purposes of § 1005.19, issuer or prepaid account issuer means the
entity to which a consumer is legally obligated, or would be
legally obligated, under the terms of a prepaid account agreement.
For example, Bank X and Bank Y work together to issue prepaid
accounts. A consumer that obtains a prepaid account issued pursuant
to this arrangement between Bank X and Bank Y is subject to an
agreement that states “This is an agreement between you, the
consumer, and Bank X that governs the terms of your Bank Y Prepaid
Account.” The prepaid account issuer in this example is Bank X,
because the agreement creates a legally enforceable obligation
between the consumer and Bank X. Bank X is the issuer even if the
consumer applied for the prepaid account through a link on Bank Y's
website and the cards prominently feature the Bank Y logo on the
front of the card.
2. Use of third-party service providers. An issuer has a
legal obligation to comply with the requirements of § 1005.19.
However, an issuer generally may use a third-party service provider
to satisfy its obligations under § 1005.19, provided that the
issuer acts in accordance with regulatory guidance regarding use of
third-party service providers and other applicable regulatory
guidance. In some cases, an issuer may wish to arrange for the
entity with which it partners to issue prepaid accounts to fulfill
the requirements of § 1005.19 on the issuer's behalf. For example,
Program Manager and Bank work together to issue prepaid accounts.
Under the § 1005.19(a)(4) definition of issuer, Bank is the issuer
of these prepaid accounts for purposes of § 1005.19. However,
Program Manager services the prepaid accounts, including mailing to
consumers account opening materials and making available to
consumers their electronic account transaction history, pursuant to
§ 1005.18(c)(1)(ii). While Bank is responsible for ensuring
compliance with § 1005.19, Bank may arrange for Program Manager (or
another appropriate third-party service provider) to make
submissions of prepaid account agreements to the Bureau under §
1005.19 on Bank's behalf. Bank must comply with regulatory guidance
regarding use of third-party service providers and other applicable
regulatory guidance.
3. Third-party websites. As explained in comment 19(c)-2,
if an issuer provides consumers with access to specific information
about their individual accounts, such as making available to
consumers their electronic account transaction history, pursuant to
§ 1005.18(c)(1)(ii), through a third-party website, the issuer is
deemed to maintain that website for purposes of § 1005.19. Such a
website is deemed to be maintained by the issuer for purposes of §
1005.19 even where, for example, an unaffiliated entity designs the
website and owns and maintains the information technology
infrastructure that supports the website, consumers with prepaid
accounts from multiple issuers can access individual account
information through the same website, and the website is not
labeled, branded, or otherwise held out to the public as belonging
to the issuer. A partner institution's website is an example of a
third-party website that may be deemed to be maintained by the
issuer for purposes of § 1005.19. For example, Program Manager and
Bank work together to issue prepaid accounts. Under the §
1005.19(a)(4) definition of issuer, Bank is the issuer of these
prepaid accounts for purposes of § 1005.19. Bank does not maintain
a website specifically related to prepaid accounts. However,
consumers can access information about their individual accounts,
such as an electronic account transaction history, through a
website maintained by Program Manager. Program Manager designs the
website and owns and maintains the information technology
infrastructure that supports the website. The website is branded
and held out to the public as belonging to Program Manager. Because
consumers can access information about their individual accounts
through this website, the website is deemed to be maintained by
Bank for purposes of § 1005.19. Bank therefore may comply with §
1005.19(c) or (d)(1) by ensuring that agreements offered by Bank
are posted on Program Manager's website in accordance with §
1005.19(c) or (d)(1), respectively. Bank need not create and
maintain a website branded and held out to the public as belonging
to Bank in order to comply with § 1005.19(c) and (d) as long as
Bank ensures that Program Manager's website complies with these
sections.
19(a)(6) Offers to the General Public
1. Prepaid accounts offered to limited groups. An issuer
is deemed to offer a prepaid account agreement to the general
public even if the issuer markets, solicits applications for, or
otherwise makes available prepaid accounts only to a limited group
of persons. For example, an issuer may solicit only residents of a
specific geographic location for a particular prepaid account; in
this case, the agreement would be considered to be offered to the
general public. Similarly, agreements for prepaid accounts issued
by a credit union are considered to be offered to the general
public even though such prepaid accounts are available only to
credit union members.
2. Prepaid account agreements not offered to the general
public. A prepaid account agreement is not offered to the
general public when a consumer is offered the agreement only by
virtue of the consumer's relationship with a third party. Examples
of agreements not offered to the general public include agreements
for payroll card accounts, government benefit accounts, or for
prepaid accounts used to distribute student financial aid
disbursements, or property and casualty insurance payouts, and
other similar programs.
19(a)(7) Open Account
1. Open account. A prepaid account is an open account if
(i) there is an outstanding balance in the account; (ii) the
consumer can load more funds to the account even if the account
does not currently hold a balance; or (iii) the consumer can access
credit from a covered separate credit feature accessible by a
hybrid prepaid-credit card as defined in Regulation Z, 12 CFR
1026.61, in connection with a prepaid account. Under this
definition, an account that meets any of these criteria is
considered to be open even if the account is deemed inactive by the
issuer.
19(a)(8) Prepaid Account
1. Prepaid account. Section 1005.19(a)(7) provides that,
for purposes of § 1005.19, the term prepaid account means a prepaid
account as defined in § 1005.2(b)(3). Therefore, for purposes of §
1005.19, a prepaid account includes, among other things, a payroll
card account as defined in § 1005.2(b)(3)(iii) and a government
benefit account as defined in §§ 1005.2(b)(3)(iii) and
1005.15(a)(2).
19(b) Submission of Agreements to the Bureau 19(b)(1) Submissions
on a Rolling Basis
1. Rolling submission requirement. Section 1005.19(b)(1)
requires issuers to send submissions to the Bureau no later than 30
days after offering, amending, or ceasing to offer any prepaid
account agreement, as described in § 1005.19(b)(1)(ii) through
(iv). For example, if on July 1 an issuer offers a prepaid account
agreement that has not been previously submitted to the Bureau, it
must submit that agreement to the Bureau by July 31 of the same
year. Similarly, if on August 1 an issuer amends a prepaid account
agreement previously submitted to the Bureau, and the change
becomes effective on September 15, the issuer must submit the
entire amended agreement as required by § 1005.19(b)(2)(i) by
October 15 of the same year. Furthermore, if on December 31 an
issuer ceases to offer a prepaid account agreement that was
previously submitted to the Bureau, it must submit notification to
the Bureau that it is withdrawing that agreement as required by §
1005.19(b)(3) by January 30 of the following year.
2. Prepaid accounts offered in conjunction with multiple
issuers. If a program manager offers prepaid account agreements
in conjunction with multiple issuers, each issuer must submit its
own agreement to the Bureau. Alternatively, each issuer may use the
program manager to submit the agreement on its behalf, in
accordance with comment 19(a)(4)-2.
19(b)(2) Amended Agreements
1. Change-in-terms notices not permissible. Section
1005.19(b)(2)(i) requires that if an agreement previously submitted
to the Bureau is amended, the issuer must submit the entire revised
agreement to the Bureau. An issuer may not fulfill this requirement
by submitting a change-in-terms or similar notice covering only the
terms that have changed. Amendments must be integrated into the
text of the agreement (or the optional addenda described in §
1005.19(b)(6)), not provided as separate riders.
2. Updates to the list of names of other relevant parties to
an agreement. Section 1005.19(b)(2)(ii) permits an issuer to
delay making a submission to the Bureau regarding a change in the
list of other relevant parties to a particular agreement until the
earlier of such time as the issuer is otherwise submitting an
amended agreement or changes to other identifying information about
the issuer and its submitted agreements pursuant to §
1005.19(b)(1)(i); or May 1 of each year, for any updates to the
list of names of other relevant parties that occurred between the
issuer's last submission of relevant party information for that
agreement and April 1 of that year. Section 1005.19(b)(2)(ii) thus
ensures that the Bureau has a list of names of other relevant
parties for all submitted agreements that is up-to-date as of April
1 of each year. The following examples illustrate these
requirements:
i. An issuer first submits to the Bureau a payroll card
agreement, along with a list of names of the other relevant parties
(i.e., employers) to that agreement, on May 1, 2019. On July
1, 2020, the issuer adds four new employers under the agreement.
The issuer is not required to make a submission to the Bureau
regarding the addition of other relevant parties to that agreement
at that time.
ii. On January 1, 2020, a change to the payroll card agreement
becomes effective reflecting a new feature and accompanying fee
that the issuer has added to the program. The issuer is required,
by January 31, 2020, to submit to the Bureau its entire revised
agreement and an updated list of the names of other relevant
parties to that agreement.
iii. If the issuer has not added any other employers to the
agreement by April 1, 2020, the issuer is not required to submit to
the Bureau an updated list of names of other relevant parties to
that agreement, because the list it previously submitted to the
Bureau remains current.
iv. If, however, on March 1, 2020, the issuer adds two new
employers under the agreement but makes no other changes to the
agreement, then as of April 1 there are new relevant parties to the
agreement that the issuer has not submitted to the Bureau. The
issuer is required, by May 1, 2020, to submit to the Bureau an
updated list of names of other relevant parties to that agreement
reflecting the two employers it added in March. Because the issuer
has not made any other changes to the agreement since it was
submitted in January, the issuer is not required to re-submit the
agreement itself by May 1, 2020.
19(b)(3) Withdrawal of Agreements No Longer Offered
1. No longer offers agreement. Section 1005.19(b)(3)
provides that, if an issuer no longer offers an agreement that was
previously submitted to the Bureau, the issuer must notify the
Bureau no later than 30 days after the issuer ceases to offer the
agreement that it is withdrawing the agreement. An issuer no longer
offers an agreement when it no longer allows a consumer to activate
or register a new account in connection with that agreement.
19(b)(4) De Minimis Exception
1. Relationship to other exceptions. The de minimis
exception in § 1005.19(b)(4) is distinct from the product testing
exception under § 1005.19(b)(5). The de minimis exception provides
that an issuer with fewer than 3,000 open prepaid accounts is not
required to submit any agreements to the Bureau, regardless of
whether those agreements qualify for the product testing exception.
In contrast, the product testing exception provides that an issuer
is not required to submit to the Bureau agreements offered solely
in connection with certain types of prepaid account programs with
fewer than 3,000 open accounts, regardless of the issuer's total
number of open accounts.
2. De minimis exception. Under § 1005.19(b)(4), an issuer
is not required to submit any prepaid account agreements to the
Bureau under § 1005.19(b)(1) if the issuer has fewer than 3,000
open prepaid accounts. For example, an issuer has 2,000 open
prepaid accounts. The issuer is not required to submit any
agreements to the Bureau because the issuer qualifies for the de
minimis exception.
3. Date for determining whether issuer qualifies. Whether
an issuer qualifies for the de minimis exception is determined as
of the last day of each calendar quarter. For example, an issuer
has 2,500 open prepaid accounts as of December 31, the last day of
the calendar quarter. As of January 30, the issuer has 3,100 open
prepaid accounts. As of March 31, the last day of the following
calendar quarter, the issuer has 2,700 open prepaid accounts. Even
though the issuer had 3,100 open prepaid accounts at one time
during the calendar quarter, the issuer qualifies for the de
minimis exception because the number of open prepaid accounts was
less than 3,000 as of March 31. The issuer therefore is not
required to submit any agreements to the Bureau under §
1005.19(b)(1).
4. Date for determining whether issuer ceases to qualify.
Whether an issuer ceases to qualify for the de minimis exception
under § 1005.19(b)(4) is determined as of the last day of the
calendar quarter. For example, an issuer has 2,500 open prepaid
accounts as of June 30, the last day of the calendar quarter. The
issuer is not required to submit any agreements to the Bureau under
§ 1005.19(b) by July 30 (the 30th day after June 30) because the
issuer qualifies for the de minimis exception. As of July 15, the
issuer has 3,100 open prepaid accounts. The issuer is not required
to take any action at this time, because whether an issuer
qualifies for the de minimis exception under § 1005.19(b)(4) is
determined as of the last day of the calendar quarter. The issuer
still has 3,100 open prepaid accounts as of September 30. Because
the issuer had 3,100 open prepaid accounts as of September 30, the
issuer ceases to qualify for the de minimis exception and must
submit its agreements to the Bureau by October 30, the 30th day
after the last day of the calendar quarter.
5. Option to withdraw agreements. Section 1005.19(b)(4)
provides that if an issuer that did not previously qualify for the
de minimis exception newly qualifies for the de minimis exception,
the issuer must continue to make rolling submissions to the Bureau
as required by § 1005.19(b)(1) until the issuer notifies the Bureau
that the issuer is withdrawing all agreements it previously
submitted to the Bureau. For example, an issuer offers three
agreements and has 3,001 open accounts as of December 31. The
issuer submitted each of the three agreements to the Bureau by
January 30 as required under § 1005.19(b). As of March 31, the
issuer has only 2,999 open accounts. The issuer has two options.
First, the issuer may notify the Bureau that the issuer is
withdrawing each of the three agreements it previously submitted.
Once the issuer has notified the Bureau, the issuer is no longer
required to make rolling submissions to the Bureau under §
1005.19(b) unless it later ceases to qualify for the de minimis
exception. Alternatively, the issuer may choose not to notify the
Bureau that it is withdrawing its agreements. In this case, the
issuer must continue making rolling submissions to the Bureau as
required by § 1005.19(b). The issuer might choose not to withdraw
its agreements if, for example, the issuer believes it will likely
cease to qualify for the de minimis exception again in the near
future.
19(b)(6) Form and Content of Agreements Submitted to the Bureau
1. Agreements currently in effect. Agreements submitted
to the Bureau must contain the provisions of the agreement and fee
information currently in effect. For example, on June 1, an issuer
decides to decrease the out-of-network ATM withdrawal fee
associated with one of the agreements it offers. The change in that
fee will become effective on August 1. The issuer must submit and
post the amended agreement with the decreased out-of-network ATM
withdrawal fee to the Bureau by August 31 as required by §
1005.19(b)(2)(i) and (c).
2. Fee information variations do not constitute separate
agreements. Fee information that may vary from one consumer to
another depending on the consumer's state of residence or other
factors must be disclosed by setting forth all the possible
variations. For example, an issuer offers a prepaid account with a
monthly fee of $4.95 or $0 if the consumer regularly receives
direct deposit to the prepaid account. The issuer must submit to
the Bureau one agreement with fee information listing the possible
monthly fees of $4.95 or $0 and including the explanation that the
latter fee is dependent upon the consumer regularly receiving
direct deposit.
3. Integrated agreement requirement. Issuers may not
submit provisions of the agreement or fee information in the form
of change-in-terms notices or riders. The only addenda that may be
submitted as part of an agreement are the optional fee information
addenda described in § 1005.19(b)(6)(ii). Changes in provisions or
fee information must be integrated into the body of the agreement
or the optional fee information addenda. For example, it would be
impermissible for an issuer to submit to the Bureau an agreement in
the form of a terms and conditions document on January 1 and
subsequently submit a change-in-terms notice to indicate amendments
to the previously submitted agreement. Instead, the issuer must
submit a document that integrates the changes made by each of the
change-in-terms notices into the body of the original terms and
conditions document and the optional addenda displaying variations
in fee information.
19(c) Posting of Agreements Offered to the General Public
1. Requirement applies only to agreements offered to the
general public. An issuer is only required to post and maintain
on its publicly available Web site the prepaid account agreements
that the issuer offers to the general public as defined by §
1005.19(a)(6) and must submit to the Bureau under § 1005.19(b). For
agreements not offered to the general public, the issuer is not
required to post and maintain the agreements on its publicly
available Web site, but is still required to provide each
individual consumer with access to his or her specific prepaid
account agreement under § 1005.19(d). This posting requirement is
distinct from that of § 1005.7, as modified by § 1005.18(f)(1),
which requires an issuer to provide certain disclosures at the time
a consumer contracts for an electronic fund transfer service or
before the first electronic fund transfer is made involving the
consumer's account, and the change-in-terms notice required under §
1005.8(a), as modified by § 1005.18(f)(2). This requirement is also
distinct from that of § 1005.18(b)(4), which requires issuers to
make the long form disclosure available to consumers prior to
prepaid account acquisition and which, depending on the methods an
issuer offers prepaid accounts to consumers, may require posting of
the long form disclosure on the issuer's Web site. Additionally, if
an issuer is not required to submit any agreements to the Bureau
because the issuer qualifies for the de minimis exception under §
1005.19(b)(4) or the agreement qualifies for the product testing
exception under § 1005.19(b)(5), the issuer is not required to post
and maintain any agreements on its Web site under § 1005.19(c). The
issuer is still required to provide each individual consumer with
access to his or her specific prepaid account agreement under §
1005.19(d) by posting and maintaining the agreement on the issuer's
Web site or by providing a copy of the agreement upon the
consumer's request.
2. Issuers that do not otherwise maintain Web sites. If
an issuer offers an agreement to the general public as defined by §
1005.19(a)(6), that issuer must post that agreement on a publicly
available Web site it maintains. If an issuer provides consumers
with access to specific information about their individual
accounts, such as balance information or copies of statements,
through a third-party Web site, the issuer is considered to
maintain that Web site for purposes of § 1005.19. Such a
third-party Web site is deemed to be maintained by the issuer for
purposes of § 1005.19(c) even where, for example, an unaffiliated
entity designs the Web site and owns and maintains the information
technology infrastructure that supports the Web site, consumers
with prepaid accounts from multiple issuers can access individual
account information through the same Web site, and the Web site is
not labeled, branded, or otherwise held out to the public as
belonging to the issuer. Therefore, issuers that provide consumers
with access to account-specific information through a third-party
Web site can comply with § 1005.19(c) by ensuring that the
agreements the issuer submits to the Bureau are posted on the
third-party Web site in accordance with § 1005.19(c).
19(d) Agreements for All Open Accounts
1. Requirement applies to all open accounts. The
requirement to provide access to prepaid account agreements under §
1005.19(d) applies to all open prepaid accounts. For example, an
issuer that is not required to post agreements on its Web site
because it qualifies for the de minimis exception under §
1005.19(b)(4) would still be required to provide consumers with
access to their specific agreements under § 1005.19(d). Similarly,
an agreement that is no longer offered would not be required to be
posted on the issuer's Web site, but would still need to be
provided to the consumer to whom it applies under § 1005.19(d).
Additionally, an issuer is not required to post on its Web site
agreements not offered to the general public, such as agreements
for payroll card accounts and government benefit accounts, as
explained in comment 19(c)-1, but the issuer must still provide
consumers with access to their specific agreements under §
1005.19(d).
2. Agreements sent to consumers. Section
1005.19(d)(1)(ii) provides, in part, that if an issuer makes an
agreement available upon request, the issuer must send the consumer
a copy of the consumer's prepaid account agreement no later than
five business days after the issuer receives the consumer's
request. If the issuer mails the agreement, the agreement must be
posted in the mail five business days after the issuer receives the
consumer's request. If the issuer hand delivers or provides the
agreement electronically, the agreement must be hand delivered or
provided electronically five business days after the issuer
receives the consumer's request. For example, if the issuer emails
the agreement, the email with the attached agreement must be sent
no later than five business days after the issuer receives the
consumer's request.
Section 1005.20 Requirements for Gift Cards and Gift Certificates
20(a) Definitions
1. Form of card, code, or device. Section 1005.20 applies
to any card, code, or other device that meets one of the
definitions in §§ 1005.20(a)(1) through (a)(3) (and is not
otherwise excluded by § 1005.20(b)), even if it is not issued in
card form. Section 1005.20 applies, for example, to an account
number or bar code that can be used to access underlying funds.
Similarly, § 1005.20 applies to a device with a chip or other
embedded mechanism that links the device to stored funds, such as a
mobile phone or sticker containing a contactless chip that enables
the consumer to access the stored funds. A card, code, or other
device that meets the definition in §§ 1005.20(a)(1) through (a)(3)
includes an electronic promise (see comment 20(a)-2) as well
as a promise that is not electronic. See, however, §
1005.20(b)(5). In addition, § 1005.20 applies if a merchant issues
a code that entitles a consumer to redeem the code for goods or
services, regardless of the medium in which the code is issued
(see, however, § 1005.20(b)(5)), and whether or not it may
be redeemed electronically or in the merchant's store. Thus, for
example, if a merchant emails a code that a consumer may redeem in
a specified amount either online or in the merchant's store, that
code is covered under § 1005.20, unless one of the exclusions in §
1005.20(b) apply.
2. Electronic promise. The term “electronic promise” as
used in EFTA sections 915(a)(2)(B), (a)(2)(C), and (a)(2)(D) means
a person's commitment or obligation communicated or stored in
electronic form made to a consumer to provide payment for goods or
services for transactions initiated by the consumer. The electronic
promise is itself represented by a card, code or other device that
is issued or honored by the person, reflecting the person's
commitment or obligation to pay. For example, if a merchant issues
a code that can be given as a gift and that entitles the recipient
to redeem the code in an online transaction for goods or services,
that code represents an electronic promise by the merchant and is a
card, code, or other device covered by § 1005.20.
3. Cards, codes, or other devices redeemable for specific
goods or services. Certain cards, codes, or other devices may
be redeemable upon presentation for a specific good or service, or
“experience,” such as a spa treatment, hotel stay, or airline
flight. In other cases, a card, code, or other device may entitle
the consumer to a certain percentage off the purchase of a good or
service, such as 20% off of any purchase in a store. Such cards,
codes, or other devices generally are not subject to the
requirements of this section because they are not issued to a
consumer “in a specified amount” as required under the definitions
of “gift certificate,” “store gift card,” or “general-use prepaid
card.” However, if the card, code, or other device is issued in a
specified or denominated amount that can be applied toward the
purchase of a specific good or service, such as a certificate or
card redeemable for a spa treatment up to $50, the card, code, or
other device is subject to this section, unless one of the
exceptions in § 1005.20(b) apply. See, e.g., §
1005.20(b)(3). Similarly, if the card, code, or other device states
a specific monetary value, such as “a $50 value,” the card, code,
or other device is subject to this section, unless an exclusion in
§ 1005.20(b) applies.
4. Issued primarily for personal, family, or household
purposes. Section 1005.20 only applies to cards, codes, or
other devices that are sold or issued to a consumer primarily for
personal, family, or household purposes. A card, code, or other
device initially purchased by a business is subject to this section
if the card, code, or other device is purchased for redistribution
or resale to consumers primarily for personal, family, or household
purposes. Moreover, the fact that a card, code, or other device may
be primarily funded by a business, for example, in the case of
certain rewards or incentive cards, does not mean the card, code,
or other device is outside the scope of § 1005.20, if the card,
code, or other device will be provided to a consumer primarily for
personal, family, or household purposes. But see §
1005.20(b)(3). Whether a card, code, or other device is issued to a
consumer primarily for personal, family, or household purposes will
depend on the facts and circumstances. For example, if a program
manager purchases store gift cards directly from an issuing
merchant and sells those cards through the program manager's retail
outlets, such gift cards are subject to the requirements of §
1005.20 because the store gift cards are sold to consumers
primarily for personal, family, or household purposes. In contrast,
a card, code, or other device generally would not be issued to
consumers primarily for personal, family, or household purposes,
and therefore would fall outside the scope of § 1005.20, if the
purchaser of the card, code, or device is contractually prohibited
from reselling or redistributing the card, code, or device to
consumers primarily for personal, family, or household purposes,
and reasonable policies and procedures are maintained to avoid such
sale or distribution for such purposes. However, if an entity that
has purchased cards, codes, or other devices for business purposes
sells or distributes such cards, codes, or other devices to
consumers primarily for personal, family, or household purposes,
that entity does not comply with § 1005.20 if it has not otherwise
met the substantive and disclosure requirements of the rule or
unless an exclusion in § 1005.20(b) applies.
5. Examples of cards, codes, or other devices issued for
business purposes. Examples of cards, codes, or other devices
that are issued and used for business purposes and therefore
excluded from the definitions of “gift certificate,” “store gift
card,” or “general-use prepaid card” include:
i. Cards, codes, or other devices to reimburse employees for
travel or moving expenses.
ii. Cards, codes, or other devices for employees to use to
purchase office supplies and other business-related items.
20(a)(2) Store Gift Card
1. Relationship between “gift certificate” and “store gift
card.” The term “store gift card” in § 1005.20(a)(2) includes
“gift certificate” as defined in § 1005.20(a)(1). For example, a
numeric or alphanumeric code representing a specified dollar amount
or value that is electronically sent to a consumer as a gift which
can be redeemed or exchanged by the recipient to obtain goods or
services may be both a “gift certificate” and a “store gift card”
if the specified amount or value cannot be increased.
2. Affiliated group of merchants. The term “affiliated
group of merchants” means two or more affiliated merchants or other
persons that are related by common ownership or common corporate
control (see, e.g., 12 CFR 227.3(b) and 12 CFR 223.2) and
that share the same name, mark, or logo. For example, the term
includes franchisees that are subject to a common set of corporate
policies or practices under the terms of their franchise licenses.
The term also applies to two or more merchants or other persons
that agree among themselves, by contract or otherwise, to redeem
cards, codes, or other devices bearing the same name, mark, or logo
(other than the mark, logo, or brand of a payment network), for the
purchase of goods or services solely at such merchants or persons.
For example, assume a movie theatre chain and a restaurant chain
jointly agree to issue cards that share the same “Flix and Food”
logo that can be redeemed solely towards the purchase of movie
tickets or concessions at any of the participating movie theatres,
or towards the purchase of food or beverages at any of the
participating restaurants. For purposes of § 1005.20, the movie
theatre chain and the restaurant chain would be considered to be an
affiliated group of merchants, and the cards are considered to be
“store gift cards.” However, merchants or other persons are not
considered to be affiliated merely because they agree to accept a
card that bears the mark, logo, or brand of a payment network.
3. Mall gift cards. See comment 20(a)(3)-2.
20(a)(3) General-Use Prepaid Card
1. Redeemable upon presentation at multiple, unaffiliated
merchants. A card, code, or other device is redeemable upon
presentation at multiple, unaffiliated merchants if, for example,
such merchants agree to honor the card, code, or device if it bears
the mark, logo, or brand of a payment network, pursuant to the
rules of the payment network.
2. Mall gift cards. Mall gift cards that are intended to
be used or redeemed for goods or services at participating
retailers within a shopping mall may be considered store gift cards
or general-use prepaid cards depending on the merchants with which
the cards may be redeemed. For example, if a mall card may only be
redeemed at merchants within the mall itself, the card is more
likely to be redeemable at an affiliated group of merchants and
considered a store gift card. However, certain mall cards also
carry the brand of a payment network and can be used at any
retailer that accepts that card brand, including retailers located
outside of the mall. Such cards are considered general-use prepaid
cards.
20(a)(4) Loyalty, Award, or Promotional Gift Card
1. Examples of loyalty, award, or promotional programs.
Examples of loyalty, award, or promotional programs under §
1005.20(a)(4) include, but are not limited to:
i. Consumer retention programs operated or administered by a
merchant or other person that provide to consumers cards or coupons
redeemable for or towards goods or services or other monetary value
as a reward for purchases made or for visits to the participating
merchant.
ii. Sales promotions operated or administered by a merchant or
product manufacturer that provide coupons or discounts redeemable
for or towards goods or services or other monetary value.
iii. Rebate programs operated or administered by a merchant or
product manufacturer that provide cards redeemable for or towards
goods or services or other monetary value to consumers in
connection with the consumer's purchase of a product or service and
the consumer's completion of the rebate submission process.
iv. Sweepstakes or contests that distribute cards redeemable for
or towards goods or services or other monetary value to consumers
as an invitation to enter into the promotion for a chance to win a
prize.
v. Referral programs that provide cards redeemable for or
towards goods or services or other monetary value to consumers in
exchange for referring other potential consumers to a merchant.
vi. Incentive programs through which an employer provides cards
redeemable for or towards goods or services or other monetary value
to employees, for example, to recognize job performance, such as
increased sales, or to encourage employee wellness and safety.
vii. Charitable or community relations programs through which a
company provides cards redeemable for or towards goods or services
or other monetary value to a charity or community group for their
fundraising purposes, for example, as a reward for a donation or as
a prize in a charitable event.
2. Issued for loyalty, award, or promotional purposes. To
indicate that a card, code, or other device is issued for loyalty,
award, or promotional purposes as required by § 1005.20(a)(4)(iii),
it is sufficient for the card, code, or other device to state on
the front, for example, “Reward” or “Promotional.”
3. Reference to toll-free number and Web site. If a card,
code, or other device issued in connection with a loyalty, award,
or promotional program does not have any fees, the disclosure under
§ 1005.20(a)(4)(iii)(D) is not required on the card, code, or other
device.
20(a)(6) Service Fee
1. Service fees. Under § 1005.20(a)(6), a service fee
includes a periodic fee for holding or use of a gift certificate,
store gift card, or general-use prepaid card. A periodic fee
includes any fee that may be imposed on a gift certificate, store
gift card, or general-use prepaid card from time to time for
holding or using the certificate or card, such as a monthly
maintenance fee, a transaction fee, an ATM fee, a reload fee, a
foreign currency transaction fee, or a balance inquiry fee, whether
or not the fee is waived for a certain period of time or is only
imposed after a certain period of time. A service fee does not
include a one-time fee or a fee that is unlikely to be imposed more
than once while the underlying funds are still valid, such as an
initial issuance fee, a cash-out fee, a supplemental card fee, or a
lost or stolen certificate or card replacement fee.
20(a)(7) Activity
1. Activity. Under § 1005.20(a)(7), any action that
results in an increase or decrease of the funds underlying a gift
certificate, store gift card, or general-use prepaid card, other
than the imposition of a fee, or an adjustment due to an error or a
reversal of a prior transaction, constitutes activity for purposes
of § 1005.20. For example, the purchase and activation of a
certificate or card, the use of the certificate or card to purchase
a good or service, or the reloading of funds onto a store gift card
or general-use prepaid card constitutes activity. However, the
imposition of a fee, the replacement of an expired, lost, or stolen
certificate or card, and a balance inquiry do not constitute
activity. In addition, if a consumer attempts to engage in a
transaction with a gift certificate, store gift card, or
general-use prepaid card, but the transaction cannot be completed
due to technical or other reasons, such attempt does not constitute
activity. Furthermore, if the funds underlying a gift certificate,
store gift card, or general-use prepaid card are adjusted because
there was an error or the consumer has returned a previously
purchased good, the adjustment also does not constitute activity
with respect to the certificate or card.
20(b) Exclusions
1. Application of exclusion. A card, code, or other
device is excluded from the definition of “gift certificate,”
“store gift card,” or “general-use prepaid card” if it meets any of
the exclusions in § 1005.20(b). An excluded card, code, or other
device generally is not subject to any of the requirements of this
section. See, however, § 1005.20(a)(4)(iii), requiring
certain disclosures for loyalty, award, or promotional gift
cards.
2. Eligibility for multiple exclusions. A card, code, or
other device may qualify for one or more exclusions. For example, a
corporation may give its employees a gift card that is marketed
solely to businesses for incentive-related purposes, such as to
reward job performance or promote employee safety. In this case,
the card may qualify for the exclusion for loyalty, award, or
promotional gift cards under § 1005.20(b)(3), or for the exclusion
for cards, codes, or other devices not marketed to the general
public under § 1005.20(b)(4). In addition, as long as any one of
the exclusions applies, a card, code, or other device is not
covered by § 1005.20, even if other exclusions do not apply. In the
above example, the corporation may give its employees a type of
gift card that can also be purchased by a consumer directly from a
merchant. Under these circumstances, while the card does not
qualify for the exclusion for cards, codes, or other devices not
marketed to the general public under § 1005.20(b)(4) because the
card can also be obtained through retail channels, it is
nevertheless exempt from the substantive requirements of § 1005.20
because it is a loyalty, award, or promotional gift card. See,
however, § 1005.20(a)(4)(iii), requiring certain disclosures
for loyalty, award, or promotional gift cards. Similarly, a person
may market a reloadable card to teenagers for occasional expenses
that enables parents to monitor spending. Although the card does
not qualify for the exclusion for cards, codes, or other devices
not marketed to the general public under § 1005.20(b)(4), it may
nevertheless be exempt from the requirements of § 1005.20 under §
1005.20(b)(2) if it is reloadable and not marketed or labeled as a
gift card or gift certificate.
Paragraph 20(b)(1)
1. Examples of excluded products. The exclusion for
products usable solely for telephone services applies to prepaid
cards for long-distance telephone service, prepaid cards for
wireless telephone service and prepaid cards for other services
that function similar to telephone services, such as prepaid cards
for voice over Internet protocol (VoIP) access time.
Paragraph 20(b)(2)
1. Reloadable. A card, code, or other device is
“reloadable” if the terms and conditions of the agreement permit
funds to be added to the card, code, or other device after the
initial purchase or issuance. A card, code, or other device is not
“reloadable” merely because the issuer or processor is technically
able to add functionality that would otherwise enable the card,
code, or other device to be reloaded.
2. Marketed or labeled as a gift card or gift
certificate. The term “marketed or labeled as a gift card or
gift certificate” means directly or indirectly offering,
advertising, or otherwise suggesting the potential use of a card,
code or other device, as a gift for another person. Whether the
exclusion applies generally does not depend on the type of entity
that makes the promotional message. For example, a card may be
marketed or labeled as a gift card or gift certificate if anyone
(other than the purchaser of the card), including the issuer, the
retailer, the program manager that may distribute the card, or the
payment network on which a card is used, promotes the use of the
card as a gift card or gift certificate. A card, code, or other
device, including a general-purpose reloadable card, is marketed or
labeled as a gift card or gift certificate even if it is only
occasionally marketed as a gift card or gift certificate. For
example, a network-branded general purpose reloadable card would be
marketed or labeled as a gift card or gift certificate if the
issuer principally advertises the card as a less costly alternative
to a bank account but promotes the card in a television, radio,
newspaper, or Internet advertisement, or on signage as “the perfect
gift” during the holiday season. However, the mere mention of the
availability of gift cards or gift certificates in an advertisement
or on a sign that also indicates the availability of other excluded
prepaid cards does not by itself cause the excluded prepaid cards
to be marketed as a gift card or a gift certificate. For example,
the posting of a sign in a store that refers to the availability of
gift cards does not by itself constitute the marketing of otherwise
excluded prepaid cards that may also be sold in the store as gift
cards or gift certificates, provided that a consumer acting
reasonably under the circumstances would not be led to believe that
the sign applies to all prepaid cards sold in the store. See,
however, comment 20(b)(2)-4.ii.
3. Examples of marketed or labeled as a gift card or gift
certificate. i. Examples of marketed or labeled as a gift card
or gift certificate include:
A. Using the word “gift” or “present” on a card, certificate, or
accompanying material, including documentation, packaging and
promotional displays.
B. Representing or suggesting that a certificate or card can be
given to another person, for example, as a “token of appreciation”
or a “stocking stuffer,” or displaying a congratulatory message on
the card, certificate or accompanying material.
C. Incorporating gift-giving or celebratory imagery or motifs,
such as a bow, ribbon, wrapped present, candle, or congratulatory
message, on a card, certificate, accompanying documentation, or
promotional material.
ii. The term does not include:
A. Representing that a card or certificate can be used as a
substitute for a checking, savings, or deposit account.
B. Representing that a card or certificate can be used to pay
for a consumer's health-related expenses - for example, a card tied
to a health savings account.
C. Representing that a card or certificate can be used as a
substitute for traveler's checks or cash.
D. Representing that a card or certificate can be used as a
budgetary tool, for example, by teenagers, or to cover emergency
expenses.
4. Reasonable policies and procedures to avoid marketing as a
gift card. The exclusion for a card, code, or other device that
is reloadable and not marketed or labeled as a gift card or gift
certificate in § 1005.20(b)(2) applies if a reloadable card, code,
or other device is not marketed or labeled as a gift card or gift
certificate and if persons subject to the rule, including issuers,
program managers, and retailers, maintain policies and procedures
reasonably designed to avoid such marketing. Such policies and
procedures may include contractual provisions prohibiting a
reloadable card, code, or other device from being marketed or
labeled as a gift card or gift certificate, merchandising
guidelines or plans regarding how the product must be displayed in
a retail outlet, and controls to regularly monitor or otherwise
verify that the card, code or other device is not being marketed as
a gift card. Whether a reloadable card, code, or other device has
been marketed as a gift card or gift certificate will depend on the
facts and circumstances, including whether a reasonable consumer
would be led to believe that the card, code, or other device is a
gift card or gift certificate. The following examples illustrate
the application of § 1005.20(b)(2):
i. An issuer or program manager of prepaid cards agrees to sell
general-purpose reloadable cards through a retailer. The contract
between the issuer or program manager and the retailer establishes
the terms and conditions under which the cards may be sold and
marketed at the retailer. The terms and conditions prohibit the
general-purpose reloadable cards from being marketed as a gift card
or gift certificate, and require policies and procedures to
regularly monitor or otherwise verify that the cards are not being
marketed as such. The issuer or program manager sets up one
promotional display at the retailer for gift cards and another
physically separated display for excluded products under §
1005.20(b), including general-purpose reloadable cards and wireless
telephone cards, such that a reasonable consumer would not believe
that the excluded cards are gift cards. The exclusion in §
1005.20(b)(2) applies because policies and procedures reasonably
designed to avoid the marketing of the general-purpose reloadable
cards as gift cards or gift certificates are maintained, even if a
retail clerk inadvertently stocks or a consumer inadvertently
places a general-purpose reloadable card on the gift card
display.
ii. Same facts as in i., except that the issuer or program
manager sets up a single promotional display at the retailer on
which a variety of prepaid cards are sold, including store gift
cards and general-purpose reloadable cards. A sign stating “Gift
Cards” appears prominently at the top of the display. The exclusion
in § 1005.20(b)(2) does not apply with respect to the
general-purpose reloadable cards because policies and procedures
reasonably designed to avoid the marketing of excluded cards as
gift cards or gift certificates are not maintained.
iii. Same facts as in i., except that the issuer or program
manager sets up a single promotional multi-sided display at the
retailer on which a variety of prepaid card products, including
store gift cards and general-purpose reloadable cards are sold.
Gift cards are segregated from excluded cards, with gift cards on
one side of the display and excluded cards on a different side of a
display. Signs of equal prominence at the top of each side of the
display clearly differentiate between gift cards and the other
types of prepaid cards that are available for sale. The retailer
does not use any more conspicuous signage suggesting the general
availability of gift cards, such as a large sign stating “Gift
Cards” at the top of the display or located near the display. The
exclusion in § 1005.20(b)(2) applies because policies and
procedures reasonably designed to avoid the marketing of the
general-purpose reloadable cards as gift cards or gift certificates
are maintained, even if a retail clerk inadvertently stocks or a
consumer inadvertently places a general-purpose reloadable card on
the gift card display.
iv. Same facts as in i., except that the retailer sells a
variety of prepaid card products, including store gift cards and
general-purpose reloadable cards, arranged side-by-side in the same
checkout lane. The retailer does not affirmatively indicate or
represent that gift cards are available, such as by displaying any
signage or other indicia at the checkout lane suggesting the
general availability of gift cards. The exclusion in §
1005.20(b)(2) applies because policies and procedures reasonably
designed to avoid marketing the general-purpose reloadable cards as
gift cards or gift certificates are maintained.
5. Online sales of prepaid cards. Some Web sites may
prominently advertise or promote the availability of gift cards or
gift certificates in a manner that suggests to a consumer that the
Web site exclusively sells gift cards or gift certificates. For
example, a Web site may display a banner advertisement or a graphic
on the home page that prominently states “Gift Cards,” “Gift
Giving,” or similar language without mention of other available
products, or use a web address that includes only a reference to
gift cards or gift certificates in the address. In such a case, a
consumer acting reasonably under the circumstances could be led to
believe that all prepaid products sold on the Web site are gift
cards or gift certificates. Under these facts, the Web site has
marketed all such products, including general-purpose reloadable
cards, as gift cards or gift certificates, and the exclusion in §
1005.20(b)(2) does not apply.
6. Temporary non-reloadable cards issued in connection with a
general-purpose reloadable card. Certain general-purpose
reloadable cards that are typically marketed as an account
substitute initially may be sold or issued in the form of a
temporary non-reloadable card. After the card is purchased, the
cardholder is typically required to call the issuer to register the
card and to provide identifying information in order to obtain a
reloadable replacement card. In most cases, the temporary
non-reloadable card can be used for purchases until the replacement
reloadable card arrives and is activated by the cardholder. Because
the temporary non-reloadable card may only be obtained in
connection with the general-purpose reloadable card, the exclusion
in § 1005.20(b)(2) applies so long as the card is not marketed as a
gift card or gift certificate.
Paragraph 20(b)(4)
1. Marketed to the general public. A card, code, or other
device is marketed to the general public if the potential use of
the card, code, or other device is directly or indirectly offered,
advertised, or otherwise promoted to the general public. A card,
code, or other device may be marketed to the general public through
any advertising medium, including television, radio, newspaper, the
Internet, or signage. However, the posting of a company policy that
funds may be disbursed by prepaid card (such as a sign posted at a
cash register or customer service center stating that store credit
will be issued by prepaid card) does not constitute the marketing
of a card, code, or other device to the general public. In
addition, the method of distribution by itself is not dispositive
in determining whether a card, code, or other device is marketed to
the general public. Factors that may be considered in determining
whether the exclusion applies to a particular card, code, or other
device include the means or channel through which the card, code,
or device may be obtained by a consumer, the subset of consumers
that are eligible to obtain the card, code, or device, and whether
the availability of the card, code, or device is advertised or
otherwise promoted in the marketplace.
2. Examples. The following examples illustrate the
application of the exclusion in § 1005.20(b)(4):
i. A merchant sells its gift cards at a discount to a business
which may give them to employees or loyal consumers as incentives
or rewards. In determining whether the gift card falls within the
exclusion in § 1005.20(b)(4), the merchant must consider whether
the card is of a type that is advertised or made available to
consumers generally or can be obtained elsewhere. If the card can
also be purchased through retail channels, the exclusion in §
1005.20(b)(4) does not apply, even if the consumer obtained the
card from the business as an incentive or reward. See,
however, § 1005.20(b)(3).
ii. A national retail chain decides to market its gift cards
only to members of its frequent buyer program. Similarly, a bank
may decide to sell gift cards only to its customers. If a member of
the general public may become a member of the program or a customer
of the bank, the card does not fall within the exclusion in §
1005.20(b)(4) because the general public has the ability to obtain
the cards. See, however, § 1005.20(b)(3).
iii. A card issuer advertises a reloadable card to teenagers and
their parents promoting the card for use by teenagers for
occasional expenses, schoolbooks and emergencies and by parents to
monitor spending. Because the card is marketed to and may be sold
to any member of the general public, the exclusion in §
1005.20(b)(4) does not apply. See, however, §
1005.20(b)(2).
iv. An insurance company settles a policyholder's claim and
distributes the insurance proceeds to the consumer by means of a
prepaid card. Because the prepaid card is simply the means for
providing the insurance proceeds to the consumer and the
availability of the card is not advertised to the general public,
the exclusion in § 1005.20(b)(4) applies.
v. A merchant provides store credit to a consumer following a
merchandise return by issuing a prepaid card that clearly indicates
that the card contains funds for store credit. Because the prepaid
card is issued for the stated purpose of providing store credit to
the consumer and the ability to receive refunds by a prepaid card
is not advertised to the general public, the exclusion in §
1005.20(b)(4) applies.
vi. A tax preparation company elects to distribute tax refunds
to its clients by issuing prepaid cards, but does not advertise or
otherwise promote the ability to receive proceeds in this manner.
Because the prepaid card is simply the mechanism for providing the
tax refund to the consumer, and the tax preparer does not advertise
the ability to obtain tax refunds by a prepaid card, the exclusion
in § 1005.20(b)(4) applies. However, if the tax preparer promotes
the ability to receive tax refund proceeds through a prepaid card
as a way to obtain “faster” access to the proceeds, the exclusion
in § 1005.20(b)(4) does not apply.
Paragraph 20(b)(5)
1. Exclusion explained. To qualify for the exclusion in §
1005.20(b)(5), the sole means of issuing the card, code, or other
device must be in a paper form. Thus, the exclusion generally
applies to certificates issued in paper form where solely the paper
itself may be used to purchase goods or services. A card, code or
other device is not issued solely in paper form simply because it
may be reproduced or printed on paper. For example, a bar code,
card or certificate number, or certificate or coupon electronically
provided to a consumer and redeemable for goods and services is not
issued in paper form, even if it may be reproduced or otherwise
printed on paper by the consumer. In this circumstance, although
the consumer might hold a paper facsimile of the card, code, or
other device, the exclusion does not apply because the information
necessary to redeem the value was initially issued in electronic
form. A paper certificate is within the exclusion regardless of
whether it may be redeemed electronically. For example, a paper
certificate or receipt that bears a bar code, code, or account
number falls within the exclusion in § 1005.20(b)(5) if the bar
code, code, or account number is not issued in any form other than
on the paper. In addition, the exclusion in § 1005.20(b)(5)
continues to apply in circumstances where an issuer replaces a gift
certificate that was initially issued in paper form with a card or
electronic code (for example, to replace a lost paper
certificate).
2. Examples. The following examples illustrate the
application of the exclusion in § 1005.20(b)(5):
i. A merchant issues a paper gift certificate that entitles the
bearer to a specified dollar amount that can be applied towards a
future meal. The merchant fills in the certificate with the name of
the certificate holder and the amount of the certificate. The
certificate falls within the exclusion in § 1005.20(b)(5) because
it is issued in paper form only.
ii. A merchant allows a consumer to prepay for a good or
service, such as a car wash or time at a parking meter, and issues
a paper receipt bearing a numerical or bar code that the consumer
may redeem to obtain the good or service. The exclusion in §
1005.20(b)(5) applies because the code is issued in paper form
only.
iii. A merchant issues a paper certificate or receipt bearing a
bar code or certificate number that can later be scanned or entered
into the merchant's system and redeemed by the certificate or
receipt holder towards the purchase of goods or services. The bar
code or certificate number is not issued by the merchant in any
form other than paper. The exclusion in § 1005.20(b)(5) applies
because the bar code or certificate number is issued in paper form
only.
iv. An online merchant electronically provides a bar code, card
or certificate number, or certificate or coupon to a consumer that
the consumer may print on a home printer and later redeem towards
the purchase of goods or services. The exclusion in § 1005.20(b)(5)
does not apply because the bar code or card or certificate number
was issued to the consumer in electronic form, even though it can
be reproduced or otherwise printed on paper by the consumer.
Paragraph 20(b)(6)
1. Exclusion explained. The exclusion for cards, codes,
or other devices that are redeemable solely for admission to events
or venues at a particular location or group of affiliated locations
generally applies to cards, codes, or other devices that are not
redeemed for a specified monetary value, but rather solely for
admission or entry to an event or venue. The exclusion also covers
a card, code, or other device that is usable to purchase goods or
services in addition to entry into the event or the venue, either
at the event or venue or at an affiliated location or location in
geographic proximity to the event or venue.
2. Examples. The following examples illustrate the
application of the exclusion in § 1005.20(b)(6):
i. A consumer purchases a prepaid card that entitles the holder
to a ticket for entry to an amusement park. The prepaid card may
only be used for entry to the park. The card qualifies for the
exclusion in § 1005.20(b)(6) because it is redeemable for admission
or entry and for goods or services in conjunction with that
admission. In addition, if the prepaid card does not have a
monetary value, and therefore is not “issued in a specified
amount,” the card does not meet the definitions of “gift
certificate,” “store gift card,” or “general-use prepaid card” in §
1005.20(a). See comment 20(a)-3.
ii. Same facts as in i., except that the gift card also entitles
the holder of the gift card to a dollar amount that can be applied
towards the purchase of food and beverages or goods or services at
the park or at nearby affiliated locations. The card qualifies for
the exclusion in § 1005.20(b)(6) because it is redeemable for
admission or entry and for goods or services in conjunction with
that admission.
iii. A consumer purchases a $25 gift card that the holder of the
gift card can use to make purchases at a merchant, or,
alternatively, can apply towards the cost of admission to the
merchant's affiliated amusement park. The card is not eligible for
the exclusion in § 1005.20(b)(6) because it is not redeemable
solely for the admission or ticket itself (or for goods and
services purchased in conjunction with such admission). The card
meets the definition of “store gift card” and is therefore subject
to § 1005.20, unless a different exclusion applies.
20(c) Form of Disclosures 20(c)(1) Clear and Conspicuous
1. Clear and conspicuous standard. All disclosures
required by this section must be clear and conspicuous. Disclosures
are clear and conspicuous for purposes of this section if they are
readily understandable and, in the case of written and electronic
disclosures, the location and type size are readily noticeable to
consumers. Disclosures need not be located on the front of the
certificate or card, except where otherwise required, to be
considered clear and conspicuous. Disclosures are clear and
conspicuous for the purposes of this section if they are in a print
that contrasts with and is otherwise not obstructed by the
background on which they are printed. For example, disclosures on a
card or computer screen are not likely to be conspicuous if
obscured by a logo printed in the background. Similarly,
disclosures on the back of a card that are printed on top of
indentations from embossed type on the front of the card are not
likely to be conspicuous if the indentations obstruct the
readability of the disclosures. To the extent permitted, oral
disclosures meet the standard when they are given at a volume and
speed sufficient for a consumer to hear and comprehend them.
2. Abbreviations and symbols. Disclosures may contain
commonly accepted or readily understandable abbreviations or
symbols, such as “mo.” for month or a “/” to indicate “per.” Under
the clear and conspicuous standard, it is sufficient to state, for
example, that a particular fee is charged “$2.50/mo. after 12
mos.”
20(c)(2) Format
1. Electronic disclosures. Disclosures provided
electronically pursuant to this section are not subject to
compliance with the consumer consent and other applicable
provisions of the Electronic Signatures in Global and National
Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.).
Electronic disclosures must be in a retainable form. For example, a
person may satisfy the requirement if it provides an online
disclosure in a format that is capable of being printed. Electronic
disclosures may not be provided through a hyperlink or in another
manner by which the purchaser can bypass the disclosure. A person
is not required to confirm that the consumer has read the
electronic disclosures.
20(c)(3) Disclosure Prior to Purchase
1. Method of purchase. The disclosures required by this
paragraph must be provided before a certificate or card is
purchased regardless of whether the certificate or card is
purchased in person, online, by telephone, or by other means.
2. Electronic disclosures. Section 1005.20(c)(3) provides
that the disclosures required by this section must be provided to
the consumer prior to purchase. For certificates or cards purchased
electronically, disclosures made to the consumer after a consumer
has initiated an online purchase of a certificate or card, but
prior to completing the purchase of the certificate or card, would
satisfy the prior-to-purchase requirement. However, electronic
disclosures made available on a person's Web site that may or may
not be accessed by the consumer are not provided to the consumer
and therefore would not satisfy the prior-to-purchase
requirement.
3. Non-physical certificates and cards. If no physical
certificate or card is issued, the disclosures must be provided to
the consumer before the certificate or card is purchased. For
example, where a gift certificate or card is a code that is
provided by telephone, the required disclosures may be provided
orally prior to purchase. See also § 1005.20(c)(2).
20(c)(4) Disclosures on the Certificate or Card
1. Non-physical certificates and cards. If no physical
certificate or card is issued, the disclosures required by this
paragraph must be disclosed on the code, confirmation, or other
written or electronic document provided to the consumer. For
example, where a gift certificate or card is a code or confirmation
that is provided to a consumer online or sent to a consumer's email
address, the required disclosures may be provided electronically on
the same document as the code or confirmation.2. No disclosures
on a certificate or card. Disclosures required by §
1005.20(c)(4) need not be made on a certificate or card if it is
accompanied by a certificate or card that complies with this
section. For example, a person may issue or sell a supplemental
gift card that is smaller than a standard size and that does not
bear the applicable disclosures if it is accompanied by a fully
compliant certificate or card. See also comment
20(c)(2)-2.
20(d) Prohibition on Imposition of Fees or Charges
1. One-year period. Section 1005.20(d) provides that a
person may impose a dormancy, inactivity, or service fee only if
there has been no activity with respect to a certificate or card
for one year. The following examples illustrate this rule:
i. A certificate or card is purchased on January 15 of year one.
If there has been no activity on the certificate or card since the
certificate or card was purchased, a dormancy, inactivity, or
service fee may be imposed on the certificate or card on January 15
of year two.
ii. Same facts as i., and a fee was imposed on January 15 of
year two. Because no more than one dormancy, inactivity, or service
fee may be imposed in any given calendar month, the earliest date
that another dormancy, inactivity, or service fee may be imposed,
assuming there continues to be no activity on the certificate or
card, is February 1 of year two. A dormancy, inactivity, or service
fee is permitted to be imposed on February 1 of year two because
there has been no activity on the certificate or card for the
preceding year (February 1 of year one through January 31 of year
two), and February is a new calendar month. The imposition of a fee
on January 15 of year two is not activity for purposes of §
1005.20(d). See comment 20(a)(7)-1.
iii. Same facts as i., and a fee was imposed on January 15 of
year two. On January 31 of year two, the consumer uses the card to
make a purchase. Another dormancy, inactivity, or service fee could
not be imposed until January 31 of year three, assuming there has
been no activity on the certificate or card since January 31 of
year two.
2. Relationship between §§ 1005.20(d)(2) and (c)(3).
Sections 1005.20(d)(2) and (c)(3) contain similar, but not
identical, disclosure requirements. Section 1005.20(d)(2) requires
the disclosure of dormancy, inactivity, and service fees on a
certificate or card. Section 1005.20(c)(3) requires that vendor
person that issues or sells such certificate or card disclose to a
consumer any dormancy, inactivity, and service fees associated with
the certificate or card before such certificate or card may be
purchased. Depending on the context, a single disclosure that meets
the clear and conspicuous requirements of both §§ 1005.20(d)(2) and
(c)(3) may be used to disclose a dormancy, inactivity, or service
fee. For example, if the disclosures on a certificate or card,
required by § 1005.20(d)(2), are visible to the consumer without
having to remove packaging or other materials sold with the
certificate or card, for a purchase made in person, the disclosures
also meet the requirements of § 1005.20(c)(3). Otherwise, a
dormancy, inactivity, or service fee may need to be disclosed
multiple times to satisfy the requirements of §§ 1005.20(d)(2) and
(c)(3). For example, if the disclosures on a certificate or card,
required by § 1005.20(d)(2), are obstructed by packaging sold with
the certificate or card, for a purchase made in person, they also
must be disclosed on the packaging sold with the certificate or
card to meet the requirements of § 1005.20(c)(3).
3. Relationship between §§ 1005.20(d)(2), (e)(3), and
(f)(2). In addition to any disclosures required under §
1005.20(d)(2), any applicable disclosures under §§ 1005.20(e)(3)
and (f)(2) of this section must also be provided on the certificate
or card.
4. One fee per month. Under § 1005.20(d)(3), no more than
one dormancy, inactivity, or service fee may be imposed in any
given calendar month. For example, if a dormancy fee is imposed on
January 1, following a year of inactivity, and a consumer makes a
balance inquiry on January 15, a balance inquiry fee may not be
imposed at that time because a dormancy fee was already imposed
earlier that month and a balance inquiry fee is a type of service
fee. If, however, the dormancy fee could be imposed on January 1,
following a year of inactivity, and the consumer makes a balance
inquiry on the same date, the person assessing the fees may choose
whether to impose the dormancy fee or the balance inquiry fee on
January 1. The restriction in § 1005.20(d)(3) does not apply to any
fee that is not a dormancy, inactivity, or service fee. For
example, assume a service fee is imposed on a general-use prepaid
card on January 1, following a year of inactivity. If a consumer
cashes out the remaining funds by check on January 15, a cash-out
fee, to the extent such cash-out fee is permitted under §
1005.20(e)(4), may be imposed at that time because a cash-out fee
is not a dormancy, inactivity, or service fee.
5. Accumulation of fees. Section 1005.20(d) prohibits the
accumulation of dormancy, inactivity, or service fees for previous
periods into a single fee because such a practice would circumvent
the limitation in § 1005.20(d)(3) that only one fee may be charged
per month. For example, if a consumer purchases and activates a
store gift card on January 1 but never uses the card, a monthly
maintenance fee of $2.00 a month may not be accumulated such that a
fee of $24 is imposed on January 1 the following year.
20(e) Prohibition on Sale of Gift Certificates or Cards With
Expiration Dates
1. Reasonable opportunity. Under § 1005.20(e)(1), no
person may sell or issue a gift certificate, store gift card, or
general-use prepaid card with an expiration date, unless there are
policies and procedures in place to provide consumers with a
reasonable opportunity to purchase a certificate or card with at
least five years remaining until the certificate or card expiration
date. Consumers are deemed to have a reasonable opportunity to
purchase a certificate or card with at least five years remaining
until the certificate or card expiration date if:
i. There are policies and procedures established to prevent the
sale of a certificate or card unless the certificate or card
expiration date is at least five years after the date the
certificate or card was sold or initially issued to a consumer;
or
ii. A certificate or card is available to consumers to purchase
five years and six months before the certificate or card expiration
date.
2. Applicability to replacement certificates or cards.
Section 1005.20(e)(1) applies solely to the purchase of a
certificate or card. Therefore, § 1005.20(e)(1) does not apply to
the replacement of such certificates or cards. Certificates or
cards issued as a replacement may bear a certificate or card
expiration date of less than five years from the date of issuance
of the replacement certificate or card. If the certificate or card
expiration date for a replacement certificate or card is later than
the date set forth in § 1005.20(e)(2)(i), then pursuant to §
1005.20(e)(2), the expiration date for the underlying funds at the
time the replacement certificate or card is issued must be no
earlier than the expiration date for the replacement certificate or
card. For purposes of § 1005.20(e)(2), funds are not considered to
be loaded to a store gift card or general-use prepaid card solely
because a replacement card has been issued or activated for
use.
3. Disclosure of funds expiration - date not required.
Section 1005.20(e)(3)(i) does not require disclosure of the precise
date the funds will expire. It is sufficient to disclose, for
example, “Funds expire 5 years from the date funds last loaded to
the card.”; “Funds can be used 5 years from the date money was last
added to the card.”; or “Funds do not expire.”
4. Disclosure not required if no expiration date. If the
certificate or card and underlying funds do not expire, the
disclosure required by § 1005.20(e)(3)(i) need not be stated on the
certificate or card. If the certificate or card and underlying
funds expire at the same time, only one expiration date need be
disclosed on the certificate or card.
5. Reference to toll-free telephone number and Web site.
If a certificate or card does not expire, or if the underlying
funds are not available after the certificate or card expires, the
disclosure required by § 1005.20(e)(3)(ii) need not be stated on
the certificate or card. See, however, § 1005.20(f)(2).
6. Relationship to § 226.20(f)(2). The same toll-free
telephone number and Web site may be used to comply with §§
226.20(e)(3)(ii) and (f)(2). Neither a toll-free number nor a Web
site must be maintained or disclosed if no fees are imposed in
connection with a certificate or card, and the certificate or card
and the underlying funds do not expire.
7. Distinguishing between certificate or card expiration and
funds expiration. If applicable, a disclosure must be made on
the certificate or card that notifies a consumer that the
certificate or card expires, but the funds either do not expire or
expire later than the certificate or card, and that the consumer
may contact the issuer for a replacement card. The disclosure must
be made with equal prominence and in close proximity to the
certificate or card expiration date. The close proximity
requirement does not apply to oral disclosures. In the case of a
certificate or card, close proximity means that the disclosure must
be on the same side as the certificate or card expiration date. For
example, if the disclosure is the same type size and is located
immediately next to or directly above or below the certificate or
card expiration date, without any intervening text or graphical
displays, the disclosures would be deemed to be equally prominent
and in close proximity. The disclosure need not be embossed on the
certificate or card to be deemed equally prominent, even if the
expiration date is embossed on the certificate or card. The
disclosure may state on the front of the card, for example, “Funds
expire after card. Call for replacement card.” or “Funds do not
expire. Call for new card after 09/2016.” Disclosures made pursuant
to § 1005.20(e)(3)(iii)(A) may also fulfill the requirements of §
1005.20(e)(3)(i). For example, making a disclosure that “Funds do
not expire” to comply with § 1005.20(e)(3)(iii)(A) also fulfills
the requirements of § 1005.20(e)(3)(i).
8. Expiration date safe harbor. A non-reloadable
certificate or card that bears an expiration date that is at least
seven years from the date of manufacture need not state the
disclosure required by § 1005.20(e)(3)(iii). However, §
1005.20(e)(1) still prohibits the sale or issuance of such
certificate or card unless there are policies and procedures in
place to provide a consumer with a reasonable opportunity to
purchase the certificate or card with at least five years remaining
until the certificate or card expiration date. In addition, under §
1005.20(e)(2), the funds may not expire before the certificate or
card expiration date, even if the expiration date of the
certificate or card bears an expiration date that is more than five
years from the date of purchase. For purposes of this safe harbor,
the date of manufacture is the date on which the certificate or
card expiration date is printed on the certificate or card.
9. Relationship between §§ 1005.20(d)(2), (e)(3), and
(f)(2). In addition to any disclosures required to be made
under § 1005.20(e)(3), any applicable disclosures under §§
1005.20(d)(2) and (f)(2) must also be provided on the certificate
or card.
10. Replacement or remaining balance of an expired
certificate or card. When a certificate or card expires, but
the underlying funds have not expired, an issuer, at its option in
accordance with applicable state law, may provide either a
replacement certificate or card or otherwise provide the
certificate or card holder, for example, by check, with the
remaining balance on the certificate or card. In either case, the
issuer may not charge a fee for the service.
11. Replacement of a lost or stolen certificate or card not
required. Section 1005.20(e)(4) does not require the
replacement of a certificate or card that has been lost or
stolen.
12. Date of issuance or loading. For purposes of §
1005.20(e)(2)(i), a certificate or card is not issued or loaded
with funds until the certificate or card is activated for use.
13. Application of expiration date provisions after
redemption of certificate or card. The requirement that funds
underlying a certificate or card must not expire for at least five
years from the date of issuance or date of last load ceases to
apply once the certificate or card has been fully redeemed, even if
the underlying funds are not used to contemporaneously purchase a
specific good or service. For example, some certificates or cards
can be used to purchase music, media, or virtual goods. Once
redeemed by a consumer, the entire balance on the certificate or
card is debited from the certificate or card and credited or
transferred to another “account” established by the merchant of
such goods or services. The consumer can then make purchases of
songs, media, or virtual goods from the merchant using that
“account” either at the time the value is transferred from the
certificate or card or at a later time. Under these circumstances,
once the card has been fully redeemed and the “account” credited
with the amount of the underlying funds, the five-year minimum
expiration term no longer applies to the underlying funds. However,
if the consumer only partially redeems the value of the certificate
or card, the five-year minimum expiration term requirement
continues to apply to the funds remaining on the certificate or
card.
20(f) Additional Disclosure Requirements for Gift Certificates or
Cards
1. Reference to toll-free telephone number and Web site.
If a certificate or card does not have any fees, the disclosure
under § 1005.20(f)(2) is not required on the certificate or card.
See, however, § 1005.20(e)(3)(ii).
2. Relationship to § 226.20(e)(3)(ii). The same toll-free
telephone number and Web site may be used to comply with §§
226.20(e)(3)(ii) and (f)(2). Neither a toll-free number nor a Web
site must be maintained or disclosed if no fees are imposed in
connection with a certificate or card, and both the certificate or
card and underlying funds do not expire.
3. Relationship between §§ 1005.20(d)(2), (e)(3), and
(f)(2). In addition to any disclosures required pursuant to §
1005.20(f)(2), any applicable disclosures under §§ 1005.20(d)(2)
and (e)(3) must also be provided on the certificate or card.
20(g) Compliance Dates
1. Period of eligibility for loyalty, award, or promotional
programs. For purposes of § 1005.20(g)(2), the period of
eligibility is the time period during which a consumer must engage
in a certain action or actions to meet the terms of eligibility for
a loyalty, award, or promotional program and obtain the card, code,
or other device. Under § 1005.20(g)(2), a gift card issued pursuant
to a loyalty, award, or promotional program that began prior to
August 22, 2010 need not state the disclosures in §
1005.20(a)(4)(iii) regardless of whether the consumer became
eligible to receive the gift card prior to August 22, 2010, or
after that date. For example, a product manufacturer may provide a
$20 rebate card to a consumer if the consumer purchases a
particular product and submits a fully completed entry between
January 1, 2010 and December 31, 2010. Similarly, a merchant may
provide a $20 gift card to a consumer if the consumer makes $200
worth of qualifying purchases between June 1, 2010 and October 30,
2010. Under both examples, gift cards provided pursuant to these
loyalty, award, or promotional programs need not state the
disclosures in § 1005.20(a)(4)(iii) to qualify for the exclusion in
§ 1005.20(b)(3) for loyalty, award, or promotional gift cards
because the period of eligibility for each program began prior to
August 22, 2010.
20(h) Temporary Exemption 20(h)(1) Delayed Effective Date
1. Application to certificates or cards produced prior to
April 1, 2010. Certificates or cards produced prior to April 1,
2010 may be sold to a consumer on or after August 22, 2010 without
satisfying the requirements of §§ 1005.20(c)(3), (d)(2), (e)(1),
(e)(3), and (f) through January 30, 2011, provided that issuers of
such certificates or cards comply with the additional substantive
and disclosure requirements of §§ 1005.20(h)(1)(i) through (iv).
Issuers of certificates or cards produced prior to April 1, 2010
need not satisfy these additional requirements if the certificates
or cards fully comply with the rule (§§ 1005.20(a) through (f)).
For example, the in-store signage and other disclosures required by
§ 1005.20(h)(2) do not apply to gift cards produced prior to April
1, 2010 that do not have fees and do not expire, and which
otherwise comply with the rule.
2. Expiration of temporary exemption. Certificates or
cards produced prior to April 1, 2010 that do not fully comply with
§§ 1005.20(a) through (f) may not be issued or sold to consumers on
or after January 31, 2011.
20(h)(2) Additional Disclosures
1. Disclosures through third parties. Issuers may make
the disclosures required by § 1005.20(h)(2) through a third party,
such as a retailer or merchant. For example, an issuer may have a
merchant install in-store signage with the disclosures required by
§ 1005.20(h)(2) on the issuer's behalf.
2. General advertising disclosures. Section 1005.20(h)(2)
does not impose an obligation on the issuer to advertise gift
certificates, store gift cards, or general-use prepaid cards.
Section 1005.30 - Remittance Transfer Definitions
1. Applicability of definitions in subpart A. Except as
modified or limited by subpart B (which modifications or
limitations apply only to subpart B), the definitions in § 1005.2
apply to all of Regulation E, including subpart B.
30(b) Business Day
1. General. A business day, as defined in § 1005.30(b),
includes the entire 24-hour period ending at midnight, and a notice
given pursuant to any section of subpart B is effective even if
given outside of normal business hours. A remittance transfer
provider is not required under subpart B to make telephone lines
available on a 24-hour basis.
2. Substantially all business functions. “Substantially
all business functions” include both the public and the back-office
operations of the provider. For example, if the offices of a
provider are open on Saturdays for customers to request remittance
transfers, but not for performing internal functions (such as
investigating errors), then Saturday is not a business day for that
provider. In this case, Saturday does not count toward the
business-day standard set by subpart B for resolving errors,
processing refunds, etc.
3. Short hours. A provider may determine, at its
election, whether an abbreviated day is a business day. For
example, if a provider engages in substantially all business
functions until noon on Saturdays instead of its usual 3 p.m.
closing, it may consider Saturday a business day.
4. Telephone line. If a provider makes a telephone line
available on Sundays for cancelling the transfer, but performs no
other business functions, Sunday is not a business day under the
“substantially all business functions” standard.
30(c) Designated Recipient
1. Person. A designated recipient can be either a natural
person or an organization, such as a corporation. See §
1005.2(j) (definition of person). The designated recipient is
identified by the name of the person provided by the sender to the
remittance transfer provider and disclosed by the provider to the
sender pursuant to § 1005.31(b)(1)(iii).
2. Location in a foreign country. i. A remittance
transfer is received at a location in a foreign country if funds
are to be received at a location physically outside of any State,
as defined in § 1005.2(l). A specific pick-up location need not be
designated for funds to be received at a location in a foreign
country. If it is specified that the funds will be transferred to a
foreign country to be picked up by the designated recipient, the
transfer will be received at a location in a foreign country, even
though a specific pick-up location within that country has not been
designated. If it is specified that the funds will be received at a
location on a U.S. military installation that is physically located
in a foreign country, the transfer will be received in a State.
ii. For transfers to a prepaid account (other than a prepaid
account that is a payroll card account or a government benefit
account), where the funds are to be received in a location
physically outside of any State depends on whether the provider at
the time the transfer is requested has information indicating that
funds are to be received in a foreign country. See comments
30(c)-2.iii and 30(e)-3.i.C for illustrations of when a remittance
transfer provider would have such information and when the provider
would not. For transfers to all other accounts, whether funds are
to be received at a location physically outside of any State
depends on where the account is located. If the account is located
in a State, the funds will not be received at a location in a
foreign country. Further, for these accounts, if they are located
on a U.S. military installation that is physically located in a
foreign country, then these accounts are located in a State.
iii. Where the sender does not specify information about a
designated recipient's account, but instead provides information
about the recipient, a remittance transfer provider may make the
determination of whether the funds will be received at a location
in a foreign country on information that is provided by the sender,
and other information the provider may have, at the time the
transfer is requested. For example, if a consumer in a State gives
a provider the recipient's email address, and the provider has no
other information about whether the funds will be received by the
recipient at a location in a foreign country, then the provider may
determine that funds are not to be received at a location in a
foreign country. However, if the provider at the time the transfer
is requested has additional information indicating that funds are
to be received in a foreign country, such as if the recipient's
email address is already registered with the provider and
associated with a foreign account, then the provider has sufficient
information to conclude that the remittance transfer will be
received at a location in a foreign country. Similarly, if a
consumer in a State purchases a prepaid card, and the provider
mails or delivers the card directly to the consumer, the provider
may conclude that funds are not to be received in a foreign
country, because the provider does not know whether the consumer
will subsequently send the prepaid card to a recipient in a foreign
country. In contrast, the provider has sufficient information to
conclude that the funds are to be received in a foreign country if
the remittance transfer provider sends a prepaid card to a
specified recipient in a foreign country, even if a person located
in a State, including the sender, retains the ability to access
funds on the prepaid card.
3. Sender as designated recipient. A “sender,” as defined
in § 1005.30(g), may also be a designated recipient if the sender
meets the definition of “designated recipient” in § 1005.30(c). For
example, a sender may request that a provider send an electronic
transfer of funds from the sender's checking account in a State to
the sender's checking account located in a foreign country. In this
case, the sender would also be a designated recipient.
30(d) Preauthorized Remittance Transfer
1. Advance authorization. A preauthorized remittance
transfer is a remittance transfer authorized in advance of a
transfer that will take place on a recurring basis, at
substantially regular intervals, and will require no further action
by the consumer to initiate the transfer. In a bill-payment system,
for example, if the consumer authorizes a remittance transfer
provider to make monthly payments to a payee by means of a
remittance transfer, and the payments take place without further
action by the consumer, the payments are preauthorized remittance
transfers. In contrast, if the consumer must take action each month
to initiate a transfer (such as by entering instructions on a
telephone or home computer), the payments are not preauthorized
remittance transfers.
30(e) Remittance Transfer
1. Electronic transfer of funds. The definition of
“remittance transfer” requires an electronic transfer of funds. The
term electronic has the meaning given in section 106(2) of the
Electronic Signatures in Global and National Commerce Act. There
may be an electronic transfer of funds if a provider makes an
electronic book entry between different settlement accounts to
effectuate the transfer. However, where a sender mails funds
directly to a recipient, or provides funds to a courier for
delivery to a foreign country, there is not an electronic transfer
of funds. Similarly, generally, where a provider issues a check,
draft, or other paper instrument to be mailed to a person abroad,
there is not an electronic transfer of funds. Nonetheless, an
electronic transfer of funds occurs for a payment made by a
provider under a bill-payment service available to a consumer via
computer or other electronic means, unless the terms of the
bill-payment service explicitly state that all payments, or all
payments to a particular payee or payees, will be solely by check,
draft, or similar paper instrument drawn on the consumer's account
to be mailed abroad, and the payee or payees that will be paid in
this manner are identified to the consumer. With respect to such a
bill-payment service, if a provider provides a check, draft or
similar paper instrument drawn on a consumer's account to be mailed
abroad for a payee that is not identified to the consumer as
described above, this payment by check, draft or similar payment
instrument will be an electronic transfer of funds.
2. Sent by a remittance transfer provider. i. The
definition of “remittance transfer” requires that a transfer be
“sent by a remittance transfer provider.” This means that there
must be an intermediary that is directly engaged with the sender to
send an electronic transfer of funds on behalf of the sender to a
designated recipient.
ii. A payment card network or other third party payment service
that is functionally similar to a payment card network does not
send a remittance transfer when a consumer provides a debit, credit
or prepaid card directly to a foreign merchant as payment for goods
or services. In such a case, the payment card network or third
party payment service is not directly engaged with the sender to
send a transfer of funds to a person in a foreign country; rather,
the network or third party payment service is merely providing
contemporaneous third-party payment processing and settlement
services on behalf of the merchant or the card issuer, rather than
on behalf of the sender. In such a case, the card issuer also is
not directly engaged with the sender to send an electronic transfer
of funds to the foreign merchant when the card issuer provides
payment to the merchant. Similarly, where a consumer provides a
checking or other account number, or a debit, credit or prepaid
card, directly to a foreign merchant as payment for goods or
services, the merchant is not acting as an intermediary that sends
a transfer of funds on behalf of the sender when it submits the
payment information for processing.
iii. However, a card issuer or a payment network may offer a
service to a sender where the card issuer or a payment network is
an intermediary that is directly engaged with the sender to obtain
funds using the sender's debit, prepaid or credit card and to send
those funds to a recipient's checking account located in a foreign
country. In this case, the card issuer or the payment network is an
intermediary that is directly engaged with the sender to send an
electronic transfer of funds on behalf of the sender, and this
transfer of funds is a remittance transfer because it is made to a
designated recipient. See comment 30(c)-2.ii.
3. Examples of remittance transfers.
i. Examples of remittance transfers include:
A. Transfers where the sender provides cash or another method of
payment to a money transmitter or financial institution and
requests that funds be sent to a specified location or account in a
foreign country.
B. Consumer wire transfers, where a financial institution
executes a payment order upon a sender's request to wire money from
the sender's account to a designated recipient.
C. An addition of funds to a prepaid card by a participant in a
prepaid card program, such as a prepaid card issuer or its agent,
that is directly engaged with the sender to add these funds, where
the prepaid card is sent or was previously sent by a participant in
the prepaid card program to a person in a foreign country, even if
a person located in a State (including a sender) retains the
ability to withdraw such funds.
D. International ACH transactions sent by the sender's financial
institution at the sender's request.
E. Online bill payments and other electronic transfers that a
sender schedules in advance, including preauthorized remittance
transfers, made by the sender's financial institution at the
sender's request to a designated recipient.
ii. The term remittance transfer does not include, for
example:
A. A consumer's provision of a debit, credit or prepaid card,
directly to a foreign merchant as payment for goods or services
because the issuer is not directly engaged with the sender to send
an electronic transfer of funds to the foreign merchant when the
issuer provides payment to the merchant. See comment
30(e)-2.
B. A consumer's deposit of funds to a checking or savings
account located in a State, because there has not been a transfer
of funds to a designated recipient. See comment
30(c)-2.ii.
C. Online bill payments and other electronic transfers that
senders can schedule in advance, including preauthorized transfers,
made through the Web site of a merchant located in a foreign
country and via direct provision of a checking account, credit
card, debit card or prepaid card number to the merchant, because
the financial institution is not directly engaged with the sender
to send an electronic transfer of funds to the foreign merchant
when the institution provides payment to the merchant. See
comment 30(e)-2.
30(f) Remittance Transfer Provider
1. Agents. A person is not deemed to be acting as a
remittance transfer provider when it performs activities as an
agent on behalf of a remittance transfer provider.
2. Normal course of business. i. General. Whether
a person provides remittance transfers in the normal course of
business depends on the facts and circumstances, including the
total number and frequency of remittance transfers sent by the
provider. For example, if a financial institution generally does
not make remittance transfers available to customers, but sends a
couple of such transfers in a given year as an accommodation for a
customer, the institution does not provide remittance transfers in
the normal course of business. In contrast, if a financial
institution makes remittance transfers generally available to
customers (whether described in the institution's deposit account
agreement, or in practice) and makes transfers more frequently than
on an occasional basis, the institution provides remittance
transfers in the normal course of business.
ii. Safe harbor. On July 21, 2020, the safe harbor
threshold in § 1005.30(f)(2)(i) changed from 100 remittance
transfers to 500 remittance transfers. Under § 1005.30(f)(2)(i),
beginning on July 21, 2020, a person that provided 500 or fewer
remittance transfers in the previous calendar year and provides 500
or fewer remittance transfers in the current calendar year is
deemed not to be providing remittance transfers in the normal
course of its business. Accordingly, a person that qualifies for
the safe harbor in § 1005.30(f)(2)(i) is not a “remittance transfer
provider” and is not subject to the requirements of subpart B. For
purposes of determining whether a person qualifies for the safe
harbor under § 1005.30(f)(2)(i), the number of remittance transfers
provided includes any transfers excluded from the definition of
“remittance transfer” due simply to the safe harbor. In contrast,
the number of remittance transfers provided does not include any
transfers that are excluded from the definition of “remittance
transfer” for reasons other than the safe harbor, such as small
value transactions or securities and commodities transfers that are
excluded from the definition of “remittance transfer” by §
1005.30(e)(2).
iii. Transition period. A person may cease to satisfy the
requirements of the safe harbor described in § 1005.30(f)(2)(i) if,
beginning on July 21, 2020, the person provides in excess of 500
remittance transfers in a calendar year. For example, if a person
that provided 500 or fewer remittance transfers in the previous
calendar year provides more than 500 remittance transfers in the
current calendar year, the safe harbor applies to the first 500
remittance transfers that the person provides in the current
calendar year. For any additional remittance transfers provided in
the current calendar year and for any remittance transfers provided
in the subsequent calendar year, whether the person provides
remittance transfers for a consumer in the normal course of its
business, as defined in § 1005.30(f)(1), and is thus a remittance
transfer provider for those additional transfers, depends on the
facts and circumstances. Section 1005.30(f)(2)(ii) provides a
reasonable period of time, not to exceed six months, for such a
person to begin complying with subpart B, if that person is then
providing remittance transfers in the normal course of its
business. At the end of that reasonable period of time, such person
would be required to comply with subpart B unless, based on the
facts and circumstances, the person is not a remittance transfer
provider.
iv. Examples. A. Example of safe harbor and transition
period for 100-transfer safe harbor threshold effective prior to
July 21, 2020. Assume that a person provided 90 remittance
transfers in 2012 and 90 such transfers in 2013. The safe harbor
applied to the person's transfers in 2013, as well as the person's
first 100 remittance transfers in 2014. However, if the person
provided a 101st transfer on September 5, 2014, the facts and
circumstances determine whether the person provided remittance
transfers in the normal course of business and was thus a
remittance transfer provider for the 101st and any subsequent
remittance transfers that it provided in 2014. Furthermore, the
person would not have qualified for the safe harbor described in §
1005.30(f)(2)(i) in 2015 because the person did not provide 100 or
fewer remittance transfers in 2014. However, for the 101st
remittance transfer provided in 2014, as well as additional
remittance transfers provided thereafter in 2014 and 2015, if that
person was then providing remittance transfers for a consumer in
the normal course of business, the person had a reasonable period
of time, not to exceed six months, to come into compliance with
subpart B. Assume that in this case, a reasonable period of time is
six months. Thus, compliance with subpart B was not required for
remittance transfers made on or before March 5, 2015 (i.e.,
six months after September 5, 2014). After March 5, 2015, the
person was required to comply with subpart B if, based on the facts
and circumstances, the person provided remittance transfers in the
normal course of business and was thus a remittance transfer
provider.
B. Example of safe harbor for a person that provided 500 or
fewer transfers in 2019 and provides 500 or fewer transfers in
2020. On July 21, 2020, the safe harbor threshold in §
1005.30(f)(2)(i) changed from 100 remittance transfers to 500
remittance transfers. Thus, beginning on July 21, 2020, pursuant to
§ 1005.30(f)(2)(i), a person is deemed not to be providing
remittance transfers for a consumer in the normal course of its
business if the person provided 500 or fewer remittance transfers
in the previous calendar year and provides 500 or fewer remittance
transfers in the current calendar year. If a person provided 500 or
fewer transfers in 2019 and provides 500 or fewer remittance
transfers in 2020, that person qualifies for the safe harbor
threshold in 2020. For example, assume that a person provided 200
remittance transfers in 2019 and 400 remittance transfers in 2020.
The safe harbor will apply to the person's transfers in 2020
beginning on July 21, 2020, as well as the person's first 500
transfers in 2021. See comment 30(f)-2.iv.C for an example
regarding the transition period if the 500-transfer safe harbor is
exceeded.
C. Example of safe harbor and transition period for the
500-transfer safe harbor threshold beginning on July 21, 2020.
Assume that a person provided 490 remittance transfers in 2020 and
490 such transfers in 2021. The safe harbor will apply to the
person's transfers in 2021, as well as the person's first 500
remittance transfers in 2022. However, if the person provides a
501st transfer on September 5, 2022, the facts and circumstances
determine whether the person provides remittance transfers in the
normal course of business and is thus a remittance transfer
provider for the 501st and any subsequent remittance transfers that
it provides in 2022. Furthermore, the person would not qualify for
the safe harbor described in § 1005.30(f)(2)(i) in 2023 because the
person did not provide 500 or fewer remittance transfers in 2022.
However, for the 501st remittance transfer provided in 2022, as
well as additional remittance transfers provided thereafter in 2022
and 2023, if that person is then providing remittance transfers for
a consumer in the normal course of business, the person will have a
reasonable period of time, not to exceed six months, to come into
compliance with subpart B of Regulation E. Assume that in this
case, a reasonable period of time is six months. Thus, compliance
with subpart B is not required for remittance transfers made on or
before March 5, 2023 (i.e., six months after September 5,
2022). After March 5, 2023, the person is required to comply with
subpart B if, based on the facts and circumstances, the person
provides remittance transfers in the normal course of business and
is thus a remittance transfer provider.
v. Continued compliance for transfers for which payment was
made before a person qualifies for the safe harbor. Section
1005.30(f)(2)(iii) addresses situations where a person who
previously was required to comply with subpart B of Regulation E
newly qualifies for the safe harbor in § 1005.30(f)(2)(i). That
section states that the requirements of EFTA and Regulation E,
including those set forth in §§ 1005.33 and 1005.34 (which address
procedures for resolving errors and procedures for cancellation and
refund of remittance transfers, respectively), as well as the
requirements set forth in § 1005.13 (which, in part, governs record
retention), continue to apply to transfers for which payment is
made prior to the date the person qualifies for the safe harbor in
§ 1005.30(f)(2)(i). Qualifying for the safe harbor in §
1005.30(f)(2)(i) likewise does not excuse compliance with any other
applicable law or regulation. For example, if a remittance transfer
is also an electronic fund transfer, any requirements in subpart A
of Regulation E that apply to the transfer continue to apply,
regardless of whether the person must comply with subpart B.
Relevant requirements in subpart A may include, but are not limited
to, those relating to initial disclosures, change-in-terms notices,
liability of consumers for unauthorized transfers, and procedures
for resolving errors.
3. Multiple remittance transfer providers. If the
remittance transfer involves more than one remittance transfer
provider, only one set of disclosures must be given, and the
remittance transfer providers must agree among themselves which
provider must take the actions necessary to comply with the
requirements that subpart B imposes on any or all of them. Even
though the providers must designate one provider to take the
actions necessary to comply with the requirements that subpart B
imposes on any or all of them, all remittance transfer providers
involved in the remittance transfer remain responsible for
compliance with the applicable provisions of the EFTA and
Regulation E.
30(g) Sender
1. Determining whether a consumer is located in a State.
Under § 1005.30(g), the definition of “sender” means a consumer in
a State who, primarily for personal, family, or household purposes,
requests a remittance transfer provider to send a remittance
transfer to a designated recipient. A sender located on a U.S.
military installation that is physically located in a foreign
country is located in a State. For transfers sent from a prepaid
account (other than a prepaid account that is a payroll card
account or a government benefit account), whether the consumer is
located in a State depends on the location of the consumer. If the
provider does not know where the consumer is at the time the
consumer requests the transfer from the consumer's prepaid account
(other than a prepaid account that is a payroll card account or a
government benefit account) the provider may make the determination
of whether a consumer is located in a State based on information
that is provided by the consumer and on any records associated with
the consumer that the provider may have, such as an address
provided by the consumer. For transfers from all other accounts
belonging to a consumer, whether a consumer is located in a State
depends on where the consumer's account is located. If the account
is located in a State, the consumer will be located in a State for
purposes of the definition of “sender” in § 1005.30(g),
notwithstanding comment 3(a)-3. For these accounts, if they are
located on a U.S. military installation that is physically located
in a foreign country, then these accounts are located in a State.
Where a transfer is requested electronically or by telephone and
the transfer is not from an account, the provider may make the
determination of whether a consumer is located in a State based on
information that is provided by the consumer and on any records
associated with the consumer that the provider may have, such as an
address provided by the consumer.
2. Personal, family, or household purposes. Under §
1005.30(g), a consumer is a “sender” only where he or she requests
a transfer primarily for personal, family, or household purposes. A
consumer who requests a transfer primarily for other purposes, such
as business or commercial purposes, is not a sender under §
1005.30(g). For transfers from an account that was established
primarily for personal, family, or household purposes, a remittance
transfer provider may generally deem that the transfer is requested
primarily for personal, family, or household purposes and the
consumer is therefore a “sender” under § 1005.30(g). But if the
consumer indicates that he or she is requesting the transfer
primarily for other purposes, such as business or commercial
purposes, then the consumer is not a sender under § 1005.30(g),
even if the consumer is requesting the transfer from an account
that is used primarily for personal, family, or household
purposes.
3. Non-consumer accounts. A transfer that is requested to
be sent from an account that was not established primarily for
personal, family, or household purposes, such as an account that
was established as a business or commercial account or an account
held by a business entity such as a corporation, not-for-profit
corporation, professional corporation, limited liability company,
partnership, or sole proprietorship, is not requested primarily for
personal, family, or household purposes. A consumer requesting a
transfer from such an account therefore is not a sender under §
1005.30(g). Additionally, a transfer that is requested to be sent
from an account held by a financial institution under a bona
fide trust agreement pursuant to § 1005.2(b)(2) is not
requested primarily for personal, family, or household purposes,
and a consumer requesting a transfer from such an account is
therefore not a sender under § 1005.30(g).
30(h) Third-Party Fees
1. Fees imposed on the remittance transfer. Fees imposed
on the remittance transfer by a person other than the remittance
transfer provider include only those fees that are charged to the
designated recipient and are specifically related to the remittance
transfer. For example, overdraft fees that are imposed by a
recipient's bank or funds that are garnished from the proceeds of a
remittance transfer to satisfy an unrelated debt are not fees
imposed on the remittance transfer because these charges are not
specifically related to the remittance transfer. Account fees are
also not specifically related to a remittance transfer if such fees
are merely assessed based on general account activity and not for
receiving transfers. Where an incoming remittance transfer results
in a balance increase that triggers a monthly maintenance fee, that
fee is not specifically related to a remittance transfer.
Similarly, fees that banks charge one another for handling a
remittance transfer or other fees that do not affect the total
amount of the transaction or the amount that will be received by
the designated recipient are not fees imposed on the remittance
transfer. For example, an interchange fee that is charged to a
provider when a sender uses a credit or debit card to pay for a
remittance transfer is not a fee imposed upon the remittance
transfer. Fees that specifically relate to a remittance transfer
may be structured on a flat per-transaction basis, or may be
conditioned on other factors (such as account status or the
quantity of remittance transfers received) in addition to the
remittance transfer itself. For example, where an institution
charges an incoming transfer fee on most customers' accounts, but
not on preferred accounts, such a fee is nonetheless specifically
related to a remittance transfer. Similarly, if the institution
assesses a fee for every transfer beyond the fifth received each
month, such a fee would be specifically related to the remittance
transfer regardless of how many remittance transfers preceded it
that month.
2. Covered third-party fees. i. Under § 1005.30(h)(1), a
covered third-party fee means any fee that is imposed on the
remittance transfer by a person other than the remittance transfer
provider that is not a non-covered third-party fee.
ii. Examples of covered third-party fees include:
A. Fees imposed on a remittance transfer by intermediary
institutions in connection with a wire transfer (sometimes referred
to as “lifting fees”).
B. Fees imposed on a remittance transfer by an agent of the
provider at pick-up for receiving the transfer.
3. Non-covered third-party fees. Under § 1005.30(h)(2), a
non-covered third-party fee means any fee imposed by the designated
recipient's institution for receiving a remittance transfer into an
account except if such institution acts as the agent of the
remittance transfer provider. For example, a fee imposed by the
designated recipient's institution for receiving an incoming
transfer into an account is a non-covered third-party fee, provided
such institution is not acting as the agent of the remittance
transfer provider. See also comment 31(b)(1)(viii)-1.
Furthermore, designated recipient's account in § 1005.30(h)(2)
refers to an asset account, regardless of whether it is a consumer
asset account, established for any purpose and held by a bank,
savings association, credit union, or equivalent institution. A
designated recipient's account does not, however, include a credit
card, prepaid card, or a virtual account held by an Internet-based
or mobile telephone company that is not a bank, savings
association, credit union or equivalent institution.
Section 1005.31 - Disclosures 31(a) General Form of Disclosures
31(a)(1) Clear and Conspicuous
1. Clear and conspicuous standard. Disclosures are clear
and conspicuous for purposes of subpart B if they are readily
understandable and, in the case of written and electronic
disclosures, the location and type size are readily noticeable to
senders. Oral disclosures as permitted by § 1005.31(a)(3), (4), and
(5) are clear and conspicuous when they are given at a volume and
speed sufficient for a sender to hear and comprehend them.
2. Abbreviations and symbols. Disclosures may contain
commonly accepted or readily understandable abbreviations or
symbols, such as “USD” to indicate currency in U.S. dollars or
“MXN” to indicate currency in Mexican pesos.
31(a)(2) Written and Electronic Disclosures
1. E-Sign Act requirements. If a sender electronically
requests the remittance transfer provider to send a remittance
transfer, the disclosures required by § 1005.31(b)(1) may be
provided to the sender in electronic form without regard to the
consumer consent and other applicable provisions of the Electronic
Signatures in Global and National Commerce Act (E-Sign Act) (15
U.S.C. 7001 et seq.). If a sender electronically requests
the provider to send a remittance transfer, the disclosures
required by § 1005.31(b)(2) may be provided to the sender in
electronic form, subject to compliance with the consumer consent
and other applicable provisions of the E-Sign Act. See §
1005.4(a)(1).
2. Paper size. Written disclosures may be provided on any
size paper, as long as the disclosures are clear and conspicuous.
For example, disclosures may be provided on a register receipt or
on an 8.5 inch by 11 inch sheet of paper.
3. Retainable electronic disclosures. A remittance
transfer provider may satisfy the requirement to provide electronic
disclosures in a retainable form if it provides an online
disclosure in a format that is capable of being printed. Electronic
disclosures may not be provided through a hyperlink or in another
manner by which the sender can bypass the disclosure. A provider is
not required to confirm that the sender has read the electronic
disclosures.
4. Pre-payment disclosures to a mobile telephone.
Disclosures provided via mobile application or text message, to the
extent permitted by § 1005.31(a)(5), need not be retainable.
However, disclosures provided electronically to a mobile telephone
that are not provided via mobile application or text message must
be retainable. For example, disclosures provided via email must be
retainable, even if a sender accesses them by mobile telephone.
5. Disclosures provided by fax. For purposes of
disclosures required to be provided pursuant to § 1005.31 or §
1005.36, disclosures provided by facsimile transmission
(i.e., fax) are considered to be provided in writing for
purposes of providing disclosures in writing pursuant to subpart B
and are not subject to the requirements for electronic disclosures
set forth in § 1005.31(a)(2).
31(a)(3) Disclosures for Oral Telephone Transactions
1. Transactions conducted partially by telephone. Except
as provided in comment 31(a)(3)-2, for transactions conducted
partially by telephone, providing the information required by §
1005.31(b)(1) to a sender orally does not fulfill the requirement
to provide the disclosures required by § 1005.31(b)(1). For
example, a sender may begin a remittance transfer at a remittance
transfer provider's dedicated telephone in a retail store, and then
provide payment in person to a store clerk to complete the
transaction. In such cases, all disclosures must be provided in
writing. A provider complies with this requirement, for example, by
providing the written pre-payment disclosure in person prior to the
sender's payment for the transaction, and the written receipt when
the sender pays for the transaction.
2. Oral telephone transactions. Section 1005.31(a)(3)
applies to transactions conducted orally and entirely by telephone,
such as transactions conducted orally on a landline or mobile
telephone. A remittance transfer provider may treat a written or
electronic communication as an inquiry when it believes that
treating the communication as a request would be impractical. For
example, if a sender physically located abroad contacts a U.S.
branch of the sender's financial institution and attempts to
initiate a remittance transfer by first sending a mailed letter,
further communication with the sender by letter may be impractical
due to the physical distance and likely mail delays. In such
circumstances, a provider may conduct the transaction orally and
entirely by telephone pursuant to § 1005.31(a)(3) when the provider
treats that initial communication as an inquiry and subsequently
responds to the consumer's inquiry by calling the consumer on a
telephone and orally gathering or confirming the information needed
to identify and understand a request for a remittance transfer and
otherwise conducts the transaction orally and entirely by
telephone.
31(a)(5) Disclosures for Mobile Application or Text Message
Transactions
1. Mobile application and text message transactions. A
remittance transfer provider may provide the required pre-payment
disclosures orally or via mobile application or text message if the
transaction is conducted entirely by telephone via mobile
application or text message, the remittance transfer provider
complies with the requirements of § 1005.31(g)(2), and the provider
discloses orally or via mobile application or text message a
statement about the rights of the sender regarding cancellation
required by § 1005.31(b)(2)(iv) pursuant to the timing requirements
in § 1005.31(e)(1). For example, if a sender conducts a transaction
via text message on a mobile telephone, the remittance transfer
provider may call the sender and orally provide the required
pre-payment disclosures. Alternatively, the provider may provide
the required pre-payment disclosures via text message. Section
1005.31(a)(5) applies only to transactions conducted entirely by
mobile telephone via mobile application or text message.
31(b) Disclosure Requirements
1. Disclosures provided as applicable. Disclosures
required by § 1005.31(b) need only be provided to the extent
applicable. A remittance transfer provider may choose to omit an
item of information required by § 1005.31(b) if it is inapplicable
to a particular transaction. Alternatively, for disclosures
required by § 1005.31(b)(1)(i) through (vii), a provider may
disclose a term and state that an amount or item is “not
applicable,” “N/A,” or “None.” For example, if fees or taxes are
not imposed in connection with a particular transaction, the
provider need not provide the disclosures about fees and taxes
generally required by § 1005.31(b)(1)(ii), the disclosures about
covered third-party fees generally required by § 1005.31(b)(1)(vi),
or the disclaimers about non-covered third-party fees and taxes
collected by a person other than the provider generally required by
§ 1005.31(b)(1)(viii). Similarly, a Web site need not be disclosed
if the provider does not maintain a Web site. A provider need not
provide the exchange rate disclosure required by §
1005.31(b)(1)(iv) if a recipient receives funds in the currency in
which the remittance transfer is funded, or if funds are delivered
into an account denominated in the currency in which the remittance
transfer is funded. For example, if a sender in the United States
sends funds from an account denominated in Euros to an account in
France denominated in Euros, no exchange rate would need to be
provided. Similarly, if a sender funds a remittance transfer in
U.S. dollars and requests that a remittance transfer be delivered
to the recipient in U.S. dollars, a provider need not disclose an
exchange rate.
2. Substantially similar terms, language, and notices.
Certain disclosures required by § 1005.31(b) must be described
using the terms set forth in § 1005.31(b) or substantially similar
terms. Terms may be more specific than those provided. For example,
a remittance transfer provider sending funds may describe fees
imposed by an agent at pick-up as “Pick-up Fees” in lieu of
describing them as “Other Fees.” Foreign language disclosures
required under § 1005.31(g) must contain accurate translations of
the terms, language, and notices required by § 1005.31(b) or
permitted by § 1005.31(b)(1)(viii) and § 1005.33(h)(3).
31(b)(1) Pre-Payment Disclosures
1. Fees and taxes. i. Taxes collected on the remittance
transfer by the remittance transfer provider include taxes
collected on the remittance transfer by a State or other
governmental body. A provider need only disclose fees imposed or
taxes collected on the remittance transfer by the provider in §
1005.31(b)(1)(ii), as applicable. For example, if no transfer taxes
are imposed on a remittance transfer, a provider would only
disclose applicable transfer fees. See comment 31(b)-1. If
both fees and taxes are imposed, the fees and taxes must be
disclosed as separate, itemized disclosures. For example, a
provider would disclose all transfer fees using the term “Transfer
Fees” or a substantially similar term and would separately disclose
all transfer taxes using the term “Transfer Taxes” or a
substantially similar term.
ii. The fees and taxes required to be disclosed by §
1005.31(b)(1)(ii) include all fees imposed and all taxes collected
on the remittance transfer by the provider. For example, a provider
must disclose any service fee, any fees imposed by an agent of the
provider at the time of the transfer, and any State taxes collected
on the remittance transfer at the time of the transfer. Fees
imposed on the remittance transfer by the provider required to be
disclosed under § 1005.31(b)(1)(ii) include only those fees that
are charged to the sender and are specifically related to the
remittance transfer. See also comment 30(h)-1. In contrast,
the fees required to be disclosed by § 1005.31(b)(1)(vi) are any
covered third-party fees as defined in § 1005.30(h)(1).
iii. The term used to describe the fees imposed on the
remittance transfer by the provider in § 1005.31(b)(1)(ii) and the
term used to describe covered third-party fees under §
1005.31(b)(1)(vi) must differentiate between such fees. For example
the terms used to describe fees disclosed under § 1005.31(b)(1)(ii)
and (vi) may not both be described solely as “Fees.”
2. Transfer amount. Sections 1005.31(b)(1)(i) and (v)
require two transfer amount disclosures. First, under §
1005.31(b)(1)(i), a provider must disclose the transfer amount in
the currency in which the remittance transfer is funded to show the
calculation of the total amount of the transaction. Typically, the
remittance transfer is funded in U.S. dollars, so the transfer
amount would be expressed in U.S. dollars. However, if the
remittance transfer is funded, for example, from a Euro-denominated
account, the transfer amount would be expressed in Euros. Second,
under § 1005.31(b)(1)(v), a provider must disclose the transfer
amount in the currency in which the funds will be made available to
the designated recipient. For example, if the funds will be picked
up by the designated recipient in Japanese yen, the transfer amount
would be expressed in Japanese yen. However, this second transfer
amount need not be disclosed if covered third-party fees as
described under § 1005.31(b)(1)(vi) are not imposed on the
remittance transfer. The terms used to describe each transfer
amount should be the same.
3. Exchange rate for calculation. The exchange rate used
to calculate the transfer amount in § 1005.31(b)(1)(v), the covered
third-party fees in § 1005.31(b)(1)(vi), the amount received in §
1005.31(b)(1)(vii), and the optional disclosures of non-covered
third-party fees and other taxes permitted by § 1005.31(b)(1)(viii)
is the exchange rate in § 1005.31(b)(1)(iv), including an estimated
exchange rate to the extent permitted by § 1005.32, prior to any
rounding of the exchange rate. For example, if one U.S. dollar
exchanges for 11.9483779 Mexican pesos, a provider must calculate
these disclosures using this rate, even though the provider may
disclose pursuant to § 1005.31(b)(1)(iv) that the U.S. dollar
exchanges for 11.9484 Mexican pesos. Similarly, if a provider
estimates pursuant to § 1005.32 that one U.S. dollar exchanges for
11.9483 Mexican pesos, a provider must calculate these disclosures
using this rate, even though the provider may disclose pursuant to
§ 1005.31(b)(1)(iv) that the U.S. dollar exchanges for 11.95
Mexican pesos (Estimated). If an exchange rate need not be rounded,
a provider must use that exchange rate to calculate these
disclosures. For example, if one U.S. dollar exchanges for exactly
11.9 Mexican pesos, a provider must calculate these disclosures
using this exchange rate.
31(b)(1)(iv) Exchange Rate
1. Applicable exchange rate. If the designated recipient
will receive funds in a currency other than the currency in which
the remittance transfer is funded, a remittance transfer provider
must disclose the exchange rate to be used by the provider for the
remittance transfer. An exchange rate that is estimated must be
disclosed pursuant to the requirements of § 1005.32. A remittance
transfer provider may not disclose, for example, that an exchange
rate is “unknown,” “floating,” or “to be determined.” If a provider
does not have specific knowledge regarding the currency in which
the funds will be received, the provider may rely on a sender's
representation as to the currency in which funds will be received
for purposes of determining whether an exchange rate is applied to
the transfer. For example, if a sender requests that a remittance
transfer be deposited into an account in U.S. dollars, the provider
need not disclose an exchange rate, even if the account is actually
denominated in Mexican pesos and the funds are converted prior to
deposit into the account. If a sender does not know the currency in
which funds will be received, the provider may assume that the
currency in which funds will be received is the currency in which
the remittance transfer is funded.
2. Rounding. The exchange rate disclosed by the provider
for the remittance transfer is required to be rounded. The provider
may round to two, three, or four decimal places, at its option. For
example, if one U.S. dollar exchanges for 11.9483779 Mexican pesos,
a provider may disclose that the U.S. dollar exchanges for 11.9484
Mexican pesos. The provider may alternatively disclose, for
example, that the U.S. dollar exchanges for 11.948 pesos or 11.95
pesos. On the other hand, if one U.S. dollar exchanges for exactly
11.9 Mexican pesos, the provider may disclose that “US$1 = 11.9
MXN” in lieu of, for example, “US$1 = 11.90 MXN.” The exchange rate
disclosed for the remittance transfer must be rounded consistently
for each currency. For example, a provider may not round to two
decimal places for some transactions exchanged into Euros and round
to four decimal places for other transactions exchanged into
Euros.
3. Exchange rate used. The exchange rate used by the
provider for the remittance transfer need not be set by that
provider. For example, an exchange rate set by an intermediary
institution and applied to the remittance transfer would be the
exchange rate used for the remittance transfer and must be
disclosed by the provider.
31(b)(1)(vi) Disclosure of Covered Third-Party Fees
1. Fees disclosed in the currency in which the funds will be
received. Section 1005.31(b)(1)(vi) requires the disclosure of
covered third-party fees in the currency in which the funds will be
received by the designated recipient. A covered third-party fee
described in § 1005.31(b)(1)(vi) may be imposed in one currency,
but the funds may be received by the designated recipient in
another currency. In such cases, the remittance transfer provider
must calculate the fee to be disclosed under § 1005.31(b)(1)(vi) in
the currency of receipt using the exchange rate in §
1005.31(b)(1)(iv), including an estimated exchange rate to the
extent permitted by § 1005.32, prior to any rounding of the
exchange rate. For example, an intermediary institution involved in
sending an international wire transfer funded in U.S. dollars may
impose a fee in U.S. dollars, but funds are ultimately deposited in
the recipient's account in Euros. In this case, the provider would
disclose the covered third-party fee to the sender expressed in
Euros, calculated using the exchange rate disclosed under §
1005.31(b)(1)(iv), prior to any rounding of the exchange rate. For
purposes of § 1005.31(b)(1)(v), (vi), and (vii), if a provider does
not have specific knowledge regarding the currency in which the
funds will be received, the provider may rely on a sender's
representation as to the currency in which funds will be received.
For example, if a sender requests that a remittance transfer be
deposited into an account in U.S. dollars, the provider may provide
the disclosures required in § 1005.31(b)(1)(v), (vi), and (vii) in
U.S. dollars, even if the account is actually denominated in
Mexican pesos and the funds are subsequently converted prior to
deposit into the account. If a sender does not know the currency in
which funds will be received, the provider may assume that the
currency in which funds will be received is the currency in which
the remittance transfer is funded.
31(b)(1)(vii) Amount Received
1. Amount received. The remittance transfer provider is
required to disclose the amount that will be received by the
designated recipient in the currency in which the funds will be
received. The amount received must reflect the exchange rate, all
fees imposed and all taxes collected on the remittance transfer by
the remittance transfer provider, as well as any covered
third-party fees required to be disclosed by § 1005.31(b)(1)(vi).
The disclosed amount received must be reduced by the amount of any
fee or tax - except for a non-covered third-party fee or tax
collected on the remittance transfer by a person other than the
provider - that is imposed on the remittance transfer that affects
the amount received even if that amount is imposed or itemized
separately from the transaction amount.
31(b)(1)(viii) Statement When Additional Fees and Taxes May Apply
1. Required disclaimer when non-covered third-party fees and
taxes collected by a person other than the provider may apply.
If non-covered third-party fees or taxes collected by a person
other than the provider apply to a particular remittance transfer
or if a provider does not know if such fees or taxes may apply to a
particular remittance transfer, § 1005.31(b)(1)(viii) requires the
provider to include the disclaimer with respect to such fees and
taxes. Required disclosures under § 1005.31(b)(1)(viii) may only be
provided to the extent applicable. For example, if the designated
recipient's institution is an agent of the provider and thus,
non-covered third-party fees cannot apply to the transfer, the
provider must disclose all fees imposed on the remittance transfer
and may not provide the disclaimer regarding non-covered
third-party fees. In this scenario, the provider may only provide
the disclaimer regarding taxes collected on the remittance transfer
by a person other than the provider, as applicable. See
Model Form A-30(c).
2. Optional disclosure of non-covered third-party fees and
taxes collected by a person other than the provider. When a
remittance transfer provider knows the non-covered third-party fees
or taxes collected on the remittance transfer by a person other
than the provider that will apply to a particular transaction, §
1005.31(b)(1)(viii) permits the provider to disclose the amount of
such fees and taxes. Section 1005.32(b)(3) additionally permits a
provider to disclose an estimate of such fees and taxes, provided
any estimates are based on reasonable source of information.
See comment 32(b)(3)-1. For example, a provider may know
that the designated recipient's institution imposes an incoming
wire fee for receiving a transfer. Alternatively, a provider may
know that foreign taxes will be collected on the remittance
transfer by a person other than the remittance transfer provider.
In these examples, the provider may choose, at its option, to
disclose the amounts of the relevant recipient institution fee and
tax as part of the information disclosed pursuant to §
1005.31(b)(1)(viii). The provider must not include that fee or tax
in the amount disclosed pursuant to § 1005.31(b)(1)(vi) or
(b)(1)(vii). Fees and taxes disclosed under § 1005.31(b)(1)(viii)
must be disclosed in the currency in which the funds will be
received. See comment 31(b)(1)(vi)-1. Estimates of any
non-covered third-party fees and any taxes collected on the
remittance transfer by a person other than the provider must be
disclosed in accordance with § 1005.32(b)(3).
31(b)(2) Receipt
1. Date funds will be available. A remittance transfer
provider does not comply with the requirements of §
1005.31(b)(2)(ii) if it provides a range of dates that the
remittance transfer may be available or an estimate of the date on
which funds will be available. If a provider does not know the
exact date on which funds will be available, the provider may
disclose the latest date on which the funds will be available. For
example, if funds may be available on January 3, but are not
certain to be available until January 10, then a provider complies
with § 1005.31(b)(2)(ii) if it discloses January 10 as the date
funds will be available. However, a remittance transfer provider
may also disclose that funds “may be available sooner” or use a
substantially similar term to inform senders that funds may be
available to the designated recipient on a date earlier than the
date disclosed. For example, a provider may disclose “January 10
(may be available sooner).”
2. Agencies required to be disclosed. A remittance
transfer provider must only disclose information about a State
agency that licenses or charters the remittance transfer provider
with respect to the remittance transfer as applicable. For example,
if a financial institution is solely regulated by a Federal agency,
and not licensed or chartered by a State agency, then the
institution need not disclose information about a State agency. A
remittance transfer provider must disclose information about the
Consumer Financial Protection Bureau, whether or not the Consumer
Financial Protection Bureau is the provider's primary Federal
regulator.
3. State agency that licenses or charters a provider. A
remittance transfer provider must only disclose information about
one State agency that licenses or charters the remittance transfer
provider with respect to the remittance transfer, even if other
State agencies also regulate the remittance transfer provider. For
example, a provider may disclose information about the State agency
which granted its license. If a provider is licensed in multiple
States, and the State agency that licenses the provider with
respect to the remittance transfer is determined by a sender's
location, a provider may make the determination as to the State in
which the sender is located based on information that is provided
by the sender and on any records associated with the sender. For
example, if the State agency that licenses the provider with
respect to an online remittance transfer is determined by a
sender's location, a provider could rely on the sender's statement
regarding the State in which the sender is located and disclose the
State agency that licenses the provider in that State. A
State-chartered bank must disclose information about the State
agency that granted its charter, regardless of the location of the
sender.
4. Web site of the Consumer Financial Protection Bureau.
Section 1005.31(b)(2)(vi) requires a remittance transfer provider
to disclose the name, toll-free telephone number(s), and Web site
of the Consumer Financial Protection Bureau. Providers may satisfy
this requirement by disclosing the Web site of the Consumer
Financial Protection Bureau's homepage,
www.consumerfinance.gov, as shown on Model Forms A-32, A-34,
A-35, and A-39. Alternatively, providers may, but are not required
to, disclose the Bureau's Web site as the address of a page on the
Bureau's Web site that provides information for consumers about
remittance transfers, currently,
consumerfinance.gov/sending-money, as shown on Model Form
A-31. In addition, providers making disclosures in a language other
than English pursuant to § 1005.31(g) may, but are not required to,
disclose the Bureau's Web site as a page on the Bureau's Web site
that provides information for consumers about remittance transfers
in the relevant language, if such Web site exists. For example, a
provider that is making disclosures in Spanish under § 1005.31(g)
may, but is not required to, disclose the Bureau's Web site on
Spanish-language disclosures as the page on the Bureau's Web site
that provides information regarding remittance transfers in
Spanish, currently consumerfinance.gov/envios. This optional
disclosure is shown on Model A-40. The Bureau will publish a list
of any other foreign language Web sites that provide information
regarding remittance transfers.
5. Date of transfer on receipt. Where applicable, §
1005.31(b)(2)(vii) requires disclosure of the date of transfer for
the remittance transfer that is the subject of a receipt required
by § 1005.31(b)(2), including a receipt that is provided in
accordance with the timing requirements in § 1005.36(a). For any
subsequent preauthorized remittance transfer subject to §
1005.36(d)(2)(ii), the future date of transfer must be provided on
any receipt provided for the initial transfer in that series of
preauthorized remittance transfers, or where permitted, or
disclosed as permitted by § 1005.31(a)(3) and (a)(5), in accordance
with § 1005.36(a)(1)(i).
6. Transfer date disclosures. The following example
demonstrates how the information required by § 1005.31(b)(2)(vii)
and § 1005.36(d)(1) should be disclosed on receipts: On July 1, a
sender instructs the provider to send a preauthorized remittance
transfer of US$100 each week to a designated recipient. The sender
requests that first transfer in the series be sent on July 15. On
the receipt, the remittance transfer provider discloses an
estimated exchange rate to the sender pursuant to § 1005.32(b)(2).
In accordance with § 1005.31(b)(2)(vii), the provider should
disclose the date of transfer for that particular transaction
(i.e., July 15) on the receipt provided when payment is made
for the transfer pursuant to the timing requirements in §
1005.36(a)(1)(i). The second receipt, which § 1005.36(a)(1)(ii)
requires to be provided within one business day after the date of
the transfer or, for transfers from the sender's account held by
the provider, on the next regularly scheduled periodic statement or
within 30 days after payment is made if a periodic statement is not
provided, is also required to include the date of transfer. If the
provider discloses on either receipt the cancellation period
applicable to and dates of subsequent preauthorized remittance
transfers in accordance with § 1005.36(d)(2), the disclosure must
be phrased and formatted in such a way that it is clear to the
sender which cancellation period is applicable to any date of
transfer on the receipt.
7. Cancellation disclosure. Remittance transfer providers
that offer remittance transfers scheduled three or more business
days before the date of the transfer, as well as remittance
transfers scheduled fewer than three business days before the date
of the transfer, may meet the cancellation disclosure requirements
in § 1005.31(b)(2)(iv) by describing the three-business-day and
30-minute cancellation periods on the same disclosure and using a
checkbox or other method to clearly designate the applicable
cancellation period. The provider may use a number of methods to
indicate which cancellation period applies to the transaction
including, but not limited to, a statement to that effect, use of a
checkbox, highlighting, circling, and the like. For transfers
scheduled three business days before the date of the transfer, the
cancellation disclosures provided pursuant to § 1005.31(b)(2)(iv)
should be phrased and formatted in such a way that it is clear to
the sender which cancellation period is applicable to the date of
transfer disclosed on the receipt.
31(b)(3) Combined Disclosure
1. Proof of payment. If a sender initiating a remittance
transfer receives a combined disclosure provided under §
1005.31(b)(3) and then completes the transaction, the remittance
transfer provider must provide the sender with proof of payment.
The proof of payment must be clear and conspicuous, provided in
writing or electronically, and provided in a retainable form. The
combined disclosure must be provided to the sender when the sender
requests the remittance transfer, but prior to payment for the
transfer, pursuant to § 1005.31(e)(1), and the proof of payment
must be provided when payment is made for the remittance transfer.
The proof of payment for the transaction may be provided on the
same piece of paper as the combined disclosure or on a separate
piece of paper. For example, a provider may feed a combined
disclosure through a computer printer when payment is made to add
the date and time of the transaction, a confirmation code, and an
indication that the transfer was paid in full. A provider may also
provide this additional information to a sender on a separate piece
of paper when payment is made. A remittance transfer provider does
not comply with the requirements of § 1005.31(b)(3) by providing a
combined disclosure with no further indication that payment has
been received.
2. Confirmation of scheduling. As discussed in comment
31(e)-2, payment is considered to be made when payment is
authorized for purposes of various timing requirements in subpart
B, including with regard to the timing requirement for provision of
the proof of payment described in § 1005.31(b)(3)(i). However,
where a transfer (whether a one-time remittance transfer or the
first in a series of preauthorized remittance transfers) is
scheduled before the date of transfer and the provider does not
intend to process payment until at or near the date of transfer,
the provider may provide a confirmation of scheduling in lieu of
the proof of payment required by § 1005.31(b)(3)(i). No further
proof of payment is required when payment is later processed.
31(c) Specific Format Requirements 31(c)(1) Grouping
1. Grouping. Information is grouped together for purposes
of subpart B if multiple disclosures are in close proximity to one
another and a sender can reasonably calculate the total amount of
the transaction and the amount that will be received by the
designated recipient. Model Forms A-30(a)-(d) through A-35 in
Appendix A illustrate how information may be grouped to comply with
the rule, but a remittance transfer provider may group the
information in another manner. For example, a provider could
provide the grouped information as a horizontal, rather than a
vertical, calculation. A provider could also send multiple text
messages sequentially to provide the full disclosure.
31(c)(4) Segregation
1. Segregation. Disclosures may be segregated from other
information in a variety of ways. For example, the disclosures may
appear on a separate sheet of paper or may appear on the front of a
page where other information appears on the back of that page. The
disclosures may be set off from other information on a notice by
outlining them in a box or series of boxes, with bold print
dividing lines or a different color background, or by using other
means.
2. Directly related. For purposes of § 1005.31(c)(4), the
following is directly related information:
i. The date and time of the transaction;
ii. The sender's name and contact information;
iii. The location at which the designated recipient may pick up
the funds;
iv. The confirmation or other identification code;
v. A company name and logo;
vi. An indication that a disclosure is or is not a receipt or
other indicia of proof of payment;
vii. A designated area for signatures or initials;
viii. A statement that funds may be available sooner, as
permitted by § 1005.31(b)(2)(ii);
ix. Instructions regarding the retrieval of funds, such as the
number of days the funds will be available to the recipient before
they are returned to the sender; and
x. A statement that the provider makes money from foreign
currency exchange.
xi. Disclosure of any non-covered third-party fees and any taxes
collected by a person other than the provider pursuant to §
1005.31(b)(1)(viii).
31(d) Estimates
1. Terms. A remittance transfer provider may provide
estimates of the amounts required by § 1005.31(b), to the extent
permitted by § 1005.32. An estimate must be described using the
term “Estimated” or a substantially similar term in close proximity
to the term or terms described. For example, a remittance transfer
provider could describe an estimated disclosure as “Estimated
Transfer Amount,” “Other Estimated Fees and Taxes,” or “Total to
Recipient (Est.).”
31(e) Timing
1. Request to send a remittance transfer. Except as
provided in § 1005.36(a), pre-payment and combined disclosures are
required to be provided to the sender when the sender requests the
remittance transfer, but prior to payment for the transfer. Whether
a consumer has requested a remittance transfer depends on the facts
and circumstances. A sender that asks a provider to send a
remittance transfer, and provides transaction-specific information
to the provider in order to send funds to a designated recipient,
has requested a remittance transfer. A sender that has sent an
email, fax, mailed letter, or similar written or electronic
communication has not requested a remittance transfer if the
provider believes that it is impractical for the provider to treat
that communication as a request and if the provider treats the
communication as an inquiry and subsequently responds to that
inquiry by calling the consumer on a telephone and orally gathering
or confirming the information needed to process a request for a
remittance transfer. See comment 31(a)(3)-2. Likewise, a
consumer who solely inquires about that day's rates and fees to
send to Mexico has not requested the provider to send a remittance
transfer. Conversely, a sender who asks the provider at an agent
location to send money to a recipient in Mexico and provides the
sender and recipient information to the provider has requested a
remittance transfer.
2. When payment is made. Except as provided in §
1005.36(a), a receipt required by § 1005.31(b)(2) must be provided
to the sender when payment is made for the remittance transfer. For
example, a remittance transfer provider could give the sender the
disclosures after the sender pays for the remittance transfer, but
before the sender leaves the counter. A provider could also give
the sender the disclosures immediately before the sender pays for
the transaction. For purposes of subpart B, payment is made, for
example, when a sender provides cash to the remittance transfer
provider or when payment is authorized.
3. Telephone transfer from an account. A sender may
transfer funds from his or her account, as defined by § 1005.2(b),
that is held by the remittance transfer provider. For example, a
financial institution may send an international wire transfer for a
sender using funds from the sender's account with the institution.
Except as provided in § 1005.36(a), if the sender conducts such a
transfer entirely by telephone, the institution may provide a
receipt required by § 1005.31(b)(2) on or with the sender's next
regularly scheduled periodic statement for that account or within
30 days after payment is made for the remittance transfer if a
periodic statement is not provided.
4. Mobile application and text message transactions. If a
transaction is conducted entirely by telephone via mobile
application or text message, a receipt required by § 1005.31(b)(2)
may be mailed or delivered to the sender pursuant to the timing
requirements in § 1005.31(e)(2). For example, if a sender conducts
a transfer entirely by telephone via mobile application, a
remittance transfer provider may mail or deliver the disclosures to
a sender pursuant to the timing requirements in §
1005.31(e)(2).
5. Statement about cancellation rights. The statement
about the rights of the sender regarding cancellation required by §
1005.31(b)(2)(iv) may, but need not, be disclosed pursuant to the
timing requirements of § 1005.31(e)(2) if a provider discloses this
information pursuant to § 1005.31(a)(3)(iii) or (a)(5)(iii). The
statement about the rights of the sender regarding error resolution
required by § 1005.31(b)(2)(iv), however, must be disclosed
pursuant to the timing requirements of § 1005.31(e)(2).
31(f) Accurate When Payment Is Made
1. No guarantee of disclosures provided before payment.
Except as provided in § 1005.36(b), disclosures required by §
1005.31(b) or permitted by § 1005.31(b)(1)(viii) must be accurate
when a sender makes payment for the remittance transfer. A
remittance transfer provider is not required to guarantee the terms
of the remittance transfer in the disclosures required or permitted
by § 1005.31(b) for any specific period of time. However, if any of
the disclosures required by § 1005.31(b) or permitted by §
1005.31(b)(1)(viii) are not accurate when a sender makes payment
for the remittance transfer, a provider must give new disclosures
before accepting payment.
31(g) Foreign Language Disclosures
1. Number of foreign languages used in written
disclosure. Section 1005.31(g)(1) does not limit the number of
languages that may be used on a single document, but such
disclosures must be clear and conspicuous pursuant to §
1005.31(a)(1). Under § 1005.31(g)(1), a remittance transfer
provider may, but need not, provide the sender with a written or
electronic disclosure that is in English and, if applicable, in
each foreign language that the remittance transfer provider
principally uses to advertise, solicit, or market either orally, in
writing, or electronically, at the office in which a sender
conducts a transaction or asserts an error, respectively.
Alternatively, the remittance transfer provider may provide the
disclosure solely in English and, if applicable, the foreign
language primarily used by the sender with the remittance transfer
provider to conduct the transaction or assert an error, provided
such language is principally used by the remittance transfer
provider to advertise, solicit, or market either orally, in
writing, or electronically, at the office in which the sender
conducts the transaction or asserts the error, respectively. If the
remittance transfer provider chooses the alternative method, it may
provide disclosures in a single document with both languages or in
two separate documents with one document in English and the other
document in the applicable foreign language. The following examples
illustrate this concept.
i. A remittance transfer provider principally uses only Spanish
and Vietnamese to advertise, solicit, or market remittance transfer
services at a particular office. The remittance transfer provider
may provide all senders with disclosures in English, Spanish, and
Vietnamese, regardless of the language the sender uses with the
remittance transfer provider to conduct the transaction or assert
an error.
ii. Same facts as i. If a sender primarily uses Spanish with the
remittance transfer provider to conduct a transaction or assert an
error, the remittance transfer provider may provide a written or
electronic disclosure in English and Spanish, whether in a single
document or two separate documents. If the sender primarily uses
English with the remittance transfer provider to conduct the
transaction or assert an error, the remittance transfer provider
may provide a written or electronic disclosure solely in English.
If the sender primarily uses a foreign language with the remittance
transfer provider to conduct the transaction or assert an error
that the remittance transfer provider does not use to advertise,
solicit, or market either orally, in writing, or electronically, at
the office in which the sender conducts the transaction or asserts
the error, respectively, the remittance transfer provider may
provide a written or electronic disclosure solely in English.
2. Primarily used. The language primarily used by the
sender with the remittance transfer provider to conduct the
transaction is the primary language used by the sender with the
remittance transfer provider to convey the information necessary to
complete the transaction. Similarly, the language primarily used by
the sender with the remittance transfer provider to assert the
error is the primary language used by the sender with the
remittance transfer provider to provide the information required by
§ 1005.33(b) to assert an error. For example:
i. A sender initiates a conversation with a remittance transfer
provider with a greeting in English and expresses interest in
sending a remittance transfer to Mexico in English. If the
remittance transfer provider thereafter communicates with the
sender in Spanish and the sender conveys the other information
needed to complete the transaction, including the designated
recipient's information and the amount and funding source of the
transfer, in Spanish, then Spanish is the language primarily used
by the sender with the remittance transfer provider to conduct the
transaction.
ii. A sender initiates a conversation with the remittance
transfer provider with a greeting in English and states in English
that there was a problem with a prior remittance transfer to
Vietnam. If the remittance transfer provider thereafter
communicates with the sender in Vietnamese and the sender uses
Vietnamese to convey the information required by § 1005.33(b) to
assert an error, then Vietnamese is the language primarily used by
the sender with the remittance transfer provider to assert the
error.
iii. A sender accesses the Web site of a remittance transfer
provider that may be used by senders to conduct remittance
transfers or assert errors. The Web site is offered in English and
French. If the sender uses the French version of the Web site to
conduct the remittance transfer, then French is the language
primarily used by the sender with the remittance transfer provider
to conduct the transaction.
31(g)(1) General
1. Principally used. i. All relevant facts and
circumstances determine whether a foreign language is principally
used by the remittance transfer provider to advertise, solicit, or
market under § 1005.31(g)(1). Generally, whether a foreign language
is considered to be principally used by the remittance transfer
provider to advertise, solicit, or market is based on:
A. The frequency with which the foreign language is used in
advertising, soliciting, or marketing of remittance transfer
services at that office;
B. The prominence of the advertising, soliciting, or marketing
of remittance transfer services in that foreign language at that
office; and
C. The specific foreign language terms used in the advertising
soliciting, or marketing of remittance transfer service at that
office.
ii. For example, if a remittance transfer provider posts several
prominent advertisements in a foreign language for remittance
transfer services, including rate and fee information, on a
consistent basis in an office, the provider is creating an
expectation that a consumer could receive information on remittance
transfer services in the foreign language used in the
advertisements. The foreign language used in such advertisements
would be considered to be principally used at that office based on
the frequency and prominence of the advertising. In contrast, an
advertisement for remittance transfer services, including rate and
fee information, that is featured prominently at an office and is
entirely in English, except for a greeting in a foreign language,
does not create an expectation that a consumer could receive
information on remittance transfer services in the foreign language
used for such greeting. The foreign language used in such an
advertisement is not considered to be principally used at that
office based on the incidental specific foreign language term
used.
2. Advertise, solicit, or market. i. Any commercial
message in a foreign language, appearing in any medium, that
promotes directly or indirectly the availability of remittance
transfer services constitutes advertising, soliciting, or marketing
in such foreign language for purposes of § 1005.31(g)(1). Examples
illustrating when a foreign language is used to advertise, solicit,
or market include:
A. Messages in a foreign language in a leaflet or promotional
flyer at an office.
B. Announcements in a foreign language on a public address
system at an office.
C. On-line messages in a foreign language, such as on the
internet.
D. Printed material in a foreign language on any exterior or
interior sign at an office.
E. Point-of-sale displays in a foreign language at an
office.
F. Telephone solicitations in a foreign language.
ii. Examples illustrating use of a foreign language for purposes
other than to advertise, solicit, or market include:
A. Communicating in a foreign language (whether by telephone,
electronically, or otherwise) about remittance transfer services in
response to a consumer-initiated inquiry.
B. Making disclosures in a foreign language that are required by
Federal or other applicable law.
3. Office. An office includes any physical location,
telephone number, or Web site of a remittance transfer provider
where a sender may conduct a remittance transfer or assert an error
for a remittance transfer. The location need not exclusively offer
remittance transfer services. For example, if an agent of a
remittance transfer provider is located in a grocery store, the
grocery store is considered an office for purposes of §
1005.31(g)(1). Because a consumer must be located in a State in
order to be considered a “sender” under § 1005.30(g), a Web site is
not an office for purposes of § 1005.31(g)(1), even if the Web site
can be accessed by consumers that are located in the United States,
unless a sender may conduct a remittance transfer on the Web site
or may assert an error for a remittance transfer on the Web
site.
4. At the office. Any advertisement, solicitation, or
marketing is considered to be made at the office in which a sender
conducts a transaction or asserts an error if such advertisement,
solicitation, or marketing is posted, provided, or made: at a
physical office of a remittance transfer provider; on a Web site of
a remittance transfer provider that may be used by senders to
conduct remittance transfers or assert errors; during a telephone
call with a remittance transfer provider that may be used by
senders to conduct remittance transfers or assert errors; or via
mobile application or text message by a remittance transfer
provider if the mobile application or text message may be used by
senders to conduct remittance transfers or assert errors. An
advertisement, solicitation, or marketing that is considered to be
made at an office does not include general advertisements,
solicitations, or marketing that are not intended to be made at a
particular office. For example, if an advertisement for remittance
transfers in Chinese appears in a Chinese newspaper that is being
distributed at a grocery store in which the agent of a remittance
transfer provider is located, such advertisement would not be
considered to be made at that office. For disclosures provided
pursuant to § 1005.31, the relevant office is the office in which
the sender conducts the transaction. For disclosures provided
pursuant to § 1005.33 for error resolution purposes, the relevant
office is the office in which the sender first asserts the error,
not the office where the transaction was conducted.
Section 1005.32 - Estimates
1. Disclosures where estimates can be used. Sections
1005.32(a) and (b)(1), (b)(4), and (b)(5) permit estimates to be
used in certain circumstances for disclosures described in §§
1005.31(b)(1) through (3) and 1005.36(a)(1) and (2). To the extent
permitted in § 1005.32(a) and (b)(1), (b)(4), and (b)(5), estimates
may be used in the pre-payment disclosure described in §
1005.31(b)(1), the receipt disclosure described in § 1005.31(b)(2),
the combined disclosure described in § 1005.31(b)(3), and the
pre-payment disclosures and receipt disclosures for both first and
subsequent preauthorized remittance transfers described in §
1005.36(a)(1) and (2). Section 1005.32(b)(2) permits estimates to
be used for certain information if the remittance transfer is
scheduled by a sender five or more business days before the date of
the transfer, for disclosures described in § 1005.36(a)(1)(i) and
(a)(2)(i).
32(a) Temporary Exception for Insured Institutions 32(a)(1) General
1. Control. For purposes of this section, an insured
institution cannot determine exact amounts “for reasons beyond its
control” when a person other than the insured institution or with
which the insured institution has no correspondent relationship
sets the exchange rate required to be disclosed under §
1005.31(b)(1)(iv) or imposes a covered third-party fee required to
be disclosed under § 1005.31(b)(1)(vi). For example, if an insured
institution has a correspondent relationship with an intermediary
financial institution in another country and that intermediary
institution sets the exchange rate or imposes a fee for remittance
transfers sent from the insured institution to the intermediary
institution, then the insured institution must determine exact
amounts for the disclosures required under § 1005.31(b)(1)(iv) or
(vi), because the determination of those amounts are not beyond the
insured institution's control.
2. Examples of scenarios that qualify for the temporary
exception. The following examples illustrate when an insured
institution cannot determine an exact amount “for reasons beyond
its control” and thus would qualify for the temporary
exception.
i. Exchange rate. An insured institution cannot determine
the exact exchange rate to disclose under § 1005.31(b)(1)(iv) for
an international wire transfer if the insured institution does not
set the exchange rate, and the rate is set when the funds are
deposited into the recipient's account by the designated
recipient's institution with which the insured institution does not
have a correspondent relationship. The insured institution will not
know the exchange rate that the recipient institution will apply
when the funds are deposited into the recipient's account.
ii. Covered third-party fees. An insured institution
cannot determine the exact covered third-party fees to disclose
under § 1005.31(b)(1)(vi) if an intermediary institution with which
the insured institution does not have a correspondent relationship,
imposes a transfer or conversion fee.
3. Examples of scenarios that do not qualify for the
temporary exception. The following examples illustrate when an
insured institution can determine exact amounts and thus would not
qualify for the temporary exception.
i. Exchange rate. An insured institution can determine
the exact exchange rate required to be disclosed under §
1005.31(b)(1)(iv) if it converts the funds into the local currency
to be received by the designated recipient using an exchange rate
that it sets. The determination of the exchange rate is in the
insured institution's control even if there is no correspondent
relationship with an intermediary institution in the transmittal
route or the designated recipient's institution.
ii. Covered third-party fees. An insured institution can
determine the exact covered third-party fees required to be
disclosed under § 1005.31(b)(1)(vi) if it has agreed upon the
specific fees with an intermediary correspondent institution, and
this correspondent institution is the only institution in the
transmittal route to the designated recipient's institution.
32(b) Permanent Exceptions 32(b)(1) Permanent Exceptions for
Transfers to Certain Countries
1. Laws of the recipient country. The laws of the
recipient country do not permit a remittance transfer provider to
determine exact amounts required to be disclosed when a law or
regulation of the recipient country requires the person making
funds directly available to the designated recipient to apply an
exchange rate that is:
i. Set by the government of the recipient country after the
remittance transfer provider sends the remittance transfer or
ii. Set when the designated recipient receives the funds.
2. Example illustrating when exact amounts can and cannot be
determined because of the laws of the recipient country.
i. The laws of the recipient country do not permit a remittance
transfer provider to determine the exact exchange rate required to
be disclosed under § 1005.31(b)(1)(iv) when, for example, the
government of the recipient country, on a daily basis, sets the
exchange rate that must, by law, apply to funds received and the
funds are made available to the designated recipient in the local
currency the day after the remittance transfer provider sends the
remittance transfer.
ii. In contrast, the laws of the recipient country permit a
remittance transfer provider to determine the exact exchange rate
required to be disclosed under § 1005.31(b)(1)(iv) when, for
example, the government of the recipient country ties the value of
its currency to the U.S. dollar.
3. Method by which transactions are made in the recipient
country. The method by which transactions are made in the
recipient country does not permit a remittance transfer provider to
determine exact amounts required to be disclosed when transactions
are sent via international ACH on terms negotiated between the
United States government and the recipient country's government,
under which the exchange rate is a rate set by the recipient
country's central bank or other governmental authority after the
provider sends the remittance transfer.
4. Example illustrating when exact amounts can and cannot be
determined because of the method by which transactions are made in
the recipient country.
i. The method by which transactions are made in the recipient
country does not permit a remittance transfer provider to determine
the exact exchange rate required to be disclosed under §
1005.31(b)(1)(iv) when the provider sends a remittance transfer via
international ACH on terms negotiated between the United States
government and the recipient country's government, under which the
exchange rate is a rate set by the recipient country's central bank
on the business day after the provider has sent the remittance
transfer.
ii. In contrast, a remittance transfer provider would not
qualify for the § 1005.32(b)(1)(i)(B) methods exception if it sends
a remittance transfer via international ACH on terms negotiated
between the United States government and a private-sector entity or
entities in the recipient country, under which the exchange rate is
set by the institution acting as the entry point to the recipient
country's payments system on the next business day. However, a
remittance transfer provider sending a remittance transfer using
such a method may qualify for the § 1005.32(a) temporary exception
or the exception set forth in § 1005.32(b)(4).
iii. A remittance transfer provider would not qualify for the §
1005.32(b)(1)(i)(B) methods exception if, for example, it sends a
remittance transfer via international ACH on terms negotiated
between the United States government and the recipient country's
government, under which the exchange rate is set by the recipient
country's central bank or other governmental authority before the
sender requests a transfer.
5. Safe harbor list. If a country is included on a safe
harbor list published by the Bureau under § 1005.32(b)(1)(ii), a
remittance transfer provider may provide estimates of the amounts
to be disclosed under § 1005.31(b)(1)(iv) through (vii). If a
country does not appear on the Bureau's list, a remittance transfer
provider may provide estimates under § 1005.32(b)(1)(i) if the
provider determines that the recipient country does not legally
permit or the method by which transactions are conducted in that
country does not permit the provider to determine exact disclosure
amounts.
6. Reliance on Bureau list of countries. A remittance
transfer provider may rely on the list of countries published by
the Bureau to determine whether the laws of a recipient country do
not permit the remittance transfer provider to determine exact
amounts required to be disclosed under § 1005.31(b)(1)(iv) through
(vii). Thus, if a country is on the Bureau's list, the provider may
give estimates under this section, unless a remittance transfer
provider has information that a country on the Bureau's list
legally permits the provider to determine exact disclosure
amounts.
7. Change in laws of recipient country.
i. If the laws of a recipient country change such that a
remittance transfer provider can determine exact amounts, the
remittance transfer provider must begin providing exact amounts for
the required disclosures as soon as reasonably practicable if the
provider has information that the country legally permits the
provider to determine exact disclosure amounts.
ii. If the laws of a recipient country change such that a
remittance transfer provider cannot determine exact disclosure
amounts, the remittance transfer provider may provide estimates
under § 1005.32(b)(1)(i), even if that country does not appear on
the list published by the Bureau.
2. Example illustrating when exact amounts can and cannot be
determined because of the laws of the recipient country.
i. The laws of the recipient country do not permit a remittance
transfer provider to determine the exact exchange rate required to
be disclosed under § 1005.31(b)(1)(iv) when, for example, the
government of the recipient country, on a daily basis, sets the
exchange rate that must, by law, apply to funds received and the
funds are made available to the designated recipient in the local
currency the day after the remittance transfer provider sends the
remittance transfer.
ii. In contrast, the laws of the recipient country permit a
remittance transfer provider to determine the exact exchange rate
required to be disclosed under § 1005.31(b)(1)(iv) when, for
example, the government of the recipient country ties the value of
its currency to the U.S. dollar.
3. Method by which transactions are made in the recipient
country. The method by which transactions are made in the
recipient country does not permit a remittance transfer provider to
determine exact amounts required to be disclosed when transactions
are sent via international ACH on terms negotiated between the
United States government and the recipient country's government,
under which the exchange rate is a rate set by the recipient
country's central bank or other governmental authority after the
provider sends the remittance transfer.
4. Example illustrating when exact amounts can and cannot be
determined because of the method by which transactions are made in
the recipient country.
i. The method by which transactions are made in the recipient
country does not permit a remittance transfer provider to determine
the exact exchange rate required to be disclosed under §
1005.31(b)(1)(iv) when the provider sends a remittance transfer via
international ACH on terms negotiated between the United States
government and the recipient country's government, under which the
exchange rate is a rate set by the recipient country's central bank
on the business day after the provider has sent the remittance
transfer.
ii. In contrast, a remittance transfer provider would not
qualify for the § 1005.32(b)(1)(i)(B) methods exception if it sends
a remittance transfer via international ACH on terms negotiated
between the United States government and a private-sector entity or
entities in the recipient country, under which the exchange rate is
set by the institution acting as the entry point to the recipient
country's payments system on the next business day. However, a
remittance transfer provider sending a remittance transfer using
such a method may qualify for the § 1005.32(a) temporary
exception.
iii. A remittance transfer provider would not qualify for the §
1005.32(b)(1)(i)(B) methods exception if, for example, it sends a
remittance transfer via international ACH on terms negotiated
between the United States government and the recipient country's
government, under which the exchange rate is set by the recipient
country's central bank or other governmental authority before the
sender requests a transfer.
5. Safe harbor list. If a country is included on a safe
harbor list published by the Bureau under § 1005.32(b)(1)(ii), a
remittance transfer provider may provide estimates of the amounts
to be disclosed under § 1005.31(b)(1)(iv) through (b)(1)(vii). If a
country does not appear on the Bureau's list, a remittance transfer
provider may provide estimates under § 1005.32(b)(1)(i) if the
provider determines that the recipient country does not legally
permit or method by which transactions are conducted in that
country does not permit the provider to determine exact disclosure
amounts.
6. Reliance on Bureau list of countries. A remittance
transfer provider may rely on the list of countries published by
the Bureau to determine whether the laws of a recipient country do
not permit the remittance transfer provider to determine exact
amounts required to be disclosed under § 1005.31(b)(1)(iv) through
(vii). Thus, if a country is on the Bureau's list, the provider may
give estimates under this section, unless a remittance transfer
provider has information that a country on the Bureau's list
legally permits the provider to determine exact disclosure
amounts.
7. Change in laws of recipient country. i. If the laws of
a recipient country change such that a remittance transfer provider
can determine exact amounts, the remittance transfer provider must
begin providing exact amounts for the required disclosures as soon
as reasonably practicable if the provider has information that the
country legally permits the provider to determine exact disclosure
amounts.
ii. If the laws of a recipient country change such that a
remittance transfer provider cannot determine exact disclosure
amounts, the remittance transfer provider may provide estimates
under § 1005.32(b)(1)(i), even if that country does not appear on
the list published by the Bureau.
32(b)(2) Permanent Exceptions for Transfers Scheduled Before the
Date of Transfer
1. Fixed amount of foreign currency. The following is an
example of when and how a remittance transfer provider may disclose
estimates for remittance transfers scheduled five or more business
days before the date of transfer where the provider agrees to the
sender's request to fix the amount to be transferred in a currency
in which the transfer will be received and not the currency in
which it was funded. If on February 1, a sender schedules a 1000
Euro wire transfer to be sent from the sender's bank account
denominated in U.S. dollars to a designated recipient on February
15, § 1005.32(b)(2) allows the provider to estimate the amount that
will be transferred to the designated recipient (i.e., the
amount described in § 1005.31(b)(1)(i)), any fees imposed or taxes
collected on the remittance transfer by the provider (if based on
the amount transferred) (i.e., the amount described in §
1005.31(b)(1)(ii)), and the total amount of the transaction
(i.e., the amount described in § 1005.31(b)(1)(iii)). The
provider may also estimate any covered third-party fees if the
exchange rate is also estimated and the estimated exchange rate
affects the amount of fees (as allowed by § 1005.32(b)(2)(ii)).
2. Relationship to § 1005.10(d). To the extent §
1005.10(d) requires, for an electronic fund transfer that is also a
remittance transfer, notice when a preauthorized electronic fund
transfer from the consumer's account will vary in amount from the
previous transfer under the same authorization or from the
preauthorized amount, that provision applies even if subpart B
would not otherwise require notice before the date of transfer.
However, insofar as § 1005.10(d) does not specify the form of such
notice, a notice sent pursuant to § 1005.36(a)(2)(i) will satisfy §
1005.10(d) as long as the timing requirements of § 1005.10(d) are
satisfied.
32(b)(3) Permanent Exception for Optional Disclosure of Non-Covered
Third-Party Fees and Taxes Collected on the Remittance Transfer by
a Person Other Than the Provider
1. Reasonable sources of information. Pursuant to §
1005.32(b)(3) a remittance transfer provider may estimate
applicable non-covered third-party fees and taxes collected on the
remittance transfer by a person other than the provider using
reasonable sources of information. Reasonable sources of
information may include, for example: information obtained from
recent transfers to the same institution or the same country or
region; fee schedules from the recipient institution; fee schedules
from the recipient institution's competitors; surveys of recipient
institution fees in the same country or region as the recipient
institution; information provided or surveys of recipient
institutions' regulators or taxing authorities; commercially or
publicly available databases, services or sources; and information
or resources developed by international nongovernmental
organizations or intergovernmental organizations.
32(b)(4) Permanent Exception for Estimation of the Exchange Rate by
an Insured Institution
1. Determining the exact exchange rate. For purposes of §
1005.32(b)(4)(i)(B), an insured institution cannot determine, at
the time it must provide the applicable disclosures, the exact
exchange rate required to be disclosed under § 1005.31(b)(1)(iv)
for a remittance transfer to a particular country where the
designated recipient of the transfer will receive funds in the
country's local currency if a person other than the insured
institution sets the exchange rate for that transfer, except where
that person has a correspondent relationship with the insured
institution, that person is a service provider for the insured
institution, or that person acts as an agent of the insured
institution.
i. Example where an insured institution cannot determine the
exact exchange rate. The following example illustrates when an
insured institution cannot determine an exact exchange rate under §
1005.32(b)(4)(i)(B) for a remittance transfer:
A. An insured institution or its service provider does not set
the exchange rate required to be disclosed under §
1005.31(b)(1)(iv), and the rate is set when the funds are deposited
into the recipient's account by the designated recipient's
institution that does not have a correspondent relationship with,
and does not act as an agent of, the insured institution.
ii. Examples where an insured institution can determine the
exact exchange rate. The following examples illustrate when an
insured institution can determine an exact exchange rate under §
1005.32(b)(4)(i)(B) for a remittance transfer, and thus the insured
institution may not use the exception in § 1005.32(b)(4) to
estimate the disclosures required under § 1005.31(b)(1)(iv) through
(vii) for the remittance transfer:
A. An insured institution has a correspondent relationship with
an intermediary financial institution (or the intermediary
financial institution acts as an agent of the insured institution)
and that intermediary financial institution sets the exchange rate
required to be disclosed under § 1005.31(b)(1)(iv) for a remittance
transfer.
B. An insured institution or its service provider converts the
funds into the local currency to be received by the designated
recipient for a remittance transfer using an exchange rate that the
insured institution or its service provider sets. The insured
institution can determine the exact exchange rate for purposes of §
1005.32(b)(4)(i)(B) for the remittance transfer even if the insured
institution does not have a correspondent relationship with an
intermediary financial institution in the transmittal route or the
designated recipient's institution, and an intermediary financial
institution in the transmittal route or the designed recipient's
institution does not act as an agent of the insured
institution.
2. Threshold. For purposes of determining whether an
insured institution made 1,000 or fewer remittance transfers in the
prior calendar year to a particular country pursuant to §
1005.32(b)(4)(i)(C):
i. The number of remittance transfers provided includes
transfers in the prior calendar year to that country when the
designated recipients of those transfers received funds in the
country's local currency regardless of whether the exchange rate
was estimated for those transfers. For example, an insured
institution exceeds the 1,000-transfer threshold in the prior
calendar year if the insured institution provided 700 remittance
transfers to a country in the prior calendar year when the
designated recipients of those transfers received funds in the
country's local currency when the exchange rate was estimated for
those transfers and also sends 400 remittance transfers to the same
country in the prior calendar year when the designated recipients
of those transfers received funds in the country's local currency
and the exchange rate for those transfers was not estimated.
ii. The number of remittance transfers does not include
remittance transfers to a country in the prior calendar year when
the designated recipients of those transfers did not receive the
funds in the country's local currency. For example, an insured
institution does not exceed the 1,000-transfer threshold in the
prior calendar year if the insured institution provides 700
remittance transfers to a country in the prior calendar year when
the designated recipients of those transfers received funds in the
country's local currency and also sends 400 remittance transfers to
the same country in the prior calendar year when the designated
recipients of those transfers did not receive funds in the
country's local currency.
3. Transition period. If an insured institution in the
prior calendar year did not exceed the 1,000-transfer threshold to
a particular country pursuant to § 1005.32(b)(4)(i)(C), but does
exceed the 1,000-transfer threshold in the current calendar year,
the insured institution has a reasonable amount of time after
exceeding the 1,000-transfer threshold to begin providing exact
exchange rates in disclosures (assuming it cannot rely on another
exception in § 1005.32 to estimate the exchange rate). The
reasonable amount of time must not exceed the later of six months
after exceeding the 1,000-transfer threshold in the current
calendar year or January 1 of the next year. For example, assume an
insured institution did not exceed the 1,000-transfer threshold to
a particular country pursuant to § 1005.32(b)(4)(i)(C) in 2020, but
does exceed the 1,000-transfer threshold on December 1, 2021. The
insured institution would have a reasonable amount of time after
December 1, 2021 to begin providing exact exchange rates in
disclosures (assuming it cannot rely on another exception in §
1005.32 to estimate the exchange rate). In this case, the
reasonable amount of time must not exceed June 1, 2022 (which is
six months after the insured institution exceeds the 1,000-transfer
threshold in the previous year).
32(b)(5) Permanent Exception for Estimation of Covered Third-Party
Fees by an Insured Institution
1. Insured institution cannot determine the exact covered
third-party fees. For purposes of § 1005.32(b)(5)(i)(B), an
insured institution cannot determine, at the time it must provide
the applicable disclosures, the exact covered third-party fees
required to be disclosed under § 1005.31(b)(1)(vi) for a remittance
transfer to a designated recipient's institution when all of the
following conditions are met:
i. The insured institution does not have a correspondent
relationship with the designated recipient's institution;
ii. The designated recipient's institution does not act as an
agent of the insured institution;
iii. The insured institution does not have an agreement with the
designated recipient's institution with respect to the imposition
of covered third-party fees on the remittance transfer
(e.g., an agreement whereby the designated recipient's
institution agrees to charge back any covered third-party fees to
the insured institution rather than impose the fees on the
remittance transfer); and
iv. The insured institution does not know at the time the
disclosures are given that the only intermediary financial
institutions that will impose covered third-party fees on the
transfer are those institutions that have a correspondent
relationship with or act as an agent for the insured institution,
or have otherwise agreed upon the covered third-party fees with the
insured institution.
2. Insured institution can determine the exact covered
third-party fees. For purposes of § 1005.32(b)(5)(i)(B), an
insured institution can determine, at the time it must provide the
applicable disclosures, exact covered third-party fees, and thus
the insured institution may not use the exception in §
1005.32(b)(5) to estimate the disclosures required under §
1005.31(b)(1)(vi) or (vii) for the transfer, if any of the
following conditions are met:
i. An insured institution has a correspondent relationship with
the designated recipient's institution;
ii. The designated recipient's institution acts as an agent of
the insured institution;
iii. An insured institution has an agreement with the designated
recipient's institution with respect to the imposition of covered
third-party fees on the remittance transfer; or
iv. An insured institution knows at the time the disclosures are
given that the only intermediary financial institutions that will
impose covered third-party fees on the transfer are those
institutions that have a correspondent relationship with or act as
an agent for the insured institution, or have otherwise agreed upon
the covered third-party fees with the insured institution.
3. Threshold. For purposes of determining whether an
insured institution made 500 or fewer remittance transfers in the
prior calendar year to a particular designated recipient's
institution pursuant to § 1005.32(b)(5)(i)(C):
i. The number of remittance transfers provided includes
remittance transfers in the prior calendar year to that designated
recipient's institution regardless of whether the covered
third-party fees were estimated for those transfers. For example,
an insured institution exceeds the 500-transfer threshold in the
prior calendar year if an insured institution provides 300
remittance transfers to the designated recipient's institution in
the prior calendar year when the covered third-party fees were
estimated for those transfers and also sends 400 remittance
transfers to the designated recipient's institution in the prior
calendar year and the covered third-party fees for those transfers
were not estimated.
ii. The number of remittance transfers includes remittance
transfers provided to the designated recipient's institution in the
prior calendar year regardless of whether the designated recipients
received the funds in the country's local currency or in another
currency. For example, an insured institution exceeds the
500-transfer threshold in the prior calendar year if the insured
institution provides 300 remittance transfers to the designated
recipient's institution in the prior calendar year when the
designated recipients of those transfers received funds in the
country's local currency and also sends 400 remittance transfers to
the same designated recipient's institution in the prior calendar
year when the designated recipients of those transfers did not
receive funds in the country's local currency.
iii. The number of remittance transfers includes remittance
transfers provided to the designated recipient's institution and
any of its branches in the country to which the particular transfer
described in § 1005.32(b)(5) is being sent. For example, if the
particular remittance transfer described in § 1005.32(b)(5) is
being sent to the designated recipient's institution Bank XYZ in
Nigeria, the number of remittance transfers for purposes of the
500-transfer threshold would include remittances transfers in the
previous calendar year that were sent to Bank XYZ, or to its
branches, in Nigeria. The 500-transfer threshold would not include
remittance transfers that were sent to branches of Bank XYZ that
were located in any country other than Nigeria.
4. United States Federal statute or regulation. An
insured institution can still use § 1005.32(b)(5) to provide
estimates of covered third-party fees for a remittance transfer
sent to a particular designated recipient's institution even if the
insured institution sent more than 500 transfers to the designated
recipient's institution in the prior calendar year if a United
States Federal statute or regulation prohibits the insured
institution from being able to determine the exact covered
third-party fees required to be disclosed under § 1005.31(b)(1)(vi)
for the remittance transfer and the insured institution meets the
other conditions set forth in § 1005.32(b)(5). A United States
Federal statute or regulation specifically prohibits the insured
institution from being able to determine the exact covered
third-party fees for the remittance transfer if the United States
Federal statute or regulation:
i. Prohibits the insured institution from disclosing exact
covered third-party fees in disclosures for transfers to a
designated recipient's institution; or
ii. Makes it infeasible for the insured institution to form a
relationship with the designated recipient's institution and that
relationship is necessary for the insured institution to be able to
determine, at the time it must provide the applicable disclosures,
exact covered third-party fees.
5. Transition period. If an insured institution in the
prior calendar year did not exceed the 500-transfer threshold to a
particular designated recipient's institution pursuant to §
1005.32(b)(5)(i)(C), but does exceed the 500-transfer threshold in
the current calendar year, the insured institution has a reasonable
amount of time after exceeding the 500-transfer threshold to begin
providing exact covered third-party fees in disclosures (assuming
that a United States Federal statute or regulation does not
prohibit the insured institution from being able to determine the
exact covered third-party fees, or the insured institution cannot
rely on another exception in § 1005.32 to estimate covered
third-party fees). The reasonable amount of time must not exceed
the later of six months after exceeding the 500-transfer threshold
in the current calendar year or January 1 of the next year. For
example, assume an insured institution did not exceed the
500-transfer threshold to a particular designated recipient's
institution pursuant to § 1005.32(b)(5)(i)(C) in 2020, but does
exceed the 500-transfer threshold on December 1, 2021. The insured
institution would have a reasonable amount of time after December
1, 2021 to begin providing exact covered third-party fees in
disclosures (assuming that a United States Federal statute or
regulation does not prohibit the insured institution from being
able to determine the exact covered third-party fees, or the
insured institution cannot rely on another exception in § 1005.32
to estimate covered third-party fees). In this case, the reasonable
amount of time must not exceed June 1, 2022 (which is six months
after the insured institution exceeds the 500-transfer threshold in
the previous year).
32(c) Bases for Estimates 32(c)(1) Exchange Rate
1. Most recent exchange rate for qualifying international ACH
transfers. If the exchange rate for a remittance transfer sent
via international ACH that qualifies for the § 1005.32(b)(1)(i)(B)
exception is set the following business day, the most recent
exchange rate available for a transfer is the exchange rate set for
the day that the disclosure is provided, i.e., the current
business day's exchange rate.
2. Publicly available. Examples of publicly available
sources of information containing the most recent wholesale
exchange rate for a currency include U.S. news services, such as
Bloomberg, the Wall Street Journal, and the New York Times; a
recipient country's national news services, and a recipient
country's central bank or other government agency.
3. Spread. An estimate for disclosing the exchange rate
based on the most recent publicly available wholesale exchange rate
must also reflect any spread the remittance transfer provider
typically applies to the wholesale exchange rate for remittance
transfers for a particular currency.
4. Most recent. For the purposes of § 1005.32(c)(1)(ii)
and (iii), if the exchange rate with respect to a particular
currency is published or provided multiple times throughout the day
because the exchange rate fluctuates throughout the day, a
remittance transfer provider may use any exchange rate available on
that day to determine the most recent exchange rate.
32(c)(3) Covered Third-Party Fees
1. Potential transmittal routes. A remittance transfer
from the sender's account at an insured institution to the
designated recipient's institution may take several routes,
depending on the correspondent relationships each institution in
the transmittal route has with other institutions. In providing an
estimate of the fees required to be disclosed under §
1005.31(b)(1)(vi) pursuant to the § 1005.32(a) temporary exception
or the exception under § 1005.32(b)(5), an insured institution may
rely upon the representations of the designated recipient's
institution and the institutions that act as intermediaries in any
one of the potential transmittal routes that it reasonably believes
a requested remittance transfer may travel.
32(d) Bases for Estimates for Transfers Scheduled Before the Date
of Transfer
1. In general. When providing an estimate pursuant to §
1005.32(b)(2), § 1005.32(d) requires that a remittance transfer
provider's estimated exchange rate must be the exchange rate (or
estimated exchange rate) that the remittance transfer provider
would have used or did use that day in providing disclosures to a
sender requesting such a remittance transfer to be made on the same
day. If, for the same-day remittance transfer, the provider could
utilize an exception permitting the provision of estimates in §
1005.32(a) or (b)(1), or (4), the provider may provide estimates
based on a methodology permitted under § 1005.32(c). For example,
if, on February 1, the sender schedules a remittance transfer to
occur on February 10, the provider should disclose the exchange
rate as if the sender was requesting the transfer be sent on
February 1. However, if at the time payment is made for the
requested transfer, the remittance transfer provider could not send
any remittance transfer until the next day (for reasons such as the
provider's deadline for the batching of transfers), the remittance
transfer provider can use the rate (or estimated exchange rate)
that the remittance transfer provider would have used or did use in
providing disclosures that day with respect to a remittance
transfer requested that day that could not be sent until the
following day.
Section 1005.33 - Procedures for Resolving Errors 33(a) Definition
of Error
1. Incorrect amount of currency paid by sender. Section
1005.33(a)(1)(i) covers circumstances in which a sender pays an
amount that differs from the total amount of the transaction,
including fees imposed in connection with the transfer, stated in
the receipt or combined disclosure provided under § 1005.31(b)(2)
or (3). Such error may be asserted by a sender regardless of the
form or method of payment provided, including when a debit, credit,
or prepaid card is used to fund the transfer and an excess amount
is paid. For example, if a remittance transfer provider incorrectly
charged a sender's credit card account for US$150, and US$120 was
sent, plus a transfer fee of US$10, the sender could assert an
error with the remittance transfer provider for the incorrect
charge under § 1005.33(a)(1)(i).
2. Incorrect amount of currency received - coverage.
Section 1005.33(a)(1)(iii) covers circumstances in which the
designated recipient receives an amount of currency that differs
from the amount of currency identified on the disclosures provided
to the sender, except where the disclosure stated an estimate of
the amount of currency to be received in accordance with § 1005.32
and the difference results from application of the actual exchange
rate, fees, and taxes, rather than any estimated amounts, or the
failure was caused by circumstances outside the remittance transfer
provider's control. A designated recipient may receive an amount of
currency that differs from the amount of currency disclosed, for
example, if an exchange rate other than the disclosed rate is
applied to the remittance transfer, or if the provider fails to
account for fees or taxes that may be imposed by the provider or a
third party before the transfer is picked up by the designated
recipient or deposited into the recipient's account in the foreign
country. However, if the provider rounds the exchange rate used to
calculate the amount received consistent with § 1005.31(b)(1)(iv)
and comment 31(b)(1)(iv)-2 for the disclosed rate, there is no
error if the designated recipient receives an amount of currency
that results from applying the exchange rate used, prior to any
rounding of the exchange rate, to calculate fees, taxes, or the
amount received rather than the disclosed rate. Section
1005.33(a)(1)(iii) also covers circumstances in which the
remittance transfer provider transmits an amount that differs from
the amount requested by the sender.
3. Incorrect amount of currency received - examples. For
purposes of the following examples illustrating the error for an
incorrect amount of currency received under § 1005.33(a)(1)(iii),
assume that none of the circumstances permitting an estimate under
§ 1005.32 apply (unless otherwise stated).
i. A consumer requests to send funds to a relative in Mexico to
be received in local currency. Upon receiving the sender's payment,
the remittance transfer provider provides a receipt indicating that
the amount of currency that will be received by the designated
recipient will be 1180 Mexican pesos, after fees and taxes are
applied. However, when the relative picks up the transfer in Mexico
a day later, he only receives 1150 Mexican pesos because the
exchange rate applied by the recipient agent in Mexico was lower
than the exchange rate used by the provider, prior to any rounding
of the exchange rate, to disclose the amount of currency to be
received by the designated recipient on the receipt. Because the
designated recipient has received less than the amount of currency
disclosed on the receipt, an error has occurred.
ii. A consumer requests to send funds to a relative in Colombia
to be received in local currency. The remittance transfer provider
provides the sender a receipt stating an amount of currency that
will be received by the designated recipient, which does not
reflect the additional foreign taxes that will be collected in
Colombia on the transfer but does include the statement required by
§ 1005.31(b)(1)(viii). If the designated recipient will receive
less than the amount of currency disclosed on the receipt due
solely to the additional foreign taxes that the provider was not
required to disclose, no error has occurred.
iii. Same facts as in ii., except that the receipt provided by
the remittance transfer provider does not reflect additional fees
that are imposed by the receiving agent in Colombia on the
transfer. Because the designated recipient will receive less than
the amount of currency disclosed in the receipt due to the
additional covered third-party fees, an error has occurred.
iv. A consumer requests to send US$250 to a relative in India to
a U.S. dollar-denominated account held by the relative at an Indian
bank. Instead of the US$250 disclosed on the receipt as the amount
to be sent, the remittance transfer provider sends US$200,
resulting in a smaller deposit to the designated recipient's
account than was disclosed as the amount to be received after fees
and taxes. Because the designated recipient received less than the
amount of currency that was disclosed, an error has occurred.
v. A consumer requests to send US$100 to a relative in a foreign
country to be received in local currency. The remittance transfer
provider provides the sender a receipt that discloses an estimated
exchange rate, other taxes, and amount of currency that will be
received due to the law in the foreign country requiring that the
exchange rate be set by the foreign country's central bank. When
the relative picks up the remittance transfer, the relative
receives less currency than the estimated amount disclosed to the
sender on the receipt due to application of the actual exchange
rate, fees, and taxes, rather than any estimated amounts. Because §
1005.32(b) permits the remittance transfer provider to disclose an
estimate of the amount of currency to be received, no error has
occurred unless the estimate was not based on an approach set forth
under § 1005.32(c).
vi. A sender requests that his bank send US$120 to a designated
recipient's account at an institution in a foreign country. The
foreign institution is not an agent of the provider. Only US$100 is
deposited into the designated recipient's account because the
recipient institution imposed a US$20 incoming wire fee and
deducted the fee from the amount transferred. Because this fee is a
non-covered third-party fee that the provider is not required to
disclose under § 1005.31(b)(1)(vi), no error has occurred if the
provider provided the disclosure required by §
1005.31(b)(1)(viii).
4. Incorrect amount of currency received - extraordinary
circumstances. Under § 1005.33(a)(1)(iii)(B), a remittance
transfer provider's failure to make available to a designated
recipient the amount of currency disclosed pursuant to §
1005.31(b)(1)(vii) and stated in the disclosure provided pursuant
to § 1005.31(b)(2) or (3) for the remittance transfer is not an
error if such failure was caused by extraordinary circumstances
outside the remittance transfer provider's control that could not
have been reasonably anticipated. Examples of extraordinary
circumstances outside the remittance transfer provider's control
that could not have been reasonably anticipated under §
1005.33(a)(1)(iii)(B) include circumstances such as war or civil
unrest, natural disaster, garnishment or attachment of some of the
funds after the transfer is sent, and government actions or
restrictions that could not have been reasonably anticipated by the
remittance transfer provider, such as the imposition of foreign
currency controls or foreign taxes unknown at the time the receipt
or combined disclosure is provided under § 1005.31(b)(2) or
(3).
5. Failure to make funds available by disclosed date of
availability - coverage. Section 1005.33(a)(1)(iv) generally
covers disputes about the failure to make funds available in
connection with a remittance transfer to a designated recipient by
the disclosed date of availability. If only a portion of the funds
were made available by the disclosed date of availability, then §
1005.33(a)(1)(iv) does not apply, but § 1005.33(a)(1)(iii) may
apply instead. The following are examples of errors for failure to
make funds available by the disclosed date of availability
(assuming that none of the exceptions in § 1005.33(a)(1)(iv)(A),
(B), or (C) apply).
i. Late or non-delivery of a remittance transfer;
ii. Delivery of funds to the wrong account;
iii. The fraudulent pick-up of a remittance transfer in a
foreign country by a person other than the designated
recipient;
iv. The recipient agent or institution's retention of the
remittance transfer, instead of making the funds available to the
designated recipient.
6. Failure to make funds available by disclosed date of
availability - extraordinary circumstances. Under §
1005.33(a)(1)(iv)(A), a remittance transfer provider's failure to
deliver or transmit a remittance transfer by the disclosed date of
availability is not an error if such failure was caused by
extraordinary circumstances outside the remittance transfer
provider's control that could not have been reasonably anticipated.
Examples of extraordinary circumstances outside the remittance
transfer provider's control that could not have been reasonably
anticipated under § 1005.33(a)(1)(iv)(A) include circumstances such
as war or civil unrest, natural disaster, garnishment or attachment
of funds after the transfer is sent, and government actions or
restrictions that could not have been reasonably anticipated by the
remittance transfer provider, such as the imposition of foreign
currency controls.
7. Failure to make funds available by disclosed date of
availability - fraud and other screening procedures. Under §
1005.33(a)(1)(iv)(B), a remittance transfer provider's failure to
deliver funds by the disclosed date of availability is not an error
if such delay is related to the provider's or any third party's
investigation necessary to address potentially suspicious, blocked
or prohibited activity, and the provider did not and could not have
reasonably foreseen the delay so as to enable it to timely disclose
an accurate date of availability when providing the sender with a
receipt or combined disclosure. For example, no error occurs if
delivery of funds is delayed because, after the receipt is
provided, the provider's fraud screening system flags a remittance
transfer because the designated recipient has a name similar to the
name of a blocked person under a sanctions program and further
investigation is needed to determine that the designated recipient
is not actually a blocked person. Similarly, no error occurs where,
after disclosing a date of availability to the sender, a remittance
transfer provider receives specific law enforcement information
indicating that the characteristics of a remittance transfer match
a pattern of fraudulent activity, and as a result, the provider
deems it necessary to delay delivery of the funds to allow for
further investigation. However, if a delay could have been
reasonably foreseen, the exception in § 1005.33(a)(1)(iv)(B) would
not apply. For example, if a provider knows in time to make a
disclosure that all remittance transfers to a certain geographic
area must undergo screening procedures that routinely delay such
transfers by two days, the provider's failure to include the
additional two days in its disclosure of the date of availability
constitutes an error if delivery of the funds is indeed delayed
beyond the disclosed date of availability.
8. Sender account number or recipient institution identifier
error. The exception in § 1005.33(a)(1)(iv)(D) applies where a
sender gives the remittance transfer provider an incorrect account
number or recipient institution identifier and all five conditions
in § 1005.33(h) are satisfied. The exception does not apply,
however, where the failure to make funds available is the result of
a mistake by a provider or a third party or due to incorrect or
insufficient information provided by the sender other than an
incorrect account number or recipient institution identifier, such
as an incorrect name of the recipient institution.
9. Account number or recipient institution identifier.
For purposes of the exception in § 1005.33(a)(1)(iv)(D), the terms
account number and recipient institution identifier refer to
alphanumerical account or institution identifiers other than names
or addresses, such as account numbers, routing numbers, Canadian
transit numbers, International Bank Account Numbers (IBANs),
Business Identifier Codes (BICs) and other similar account or
institution identifiers used to route a transaction. In addition
and for purposes of this exception, the term designated recipient's
account in § 1005.33(a)(1)(iv)(D) refers to an asset account,
regardless of whether it is a consumer asset account, established
for any purpose and held by a bank, savings association, credit
union, or equivalent institution. A designated recipient's account
does not, however, include a credit card, prepaid card, or a
virtual account held by an Internet-based or mobile telephone
company that is not a bank, savings association, credit union or
equivalent institution.
10. Recipient-requested changes. Under §
1005.33(a)(2)(iii), a change requested by the designated recipient
that the remittance transfer provider or others involved in the
remittance transfer decide to accommodate is not considered an
error. The exception under § 1005.33(a)(2)(iii) is available only
if the change is made solely because the designated recipient
requested the change. For example, if a sender requests to send
US$100 to a designated recipient at a designated location, but the
designated recipient requests the amount in a different currency
(either at the sender-designated location or another location
requested by the recipient) and the remittance transfer provider
accommodates the recipient's request, the change does not
constitute an error.
11. Change from disclosure made in reliance on sender
information. Under the commentary accompanying § 1005.31, the
remittance transfer provider may rely on the sender's
representations in making certain disclosures. See, e.g.,
comments 31(b)(1)(iv)-1 and 31(b)(1)(vi)-1. For example, suppose a
sender requests U.S. dollars to be deposited into an account of the
designated recipient and represents that the account is U.S.
dollar-denominated. If the designated recipient's account is
actually denominated in local currency and the recipient
account-holding institution must convert the remittance transfer
into local currency in order to deposit the funds and complete the
transfer, the change in currency does not constitute an error
pursuant to § 1005.33(a)(2)(iv).
33(b) Notice of Error From Sender
1. Person asserting or discovering error. The error
resolution procedures of this section apply only when a notice of
error is received from the sender, and not when a notice of error
is received from the designated recipient or when the remittance
transfer provider itself discovers and corrects an error.
2. Content of error notice. The notice of error is
effective so long as the remittance transfer provider is able to
identify the elements in § 1005.33(b)(1)(ii). For example, the
sender could provide the confirmation number or code that would be
used by the designated recipient to pick up the transfer, or other
identification number or code supplied by the remittance transfer
provider in connection with the transfer, if such number or code is
sufficient for the remittance transfer provider to identify the
sender (and contact information), designated recipient, and the
transfer in question. For an account-based remittance transfer, the
notice of error is effective even if it does not contain the
sender's account number, so long as the remittance transfer
provider is able to identify the account and the transfer in
question.
3. Address on notice of error. A remittance transfer
provider may request, or a sender may provide, the sender's or
designated recipient's email address, as applicable, instead of a
physical address, on a notice of error.
4. Effect of late notice. A remittance transfer provider
is not required to comply with the requirements of this section for
any notice of error from a sender that is received by the provider
more than 180 days from the disclosed date of availability of the
remittance transfer to which the notice of error applies or, if
applicable, more than 60 days after a provider sent documentation,
additional information, or clarification requested by the sender,
provided such date is later than 180 days after the disclosed date
of availability.
5. Notice of error provided to agent. A notice of error
provided by a sender to an agent of the remittance transfer
provider is deemed to be received by the provider under §
1005.33(b)(1)(i) when received by the agent.
6. Consumer notice of error resolution rights. Section
1005.31 requires a remittance transfer provider to include an
abbreviated notice of the consumer's error resolution rights on the
receipt or combined notice provided under § 1005.31(b)(2) or (3).
In addition, the remittance transfer provider must make available
to a sender upon request, a notice providing a full description of
the sender's error resolution rights, using language set forth in
Appendix A of this part (Model Form A-36) or substantially similar
language.
33(c) Time Limits and Extent of Investigation
1. Notice to sender of finding of error. If the
remittance transfer provider determines during its investigation
that an error occurred as described by the sender, the remittance
provider may inform the sender of its findings either orally or in
writing. However, if the provider determines that no error or a
different error occurred, the provider must provide a written
explanation of its findings under § 1005.33(d)(1).
2. Incorrect or insufficient information provided for
transfer. The remedy in § 1005.33(c)(2)(iii) applies if a
remittance transfer provider's failure to make funds in connection
with a remittance transfer available to a designated recipient by
the disclosed date of availability occurred because the sender
provided incorrect or insufficient information in connection with
the transfer, such as by erroneously identifying the designated
recipient's address or by providing insufficient information such
that the entity distributing the funds cannot identify the correct
designated recipient. A sender is not considered to have provided
incorrect or insufficient information for purposes of §
1005.33(c)(2)(iii) if the provider discloses the incorrect location
where the transfer may be picked up, gives the wrong confirmation
number/code for the transfer, or otherwise miscommunicates
information necessary for the designated recipient to pick-up the
transfer. The remedies in § 1005.33(c)(2)(iii) do not apply if the
sender provided an incorrect account number or recipient
institution identifier and the provider has met the requirements of
§ 1005.33(h) because under § 1005.33(a)(1)(iv)(D) no error would
have occurred. See § 1005.33(a)(1)(iv)(D) and comment
33(a)-7.
3. Designation of requested remedy. Under §
1005.33(c)(2)(ii), the sender may generally choose to obtain a
refund of funds that were not properly transmitted or delivered to
the designated recipient or, request redelivery of the amount
appropriate to correct the error at no additional cost unless the
error is determined to have occurred because the sender provided
incorrect or insufficient information. Upon receiving the sender's
request, the remittance transfer provider shall correct the error
within one business day, or as soon as reasonably practicable,
applying the same exchange rate, fees, and taxes stated in the
disclosure provided under § 1005.31(b)(2) or (3), if the sender
requests delivery of the amount appropriate to correct the error
and the error did not occur because the sender provided incorrect
or insufficient information. The provider may also request that the
sender indicate the preferred remedy at the time the sender
provides notice of the error although if provider does so, it
should indicate that the if the sender chooses a resend at the
time, the remedy may be unavailable if the error occurred because
the sender provided incorrect or insufficient information. However,
if the sender does not indicate the desired remedy at the time of
providing notice of error, the remittance transfer provider must
notify the sender of any available remedies in the report provided
under § 1005.33(c)(1) or (d)(1) if the provider determines an error
occurred.
4. Default remedy. Unless the sender provided incorrect
or insufficient information and § 1005.33(c)(2)(iii) applies, the
remittance transfer provider may set a default remedy that the
provider will provide if the sender does not designate a remedy
within a reasonable time after the sender receives the report
provided under § 1005.33(c)(1). A provider that permits a sender to
designate a remedy within 10 days after the provider has sent the
report provided under § 1005.33(c)(1) or (d)(1) before imposing the
default remedy is deemed to have provided the sender with a
reasonable time to designate a remedy. In the case a default remedy
is provided, the provider must correct the error within one
business day, or as soon as reasonably practicable, after the
reasonable time for the sender to designate the remedy has passed,
consistent with § 1005.33(c)(2).
5. Amount appropriate to resolve the error. For purposes
of the remedies set forth in § 1005.33(c)(2)(i)(A), (c)(2)(i)(B),
(c)(2)(ii)(A)(1), and (c)(2)(i)(A)(2) the amount
appropriate to resolve the error is the specific amount of
transferred funds that should have been received if the remittance
transfer had been effected without error. The amount appropriate to
resolve the error does not include consequential damages. For
example, when the amount that was disclosed pursuant to §
1005.31(b)(1)(vii) was received by the designated recipient before
the provider must determine the appropriate remedy for an error
under § 1005.33(a)(1)(iv), no additional amounts are required to
resolve the error after the remittance transfer provider refunds
the appropriate fees and taxes paid by the sender pursuant to §
1005.33(c)(2)(ii)(B) or (c)(2)(iii), as applicable.
6. Form of refund. For a refund provided under §
1005.33(c)(2)(i)(A), (c)(2)(ii)(A)(1), (c)(2)(ii)(B), or
(c)(2)(iii), a remittance transfer provider may generally, at its
discretion, issue a refund either in cash or in the same form of
payment that was initially provided by the sender for the
remittance transfer. For example, if the sender originally provided
a credit card as payment for the transfer, the remittance transfer
provider may issue a credit to the sender's credit card account in
the appropriate amount. However, if a sender initially provided
cash for the remittance transfer, a provider may issue a refund by
check. For example, if the sender originally provided cash as
payment for the transfer, the provider may mail a check to the
sender in the amount of the payment.
7. Remedies for incorrect amount paid. If an error under
§ 1005.33(a)(1)(i) occurred, the sender may request the remittance
transfer provider refund the amount necessary to resolve the error
under § 1005.33(c)(2)(i)(A) or that the remittance transfer
provider make the amount necessary to resolve the error available
to the designated recipient at no additional cost under §
1005.33(c)(2)(i)(B).
8. Correction of an error if funds not available by disclosed
date. If the remittance transfer provider determines an error
of failure to make funds available by the disclosed date occurred
under § 1005.33(a)(1)(iv), it must correct the error in accordance
with § 1005.33(c)(2)(ii)(A), as applicable, and refund any fees
imposed for the transfer (unless the sender provided incorrect or
insufficient information to the remittance transfer provider in
connection with the remittance transfer), whether the fee was
imposed by the provider or a third party involved in sending the
transfer, such as an intermediary bank involved in sending a wire
transfer or the institution from which the funds are picked up in
accordance with § 1005.33(c)(2)(ii)(B).
9. Charges for error resolution. If an error occurred,
whether as alleged or in a different amount or manner, the
remittance transfer provider may not impose a charge related to any
aspect of the error resolution process (including charges for
documentation or investigation).
10. Correction without investigation. A remittance
transfer provider may correct an error, without investigation, in
the amount or manner alleged by the sender, or otherwise
determined, to be in error, but must comply with all other
applicable requirements of § 1005.33.
11. Procedure for sending a new remittance transfer after a
sender provides incorrect or insufficient information. Section
1005.33(c)(2)(iii) generally requires a remittance transfer
provider to refund the transfer amount to the sender even if the
sender's previously designated remedy was a resend or if the
provider's default remedy in other circumstances is a resend.
However, if before the refund is processed, the sender receives
notice pursuant to § 1005.33(c)(1) or (d)(1) that an error occurred
because the sender provided incorrect or insufficient information
and then requests that the provider send the remittance transfer
again, and the provider agrees to that request, §
1005.33(c)(2)(iii) requires that the request be treated as a new
remittance transfer and the provider must provide new disclosures
in accordance with § 1005.31 and all other applicable provisions of
subpart B. However, § 1005.33(c)(2)(iii) does not obligate the
provider to agree to a sender's request to send a new remittance
transfer.
12. Determining amount of refund. Section
1005.33(c)(2)(iii) permits the provider to deduct from the amount
refunded, or applied towards a new transfer, any fees or taxes
actually deducted from the transfer amount by a person other than
the provider as part of the first unsuccessful remittance transfer
attempt or that were deducted in the course of returning the
transfer amount to the provider following a failed delivery.
However, a provider may not deduct those fees and taxes that will
ultimately be refunded to the provider. When the provider deducts
fees or taxes from the amount refunded pursuant to §
1005.33(c)(2)(iii), the provider must inform the sender of the
deduction as part of the notice required by either § 1005.33(c)(1)
or (d)(1) and the reason for the deduction. The following examples
illustrate these concepts.
i. A sender instructs a remittance transfer provider to send
US$100 to a designated recipient in local currency, for which the
provider charges a transfer fee of US$10 (and thus the sender pays
the provider $110). The provider's correspondent imposes a fee of
US$15 that it deducts from the amount of the transfer. The sender
provides incorrect or insufficient information that results in
non-delivery of the remittance transfer as requested. Once the
provider determines that an error occurred because the sender
provided incorrect or insufficient information, the provider must
provide the report required by § 1005.33(c)(1) or (d)(1) and inform
the sender, pursuant to § 1005.33(c)(1) or (d)(1), that it will
refund US$95 to the sender within three business days, unless the
sender chooses to apply the US$95 towards a new remittance transfer
and the provider agrees. Of the $95 that is refunded to the sender,
$10 reflects the refund of the provider's transfer fee, and $85
reflects the refund of the amount of funds provided by the sender
in connection with the transfer which was not properly transmitted.
The provider is not required to refund the US$15 fee imposed by the
correspondent (unless the $15 will be refunded to the provider by
the correspondent).
ii. A sender instructs a remittance transfer provider to send
US$100 to a designated recipient in a foreign country, for which
the provider charges a transfer fee of US$10 (and thus the sender
pays the provider US$110) and an intermediary institution charges a
lifting fee of US$5, such that the designated recipient is expected
to receive only US$95, as indicated in the receipt. If an error
occurs because the sender provides incorrect or insufficient
information that results in non-delivery of the remittance transfer
by the date of availability stated in the disclosure provided to
the sender for the remittance transfer under § 1005.31(b)(2) or
(3), the provider is required to refund, or reapply if requested
and the provider agrees, $105 unless the intermediary institution
refunds to the provider the US$5 fee. If the sender requests to
have the transfer amount applied to a new remittance transfer
pursuant to § 1005.33(c)(2)(iii) and provides the corrected or
additional information, and the remittance transfer provider agrees
to a resend remedy, the remittance transfer provider may charge the
sender another transfer fee of US$10 to send the remittance
transfer again with the corrected or additional information
necessary to complete the transfer. Insofar as the resend is an
entirely new remittance transfer, the provider must provide a
prepayment disclosure and receipt or combined disclosure in
accordance with, among other provisions, the timing requirements of
§ 1005.31(f) and the cancellation provision of § 1005.34(a).
iii. In connection with a remittance transfer, a provider
imposes a $15 tax that it then remits to a State taxing authority.
An error occurs because the sender provided incorrect or
insufficient information that resulted in non-delivery of the
transfer to the designated recipient. The provider may deduct $15
from the amount it refunds to the sender pursuant to §
1005.33(c)(2)(iii) unless the relevant tax law will result in the
$15 tax being refunded to the provider by the State taxing
authority because the transfer was not completed.
33(d) Procedures if Remittance Transfer Provider Determines No
Error or Different Error Occurred
1. Error different from that alleged. When a remittance
transfer provider determines that an error occurred in a manner or
amount different from that described by the sender, it must comply
with the requirements of both § 1005.33(c) and (d), as applicable.
The provider may give the notice of correction and the explanation
separately or in a combined form.
33(e) Reassertion of Error
1. Withdrawal of error; right to reassert. The remittance
transfer provider has no further error resolution responsibilities
if the sender voluntarily withdraws the notice alleging an error. A
sender who has withdrawn an allegation of error has the right to
reassert the allegation unless the remittance transfer provider had
already complied with all of the error resolution requirements
before the allegation was withdrawn. The sender must do so,
however, within the original 180-day period from the disclosed date
of availability or, if applicable, the 60-day period for a notice
of error asserted pursuant to § 1005.33(b)(2).
33(f) Relation to Other Laws
1. Concurrent error obligations. A financial institution
that is also the remittance transfer provider may have error
obligations under both §§ 1005.11 and 1005.33. For example, if a
sender asserts an error under § 1005.11 with a remittance transfer
provider that holds the sender's account, and the error is not also
an error under § 1005.33 (such as the omission of an EFT on a
periodic statement), then the error-resolution provisions of §
1005.11 exclusively apply to the error. However, if a sender
asserts an error under § 1005.33 with a remittance transfer
provider that holds the sender's account, and the error is also an
error under § 1005.11 (such as when the amount the sender requested
to be deducted from the sender's account and sent for the
remittance transfer differs from the amount that was actually
deducted from the account and sent), then the error-resolution
provisions of § 1005.33 exclusively apply to the error.
2. Holder in due course. Nothing in this section limits a
sender's rights to assert claims and defenses against a card issuer
concerning property or services purchased with a credit card under
Regulation Z, 12 CFR 1026.12(c)(1), as applicable.
3. Assertion of same error with multiple parties. If a
sender receives credit to correct an error of an incorrect amount
paid in connection with a remittance transfer from either the
remittance transfer provider or account-holding institution (or
creditor), and subsequently asserts the same error with another
party, that party has no further responsibilities to investigate
the error if the error has been corrected. For example, assume that
a sender initially asserts an error with a remittance transfer
provider with respect to a remittance transfer alleging that US$130
was debited from his checking account, but the sender only
requested a remittance transfer for US$100, plus a US$10 transfer
fee. If the remittance transfer provider refunds US$20 to the
sender to correct the error, and the sender subsequently asserts
the same error with his account-holding institution, the
account-holding institution has no error resolution
responsibilities under Regulation E because the error has been
fully corrected. In addition, nothing in this section prevents an
account-holding institution or creditor from reversing amounts it
has previously credited to correct an error if a sender receives
more than one credit to correct the same error. For example, assume
that a sender concurrently asserts an error with his or her
account-holding institution and remittance transfer provider for
the same error, and the sender receives credit from the
account-holding institution for the error within 45 days of the
notice of error. If the remittance transfer provider subsequently
provides a credit of the same amount to the sender for the same
error, the account-holding institution may reverse the amounts it
had previously credited to the consumer's account, even after the
45-day error resolution period under § 1005.11.
33(g) Error Resolution Standards and Recordkeeping Requirements
1. Record retention requirements. As noted in §
1005.33(g)(2), remittance transfer providers are subject to the
record retention requirements under § 1005.13. Therefore,
remittance transfer providers must retain documentation, including
documentation related to error investigations, for a period of not
less than two years from the date a notice of error was submitted
to the provider or action was required to be taken by the provider.
A remittance transfer provider need not maintain records of
individual disclosures that it has provided to each sender; it need
only retain evidence demonstrating that its procedures reasonably
ensure the sender's receipt of required disclosures and
documentation.
33(h) Incorrect Account Number Supplied
1. Reasonable methods of verification. When a sender
provides an incorrect recipient institution identifier, §
1005.33(h)(2) limits the exception in § 1005.33(a)(1)(iv)(D) to
situations where the provider used reasonably available means to
verify that the recipient institution identifier provided by the
sender did correspond to the recipient institution name provided by
the sender. Reasonably available means may include accessing a
directory of Business Identifier Codes and verifying that the code
provided by the sender matches the provided institution name, and,
if possible, the specific branch or location provided by the
sender. Providers may also rely on other commercially available
databases or directories to check other recipient institution
identifiers. If reasonable verification means fail to identify that
the recipient institution identifier is incorrect, the exception in
§ 1005.33(a)(1)(iv)(D) will apply, assuming that the provider can
satisfy the other conditions in § 1005.33(h). Similarly, if no
reasonably available means exist to verify the accuracy of the
recipient institution identifier, § 1005.33(h)(2) would be
satisfied and thus the exception in § 1005.33(a)(1)(iv)(D) also
will apply, again assuming the provider can satisfy the other
conditions in § 1005.33(h). However, where a provider does not
employ reasonably available means to verify a recipient institution
identifier, § 1005.33(h)(2) is not satisfied and the exception in §
1005.33(a)(1)(iv)(D) will not apply.
2. Reasonable efforts. Section 1005.33(h)(5) requires a
remittance transfer provider to use reasonable efforts to recover
the amount that was to be received by the designated recipient.
Whether a provider has used reasonable efforts does not depend on
whether the provider is ultimately successful in recovering the
amount that was to be received by the designated recipient. Under §
1005.33(h)(5), if the remittance transfer provider is requested to
provide documentation or other supporting information in order for
the pertinent institution or authority to obtain the proper
authorization for the return of the incorrectly credited amount,
reasonable efforts to recover the amount include timely providing
any such documentation to the extent that it is available and
permissible under law. The following are examples of reasonable
efforts:
i. The remittance transfer provider promptly calls or otherwise
contacts the institution that received the transfer, either
directly or indirectly through any correspondent(s) or other
intermediaries or service providers used for the particular
transfer, to request that the amount that was to be received by the
designated recipient be returned, and if required by law or
contract, by requesting that the recipient institution obtain a
debit authorization from the holder of the incorrectly credited
account.
ii. The remittance transfer provider promptly uses a messaging
service through a funds transfer system to contact institution that
received the transfer, either directly or indirectly through any
correspondent(s) or other intermediaries or service providers used
for the particular transfer, to request that the amount that was to
be received by the designated recipient be returned, in accordance
with the messaging service's rules and protocol, and if required by
law or contract, by requesting that the recipient institution
obtain a debit authorization from the holder of the incorrectly
credited account.
3. Promptness of Reasonable Efforts. Section
1005.33(h)(5) requires that a remittance transfer provider act
promptly in using reasonable efforts to recover the amount that was
to be received by the designated recipient. Whether a provider acts
promptly to use reasonable efforts depends on the facts and
circumstances. For example, if, before the date of availability
disclosed pursuant to § 1005.31(b)(2)(ii), the sender informs the
provider that the sender provided a mistaken account number, the
provider will have acted promptly if it attempts to contact the
recipient's institution before the date of availability.
Section 1005.34 - Procedures for Cancellation and Refund of
Remittance Transfers 34(a) Sender Right of Cancellation and Refund
1. Content of cancellation request. A request to cancel a
remittance transfer is valid so long as the remittance transfer
provider is able to identify the remittance transfer in question.
For example, the sender could provide the confirmation number or
code that would be used by the designated recipient to pick up the
transfer or other identification number or code supplied by the
remittance transfer provider in connection with the transfer, if
such number or code is sufficient for the remittance transfer
provider to identify the transfer. A remittance transfer provider
may also request, or the sender may provide, the sender's email
address instead of a physical address, so long as the remittance
transfer provider is able to identify the transfer to which the
request to cancel applies.
2. Notice of cancellation right. Section 1005.31 requires
a remittance transfer provider to include an abbreviated notice of
the sender's right to cancel a remittance transfer on the receipt
or combined disclosure given under § 1005.31(b)(2) or (3). In
addition, the remittance transfer provider must make available to a
sender upon request, a notice providing a full description of the
right to cancel a remittance transfer using language that is set
forth in Model Form A-36 of Appendix A to this part or
substantially similar language.
3. Thirty-minute cancellation right. A remittance
transfer provider must comply with the cancellation and refund
requirements of § 1005.34 if the cancellation request is received
by the provider no later than 30 minutes after the sender makes
payment. The provider may, at its option, provide a longer time
period for cancellation. A provider must provide the 30-minute
cancellation right regardless of the provider's normal business
hours. For example, if an agent closes less than 30 minutes after
the sender makes payment, the provider could opt to take
cancellation requests through the telephone number disclosed on the
receipt. The provider could also set a cutoff time after which the
provider will not accept requests to send a remittance transfer.
For example, a financial institution that closes at 5:00 p.m. could
stop accepting payment for remittance transfers after 4:30 p.m.
4. Cancellation request provided to agent. A cancellation
request provided by a sender to an agent of the remittance transfer
provider is deemed to be received by the provider under §
1005.34(a) when received by the agent.
5. Payment made. For purposes of subpart B, payment is
made, for example, when a sender provides cash to the remittance
transfer provider or when payment is authorized.
34(b) Time Limits and Refund Requirements
1. Form of refund. At its discretion, a remittance
transfer provider generally may issue a refund either in cash or in
the same form of payment that was initially provided by the sender
for the remittance transfer. For example, if the sender originally
provided a credit card as payment for the transfer, the remittance
transfer provider may issue a credit to the sender's credit card
account in the amount of the payment. However, if a sender
initially provided cash for the remittance transfer, a provider may
issue a refund by check. For example, if the sender originally
provided cash as payment for the transfer, the provider may mail a
check to the sender in the amount of the payment.
2. Fees and taxes refunded. If a sender provides a timely
request to cancel a remittance transfer, a remittance transfer
provider must refund all funds provided by the sender in connection
with the remittance transfer, including any fees and, to the extent
not prohibited by law, taxes that have been imposed for the
transfer, whether the fee or tax was assessed by the provider or a
third party, such as an intermediary institution, the agent or bank
in the recipient country, or a State or other governmental
body.
Section 1005.35 - Acts of Agents
1. General. Remittance transfer providers must comply
with the requirements of subpart B, including, but not limited to,
providing the disclosures set forth in § 1005.31 and providing any
remedies as set forth in § 1005.33, even if an agent or other
person performs functions for the remittance transfer provider, and
regardless of whether the provider has an agreement with a third
party that transfers or otherwise makes funds available to a
designated recipient.
Section 1005.36 - Transfers Scheduled Before the Date of Transfer
1. Applicability of subpart B. The requirements set forth
in subpart B apply to remittance transfers subject to § 1005.36, to
the extent that § 1005.36 does not modify those requirements. For
example, the foreign language disclosure requirements in §
1005.31(g) and related commentary continue to apply to disclosures
provided in accordance with § 1005.36(a)(2).
36(a) Timing 36(a)(2) Subsequent Preauthorized Remittance Transfers
1. Changes in Disclosures. When a sender schedules a
series of preauthorized remittance transfers, the provider is
generally not required to provide a pre-payment disclosure prior to
the date of each subsequent transfer. However, § 1005.36(a)(1)(i)
requires the provider to provide a pre-payment disclosure and
receipt for the first in the series of preauthorized remittance
transfers in accordance with the timing requirements set forth in §
1005.31(e). While certain information in those disclosures is
expressly permitted to be estimated (see § 1005.32(b)(2)), other
information is not permitted to be estimated, or is limited in how
it may be estimated. When any of the information on the most recent
receipt provided pursuant to § 1005.36(a)(1)(i) or (a)(2)(i), other
than the temporal disclosures required by § 1005.31(b)(2)(ii) and
(b)(2)(vii), is no longer accurate with respect to a subsequent
preauthorized remittance transfer for reasons other than as
permitted by § 1005.32, the provider must provide, within a
reasonable time prior to the scheduled date of the next
preauthorized remittance transfer, a receipt that complies with §
1005.31(b)(2) and which discloses, among the other disclosures
required by § 1005.31(b)(2), the changed terms. For example, if the
provider discloses in the pre-payment disclosure for the first in
the series of preauthorized remittance transfers that its fee for
each remittance transfer is $20 and, after six preauthorized
remittance transfers, the provider increases its fee to $30 (to the
extent permitted by contract law), the provider must provide the
sender a receipt that complies with §§ 1005.31(b)(2) and
1005.36(b)(2) within a reasonable time prior to the seventh
transfer. Barring a further change, this receipt will apply to
transfers after the seventh transfer. Or, if, after the sixth
transfer, a tax collected by the provider increases from 1.5% of
the amount that will be transferred to the designated recipient to
2.0% of the amount that will be transferred to the designated
recipient, the provider must provide the sender a receipt that
complies with §§ 1005.31(b)(2) and 1005.36(b)(2) within a
reasonable time prior to the seventh transfer. In contrast, §
1005.36(a)(2)(i) does not require an updated receipt where an
exchange rate, estimated as permitted by § 1005.32(b)(2),
changes.
2. Clearly and conspicuously. In order to indicate
clearly and conspicuously that the provider's fee has changed as
required by § 1005.36(a)(2)(i), the provider could, for example,
state on the receipt: “Transfer Fees (UPDATED) * * * $30.” To the
extent that other figures on the receipt must be revised because of
the new fee, the receipt should also indicate that those figures
are updated.
3. Reasonable time. If a disclosure required by §
1005.36(a)(2)(i) or (d)(1) is mailed, the disclosure would be
considered to be received by the sender five business days after it
is posted in the mail. If hand delivered or provided
electronically, the receipt would be considered to be received by
the sender at the time of delivery. Thus, if the provider mails a
disclosure required by § 1005.36(a)(2)(i) or (d)(1) not later than
ten business days before the scheduled date of the transfer, or
hand or electronically delivers a disclosure not later than five
business days before the scheduled date of the transfer, the
provider would be deemed to have provided the disclosure within a
reasonable time prior to the scheduled date of the subsequent
preauthorized remittance transfer.
36(b) Accuracy
1. Use of estimates. In providing the disclosures
described in § 1005.36(a)(1)(i) or (a)(2)(i), remittance transfer
providers may use estimates to the extent permitted by any of the
exceptions in § 1005.32. When estimates are permitted, however,
they must be disclosed in accordance with § 1005.31(d).
2. Subsequent preauthorized remittance transfers. For a
subsequent transfer in a series of preauthorized remittance
transfers, the receipt provided pursuant to § 1005.36(a)(1)(i),
except for the temporal disclosures in that receipt required by §
1005.31(b)(2)(ii) (Date Available) and (b)(2)(vii) (Transfer Date),
applies to each subsequent preauthorized remittance transfer unless
and until it is superseded by a receipt provided pursuant to §
1005.36(a)(2)(i). For each subsequent preauthorized remittance
transfer, only the most recent receipt provided pursuant to §
1005.36(a)(1)(i) or (a)(2)(i) must be accurate as of the date each
subsequent transfer is made.
3. Receipts. A receipt required by § 1005.36(a)(1)(ii) or
(a)(2)(ii) must accurately reflect the details of the transfer to
which it pertains and may not contain estimates pursuant to §
1005.32(b)(2). However, the remittance transfer provider may
continue to disclose estimates to the extent permitted by §
1005.32(a) or (b)(1), (4), or (5). In providing receipts pursuant
to § 1005.36(a)(1)(ii) or (a)(2)(ii), § 1005.36(b)(2) and (3) do
not allow a remittance transfer provider to change figures
previously disclosed on a receipt provided pursuant to §
1005.36(a)(1)(i) or (a)(2)(i), unless a figure was an estimate or
based on an estimate disclosed pursuant to § 1005.32. Thus, for
example, if a provider disclosed its fee as $10 in a receipt
provided pursuant to § 1005.36(a)(1)(i) and that receipt contained
an estimate of the exchange rate pursuant to § 1005.32(b)(2), the
second receipt provided pursuant to § 1005.36(a)(1)(ii) must also
disclose the fee as $10.
36(c) Cancellation
1. Scheduled remittance transfer. Section 1005.36(c)
applies when a remittance transfer is scheduled by the sender at
least three business days before the date of the transfer, whether
the sender schedules a preauthorized remittance transfer or a
one-time transfer. A remittance transfer is scheduled if it will
require no further action by the sender to send the transfer after
the sender requests the transfer. For example, a remittance
transfer is scheduled at least three business days before the date
of the transfer, and § 1005.36(c) applies, where a sender on March
1 requests a remittance transfer provider to send a wire transfer
to pay a bill in a foreign country on March 15, if it will require
no further action by the sender to send the transfer after the
sender requests the transfer. A remittance transfer is not
scheduled, and § 1005.36(c) does not apply, where a transfer occurs
more than three days after the date the sender requests the
transfer solely due to the provider's processing time. The
following are examples of when a sender has not scheduled a
remittance transfer at least three business days before the date of
the remittance transfer, such that the cancellation rule in §
1005.34 applies.
i. A sender on March 1 requests a remittance transfer provider
to send a wire transfer to pay a bill in a foreign country on March
3.
ii. A sender on March 1 requests that a remittance transfer
provider send a remittance transfer on March 15, but the provider
requires the sender to confirm the request on March 14 in order to
send the transfer.
iii. A sender on March 1 requests that a remittance transfer
provider send an ACH transfer, and that transfer is sent on March
2, but due to the time required for processing, funds will not be
deducted from the sender's account until March 5.
2. Cancelled preauthorized remittance transfers. For
preauthorized remittance transfers, the provider must assume the
request to cancel applies to all future preauthorized remittance
transfers, unless the sender specifically indicates that it should
apply only to the next scheduled remittance transfer.
3. Concurrent cancellation obligations. A financial
institution that is also a remittance transfer provider may have
both stop payment obligations under § 1005.10 and cancellation
obligations under § 1005.36. If a sender cancels a remittance
transfer under § 1005.36 with a remittance transfer provider that
holds the sender's account, and the transfer is a preauthorized
transfer under § 1005.10, then the cancellation provisions of §
1005.36 exclusively apply.
36(d) Date of Transfer for Subsequent Preauthorized Remittance
Transfers
1. General. Section 1005.36(d)(2)(i) permits remittance
transfer providers some flexibility in determining how and when the
disclosures required by § 1005.36(d)(1) may be provided to senders.
The disclosure described in § 1005.36(d)(1) may be provided as a
separate disclosure, or on or with any other disclosure required by
this subpart B related to the same series of preauthorized
remittance transfers, provided that the disclosure and timing
requirements in § 1005.36(d)(2) and other applicable provisions in
subpart B are satisfied. For example, the required disclosures may
be made on or with a receipt provided pursuant to §
1005.36(a)(1)(i); a receipt provided pursuant to § 1005.36(a)(2);
or in a separate disclosure created by the provider. Thus, for
example, a remittance transfer provider complies with §
1005.36(d)(1) for a period of one year if it provides in the
receipt provided to the sender when payment is made for the initial
preauthorized remittance transfer, a schedule or summary of the
dates of transfer of all the subsequent preauthorized remittance
transfers in the series scheduled to occur over the next 12 months
(and the applicable cancellation requirements and contact
information).
2. Delivery of disclosure. Section 1005.36(d)(2)(i)
requires that the sender receive disclosure of the date of
transfer, applicable cancellation requirements, and the provider's
contact information no more than 12 months, and no less than 5
business days prior to the date of transfer of the subsequent
preauthorized remittance transfer. For purposes of determining when
a disclosure required by § 1005.36(d)(1) is received by the sender,
refer to comment 36(a)(2)-3.
3. Disclosure of the date of transfer. The date of
transfer of a subsequent preauthorized remittance transfer may be
disclosed as a specific date (e.g., July 19, 2013) or by
using a method that clearly permits identification of the date of
the transfer, such as periodic intervals (e.g., the third
Monday of every month, or the 15th of every month). If the future
dates of transfer are disclosed as occurring periodically and there
is a break in the sequence, or the date of transfer does not
otherwise conform to the described period, e.g., if a
holiday or weekend causes the provider to deviate from the normal
schedule, the remittance transfer provider should disclose the
specific date of transfer for the affected transfer.
4. Accuracy requirements. Section 1005.36(d)(4) sets
forth accuracy requirements for disclosures required for subsequent
preauthorized remittance transfers under § 1005.36(d)(1). If any of
the information provided in these disclosures change, the provider
must provide an updated disclosure with the revised information
that is accurate as of when the transfer is made, pursuant to §
1005.36(d)(2).
Appendix A - Model Disclosure Clauses and Forms
1. Review of forms. The Bureau will not review or approve
disclosure forms or statements for financial institutions. However,
the Bureau has issued model clauses for institutions to use in
designing their disclosures. If an institution uses these clauses
accurately to reflect its service, the institution is protected
from liability for failure to make disclosures in proper form.
2. Use of forms. The appendix contains model disclosure
clauses for optional use by financial institutions and remittance
transfer providers to facilitate compliance with the disclosure
requirements of §§ 1005.5(b)(2) and (3), 1005.6(a), 1005.7,
1005.8(b), 1005.14(b)(1)(ii), 1005.15(c), 1005.15(e)(1) and (2),
1005.18(b)(2), (3), (6) and (7), 1005.18(d)(1) and (2), 1005.31,
1005.32 and 1005.36. The use of appropriate clauses in making
disclosures will protect a financial institution and a remittance
transfer provider from liability under sections 916 and 917 of the
act provided the clauses accurately reflect the institution's EFT
services and the provider's remittance transfer services,
respectively.
3. Altering the clauses. Unless otherwise expressly
addressed in the rule, the following applies. Financial
institutions may use clauses of their own design in conjunction
with the Bureau's model clauses. The inapplicable words or portions
of phrases in parentheses should be deleted. The catchlines are not
part of the clauses and need not be used. Financial institutions
may make alterations, substitutions, or additions in the clauses to
reflect the services offered, such as technical changes (including
the substitution of a trade name for the word “card,” deletion of
inapplicable services, or substitution of lesser liability limits).
Several of the model clauses include references to a telephone
number and address. Where two or more of these clauses are used in
a disclosure, the telephone number and address may be referenced
and need not be repeated.
4. Model forms for remittance transfers. The Bureau will
not review or approve disclosure forms for remittance transfer
providers. However, this appendix contains 15 model forms for use
in connection with remittance transfers. These model forms are
intended to demonstrate several formats a remittance transfer
provider may use to comply with the requirements of § 1005.31(b).
Model Forms A-30 through A-32 demonstrate how a provider could
provide the required disclosures for a remittance transfer
exchanged into local currency. Model Forms A-30(a), (b), (c), and
(d) demonstrate four options regarding model language related to
the required disclaimer, where applicable, of non-covered
third-party fees and taxes on the remittance transfer collected by
a person other than the provider under § 1005.31(b)(1)(viii). Model
forms 30(b) through (d) also include language that may be used if a
provider elects to estimate either these non-covered third-party
fees or taxes collected by a person other than the provider as part
of the disclaimer. Model Forms A-33 through A-35 demonstrate how a
provider could provide the required disclosures for
dollar-to-dollar remittance transfers. These forms also demonstrate
disclosure of the required content, in accordance with the grouping
and proximity requirements of § 1005.31(c)(1) and (2), in both a
register receipt format and an 8.5 inch by 11 inch format. Model
Form A-36 provides long form model error resolution and
cancellation disclosures required by § 1005.31(b)(4), and Model
Form A-37 provides short form model error resolution and
cancellation disclosures required by § 1005.31(b)(2)(iv) and (vi).
Model Forms A-38 through A-41 provide language for Spanish language
disclosures.
i. The model forms contain information that is not required by
subpart B, including a confirmation code, the sender's name and
contact information, and the optional disclosure of the estimated
amount of these non-covered third-party fees and taxes collected by
a person other than the provider as part of the disclaimer.
Additional information not required by subpart B may be presented
on the model forms as permitted by § 1005.31(b)(1)(viii) and
(c)(4). Any additional information must be presented consistent
with a remittance transfer provider's obligation to provide
required disclosures in a clear and conspicuous manner.
ii. Use of the model forms is optional. A remittance transfer
provider may change the forms by rearranging the format or by
making modifications to the language of the forms, in each case
without modifying the substance of the disclosures. Any
rearrangement or modification of the format of the model forms must
be consistent with the form, grouping, proximity, and other
requirements of § 1005.31(a) and (c). Providers making revisions
that do not comply with this section will lose the benefit of the
safe harbor for appropriate use of Model Forms A-30 to A-41.
iii. Permissible changes to the language and format of the model
forms include, for example:
A. Substituting the information contained in the model forms
that is intended to demonstrate how to complete the information in
the model forms - such as names, addresses, and Web sites; dates;
numbers; and State-specific contact information - with information
applicable to the remittance transfer. In addition, if the
applicable non-covered third-party fees are imposed by an
institution other than a bank, a provider could modify the
disclaimer accordingly.
B. Eliminating disclosures that are not applicable to the
transfer, as described under § 1005.31(b). For example, if only
covered third-party fees are imposed, a provider would not use a
disclaimer related to additional fees that may apply because all
applicable fees are covered and included in the disclosure as
required under § 1005.31(b)(1)(vi).
C. Correcting or updating telephone numbers, mailing addresses,
or Web site addresses that may change over time.
D. Providing the disclosures on a paper size that is different
from a register receipt and 8.5 inch by 11 inch formats.
E. Adding a term substantially similar to “estimated” in close
proximity to the specified terms in § 1005.31(b)(1) and (2), as
required under § 1005.31(d).
F. Providing the disclosures in a foreign language, or multiple
foreign languages, subject to the requirements of § 1005.31(g).
G. Substituting cancellation language to reflect the right to a
cancellation made pursuant to the requirements of § 1005.36(c).
iv. Changes to the model forms that are not permissible include,
for example, adding information that is not segregated from the
required disclosures, other than as permitted by §
1005.31(c)(4).
[76 FR 81023, Dec. 27, 2011, as amended at 78 FR 18224, Mar. 26,
2013; 77 FR 6297, Feb. 7, 2012; 77 FR 50285; 77 FR 50285, Aug. 20,
2012; 78 FR 30714, May 22, 2013; 78 FR 49366, Aug. 14, 2013; 79 FR
55993, Sept. 18, 2014; 81 FR 70320, Oct. 12, 2016; 81 FR 84345,
Nov. 22, 2016; 83 FR 6420, Feb. 13, 2018; 85 FR 34905, June 5,
2020]
A-11 through A-29
[Reserved] A-30(a) - Model Form for Pre-Payment Disclosures for
Remittance Transfers Exchanged into Local Currency (§
1005.31(b)(1)) 
A-30(b) - Model
Form for Pre-Payment Disclosures for Remittance Transfers Exchanged
into Local Currency (§ 1005.31(b)(1)) 
A-30(c) - Model
Form for Pre-Payment Disclosures for Remittance Transfers Exchanged
into Local Currency (§ 1005.31(b)(1)) 
A-30(d) - Model
Form for Pre-Payment Disclosures for Remittance Transfers Exchanged
into Local Currency (§ 1005.31(b)(1)) 
A-31 - Model Form
for Receipts for Remittance Transfers Exchanged into Local Currency
(§ 1005.31(b)(2)) 
A-32 - Model Form
for Combined Disclosures for Remittance Transfers Exchanged into
Local Currency (§ 1005.31(b)(3)) 
A-33 - Model Form
for Pre-Payment Disclosures for Dollar-to-Dollar Remittance
Transfers (§ 1005.31(b)(1)) 
A-34 - Model Form
for Receipts for Dollar-to-Dollar Remittance Transfers (§
1005.31(b)(2)) 
A-35 - Model Form
for Combined Disclosures for Dollar-to-Dollar Remittance Transfers
(§ 1005.31(b)(3)) 
A-36 - Model Form
for Error Resolution and Cancellation Disclosures (Long) (§
1005.31(b)(4)) 
A-37 - Model Form
for Error Resolution and Cancellation Disclosures (Short) (§
1005.31(b)(2)(iv) and (b)(2)(vi))
A-39 - Model Form
for Receipts for Remittance Transfers Exchanged into Local Currency
- Spanish (§ 1005.31(b)(2)) 
A-40 - Model Form
for Combined Disclosures for Remittance Transfers Exchanged into
Local Currency - Spanish (§ 1005.31(b)(3)) 
A-41 - Model Form
for Error Resolution and Cancellation Disclosures (Long) - Spanish
(§ 1005.31(b)(4)) 
[76 FR 81023, Dec.
27, 2011, as amended at 77 FR 6290, Feb. 7, 2012; 77 FR 40459, July
10, 2012; 78 FR 30705, May 22, 2013; 79 FR 55991, Sept. 18, 2014;
81 FR 70320, Oct. 12, 2016; 81 FR 84338, Nov. 22, 2016; 83 FR 6419,
Feb. 13, 2018]