Confused about How to Comply with Regulation E for Accounts Receivable? Legal Experts Explain
Regulation E is a well-known, but often confusing regulation found within the Electronic Funds Transfers Act (EFTA). Although most accounts receivable departments fall under its scope in some way or another while accepting payments, many ARM professionals don’t fully understand what is required of them to comply. Some might even think it is too much trouble to comply, and willingly ignore what is required, unaware of the serious consequences that can have on them and their business.
We consulted with two experts on some of the basic components of this regulation every business in accounts receivable should know:
Scott E. Wortman, Partner at Blank Rome LLP in New York. He focuses on providing legal advice and regulatory advocacy in matters involving consumer financial protection statutes and regulations. Wortman has substantial experience assisting clients with complex issues including class action litigation, government enforcement and administrative action. He also regularly provides compliance advice related to privacy and data security laws and assists with due diligence for financial services transactions.
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If You Comply with Regulation E, Does That Also Provide Compliance for the EFTA and NACHA?
“The EFTA is actually implemented through Regulation E, which includes official interpretations, which is really where the nuances come into play,” says Wortman. “By way of example, in 2009, the Federal Reserve Board amended Regulation E to prohibit institutions from charging overdraft fees for ATM and one-time debit card transactions, unless the consumer opts in or affirmatively consents to the institution’s overdraft services. The Federal Reserve Board also amended Regulation E to restrict fees and expiration dates on gift cards and to require that gift card terms be clearly stated. What’s more, the Dodd-Frank Act amended the EFTA, creating new systems of consumer protections for remittance transfers, while also transferring rulemaking authority under the EFTA to the CFPB. It’s also important to note the many corollaries with Regulation Z (Truth in Lending Act).”
Wortman also states that NACHA, a not-for-profit-association that develops the operating rules and business practices for any institution or business participating in the ACH system “does not take the place of the EFTA or legal advice regarding compliance with Regulation E.”
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"Confused about How to Comply with Regulation E for Accounts Receivable? Legal Experts Explain," was published in PDC Flow on April 24, 2018.