Electronic Fund Transfer Act (Regulation E) (2024)

• Definitions
• Associated Risks
• Examination Objectives
• Examination Procedures
• Checklist

Associated Risks

Compliance risk can occur when the credit union fails to implement the necessary controls to comply with Regulation E.

Transaction risk can occur when the credit union does not have adequate internal controls in place and as a result suffers a loss.

Reputation risk can occur when the credit union incurs losses or receives decreased member confidence as a result of failure to comply with Regulation E.

Strategic risk can occur when the board of directors fails to perform necessary due diligence in reviewing existing and prospective products and services for compliance with Regulation E.

Examination Objectives

• Determine the credit union’s compliance with Regulation E.
• Assess the quality of the credit union’s compliance risk management systems and its policies and procedures for implementing Regulation E.
• Determine how reliable the credit union’s internal controls and procedures are for monitoring its compliance with Regulation E.
• As appropriate, direct corrective action when violations of law are identified or when the credit union’s policies or internal controls are deficient.

Examination Procedures

These examination procedures are divided into three sections:

• Section I covers management and policy-related procedures for credit unions.
• Section II covers electronic fund transfers that credit unions conduct.
• Section III applies to remittance transfer providers (including credit unions).

Each examination should be risk-focused and may not require completion of all three sections.

Section I – Management and Policy-Related Examination Procedures

1. Through a review of all available information (e.g., board minutes, management reports, monitoring reports, etc.) and discussions with management, determine whether the board and management have set clear expectations about compliance with Regulation E, not only within the credit union but also with key business partners, including agents, correspondent banks, and software providers, to the extent relevant.
2. Through a review of all available information (e.g., written policies and procedures, management’s self-assessments, member complaints, prior examination reports, and any compliance audit material, including work papers and reports), determine whether:
   1. There are any weaknesses or other risks in the business model.
   2. The scope of the self-assessments/audits address all provisions of Regulation E, as applicable.
   3. The scope of the self-assessments/audits address all key business processes and functions, including those carried out by third-party service providers or key business partners, as appropriate.
   4. Management has taken corrective actions to follow up on previously identified deficiencies.
   5. As applicable, testing includes risk-based samples covering product types and decision centers.
   6. There is an audit trail that supports the findings and conclusions of the work performed.
   7. Significant deficiencies and their causes are included in reports to management and/or to the Board of Directors.
   8. The frequency of review is appropriate.
3. Through discussions with management and review of available information, determine whether the credit union’s internal controls are adequate to ensure compliance with Regulation E. Consider among other things:
   1. Organizational charts;
   2. Process flowcharts;
   3. Policies and procedures;
   4. Account (if applicable) and transaction documentation;
   5. Checklists; and
   6. Computer program documentation.
4. Through a review of the credit union’s training materials and discussions with management, determine whether:
   1. The credit union provides appropriate training to employees and other persons responsible for Regulation E compliance and operational procedures.
   2. The training is comprehensive and covers the sections of Regulation E that apply to the credit union’s product offerings and operations including, to the extent appropriate, functions carried out by third-party service providers or other business partners, such as agents and correspondent banks.

Section II – Subpart A

Based on the materials reviewed within Section I, complete Section II, as applicable, to determine the credit union’s compliance with Regulation E.

Transaction-Related Examination Procedures

Conduct transaction testing, using the following examination procedures:

1. Obtain and review copies of the following:
   1. Disclosure forms;
   2. Advertising and scripts for overdraft opt-ins;
   3. Account agreements;
   4. Procedural manuals and written policies;
   5. Merchant agreements;
   6. ATM receipts and periodic statements;
   7. Error resolution statements/files;
   8. Form letters used in case of errors or questions concerning an account;
   1. Any agreements with third parties allocating compliance responsibilities; and
   10. Member complaint files.

Policies and Procedures

1. Determine the extent and adequacy of the credit union’s policies, procedures, and practices for ensuring compliance with the regulation. In particular, verify that:
   1. Access devices are issued in compliance with the regulation (§1005.5(b)).
   2. Required disclosures are given when the account is opened or before the first EFT (§§1005.4 and 1005.7(c)).
   3. Unauthorized transfer claims are processed in compliance with the regulation (§§ 1005.6 and 1005.11).
   4. Liability for unauthorized transfer claims is assessed in compliance with the regulation (§1005.6).
   5. Negligence is not a factor in determining member liability. The deposit agreement may not impose greater liability than Regulation E allows, but may provide for less (§1005.6).
   6. Preauthorized debits and credits comply with the regulation (§1005.10).

Disclosures, Notices, Receipts, Periodic Statements, and Preauthorized Transfers

1. If the credit union has changed the terms or conditions of initial disclosures for EFT services since the preceding examination, and the changes required a written notice to the member, determine that the credit union provided the proper notice in a timely manner (§ 1005.8(a)).
2. Review a sample of periodic statements for each type of account in which EFTs occur to determine if they contain enough information for the member to identify transactions adequately and that they otherwise comply with regulatory requirements (§ 1005.9).
3. Verify that the credit union does not require compulsory use of EFTs, except as authorized (§ 1005.10(e)).
4. For unauthorized transfers, lost or stolen ATM cards, EFT member complaints, and their respective periodic statements, determine whether:
   1. The credit union is in compliance with its error resolution procedures to isolate any apparent deficiencies in its operations to ensure it follows its policies for unauthorized transfers (§§ 1005.6 and 1005.11).
   2. The credit union investigates alleged errors and notifies members of the results within permissible time frames and, when appropriate, provisionally re-credits affected accounts (§ 1005.11(c)).
   3. The credit union follows regulatory procedures after it completes its investigation and determines either that an error occurred (§ 1005.11(c)(1)) or not (§ 1005.11(d)).
5. Review ATM and point-of-sale transfer receipts to determine whether they provide a clear description of the transaction (§ 1005.9(a)).
6. Determine that the credit union keeps records of compliance for no less than two years from the date the credit union must make disclosures or take action (§ 1005.13(b)).

Payroll Cards and ATMs

1. If the credit union maintains payroll card accounts and does not provide periodic statements under § 1005.9(b) for these accounts, verify that the credit union makes the account balance available by telephone, electronic history, and (upon request) provides a written history of account transactions (§ 1005.18(b)).
2. If the credit union maintains payroll card accounts, verify that it complies with the requirements for required initial disclosures, error resolution notices, limitations on liability, and error resolution procedures (§ 1005.18(c)).
3. If the credit union operates one or more ATMs for which it charges a fee for use, determine that it provides notice of the fee and the amount of the fee on the ATM screen or on paper before the member is committed to paying the fee (§ 1005.16).

Overdrafts

1. Determine that the credit union holding a member’s account does not assess a fee or charge on a member’s account for paying an ATM or one-time debit card transaction using the credit union’s overdraft service,^[1] unless the credit union:
   1. Provides the member with a notice in writing (or if the member agrees, electronically) that is segregated from all other information and describes the credit union’s overdraft service;
   2. Provides a reasonable opportunity for the member to affirmatively consent, or opt-in, to the service for ATM and one-time debit card transactions;
   3. Obtains the member’s affirmative consent, or opt-in, to the credit union’s payment of ATM or one-time debit card transactions; and
   4. Provides the member with confirmation of the member's consent in writing (or if the member agrees, electronically), which includes a statement informing the member of the right to revoke the consent. (§1005.17(b)(1))

Note: A credit union does not have to meet the notice requirements above if it has a policy and practice of declining to authorize and pay ATM or one-time debit card transactions when it has a reasonable belief at the time of the authorization request that the member does not have enough funds available to cover the transaction. However, it is still prohibited from charging fees for paying an ATM or one-time debit transaction overdraft (§ 1005.17, and Official Interpretation § 1005.17(b)(1)(iv)).

2. Determine that in assessing overdraft fees for members who have not opted-in, the credit union charges fees only for negative balances, daily or sustained overdrafts, or similar fees, when the negative balance is due in whole or in part to checks, automated clearing house (ACH) or other transactions not subject to the fee prohibition and that the fee is assessed based on the date when the check is paid into overdraft, not the date of the ATM or one-time debit transaction (Official Interpretation § 1005.17(b)(9)).
3. Determine that the credit union does not:
   1. Condition the payment of overdrafts for checks, ACH transactions, and other types of transactions on the member’s affirmative consent to pay ATM and one-time debit card transactions under the credit union's overdraft service; or
   2. Decline to pay checks, ACH transactions, and other types of transactions that overdraw the member’s account because the member has not affirmatively consented to the overdraft service for ATM and one-time debit card transactions (§ 1005.17(b)(2)).
4. Determine that the credit union provides members who do not affirmatively consent to the overdraft service for ATM and one-time debit card transactions with the same account terms, conditions, and features provided to members who affirmatively consent, except for the overdraft service for ATM and one-time debit card transactions (§ 1005.17(b)(3)).
5. Ensure that the notice required by § 1005.17(b)(1)(i) is substantially similar to Model Form A–9 (Model Consent Form for Overdraft Services), includes all applicable items in the following list, and does not contain any additional information:
   1. Overdraft service. A brief description of the credit union’s overdraft service and the types of transactions for which a fee or charge for paying an overdraft may be imposed, including ATM and one-time debit card transactions.
   2. Fees imposed. The dollar amount of any fees or charges the credit union assesses for paying ATM or one-time debit card transactions under the overdraft service, including any daily or other overdraft fees. If the credit union determines the amount of the fee based on the number of times the member has overdrawn the account, the amount of the overdraft, or other factors, the credit union must disclose the maximum fee that it may impose.
   3. Limits on fees charged. The maximum number of overdraft fees or charges that may be assessed per day, or if applicable, that there is no limit.
   4. Disclosure of opt-in right. An explanation of the member’s right to affirmatively consent to the credit union's payment of overdrafts for ATM and one-time debit card transactions under its overdraft service, including the methods the member may use to consent; and
   5. Alternative plans for covering overdrafts. If the credit union 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 member held at the credit union to cover overdrafts, the credit union must state in its opt-in notice that both alternative plans are offered. If the credit union offers one, but not the other, it must state in its opt-in notice the alternative plan that it offers. If the credit union does not offer either plan, it should omit the reference to the alternative plans. If the credit union offers additional alternatives for paying overdrafts, it may (but is not required to) disclose those alternatives.
      (12 CFR 1005.17(d) and Official Interpretations §§ 1005.17(d)(1) through 1005.17(d)(5).

Note: Permitted modifications and additional content. If applicable, the credit union may modify the content required by § 1005.17(d) to indicate that the member has the right to opt-in to, or opt-out of, the payment of overdrafts under the credit union’s overdraft service for other types of transactions, such as checks, ACH transactions, or automatic bill payments; to provide a means for the member to exercise this choice; and to disclose the associated returned item fee and that additional merchant fees may apply. The credit union may also disclose the member’s right to revoke consent. The response portion of Model Form A-9 may be tailored to the methods offered for opting-in, and may include reasonable methods to identify the account, such as a bar code.

6. Determine that, when two or more members jointly hold an account, the credit union treats the affirmative consent of any of them as affirmative consent for the account, and treats a revocation of affirmative consent by any of them as revocation of consent for that account (§ 1005.17(e)).
7. Ensure that a member may affirmatively consent to the credit union's overdraft service at any time in the manner described in the credit union’s (§ 1005.17(b)(1)(i)) notice, and that a member may revoke consent at any time in the manner made available to the member for providing consent (§ 1005.17(f)).
8. Determine that the credit union implements member revocation of consent as soon as reasonably practicable (§ 1005.17(f)).
9. Determine that a member’s affirmative consent to the credit union's overdraft service is effective until revoked, or until the credit union terminates the service (§ 1005.17(g)).
10. Determine that the credit union's overdraft protection program incorporates regulatory agency guidance as applicable.

Gift Card Disclosures

1. Determine that the disclosures required by the sections listed below are made on the certificate or card, or in the case of a loyalty, award, or promotional gift card, on the card, code, or other device:
   1. §1005.20(a)(4)(iii) (loyalty, award, or promotional gift card);
   2. §1005.20(d)(2) (dormancy, inactivity, or service fees);
   3. §1005.20(e)(3) (expiration date or phone and web regarding replacement); and
   4. §1005.20(f)(2) (phone and web regarding fees).

Note: A disclosure made in an accompanying terms-and-conditions document, on packaging surrounding a certificate or card, or on a sticker or other label affixed to the certificate or card does not constitute disclosure on the certificate or card.

If the certificate or card is electronic, determine that disclosures are provided electronically on the certificate or card provided to the member.

If an issuer provides a code or confirmation to a member orally, determine that the issuer provides to the member a written or electronic copy of the code or confirmation promptly, and the applicable disclosures are provided on the written copy of the code or confirmation (§ 1005.20(c)(4)).

2. Determine that the following are stated, as applicable, clearly and conspicuously on the gift certificate, store gift card, or general-use prepaid card:
   1. The amount of any dormancy, inactivity, or service fee that may be charged;
   2. How often the fee may be assessed; and
   3. That the fee may be assessed for inactivity. (§ 1005.20(d)(2))
3. Determine that the following disclosures and information are provided in connection with a gift certificate, store gift card, or general-use prepaid card as applicable. For each type of fee that may be imposed in connection with the certificate or card (other than a dormancy, inactivity, or service fee (discussed above)), the following information must be provided on or with the certificate or card:
   1. The type of fee;
   2. The amount of the fee (or an explanation of how it will be determined);
   3. The conditions under which the fee may be imposed; and
   4. A toll-free number, and if one is maintained, a website that a member may use to obtain information about the fees described in paragraphs § 1005.20(d)(2) and § 1005.20(f)(1) (described immediately above).
      (§ 1005.20(f))
4. If an expiration date applies to a certificate or card, determine that the following disclosures are provided on the certificate or card, as applicable:
   1. The expiration date for the underlying funds or, if the underlying funds do not expire, that fact;
   2. A toll-free telephone number and, if one is maintained, a website that a member may use to obtain a replacement certificate or card after the certificate or card expires if the underlying funds may be available; and
   3. Except where a non-reloadable certificate or card has an expiration date that is at least seven years from the date of manufacture, a statement, disclosed with equal prominence and in close proximity to the certificate or card expiration date, that:
      1. The certificate or card expires, but the underlying funds either do not expire or expire later than the certificate or card, and
      2. The member may contact the issuer for a replacement card.
         (§ 1005.20(e)(3))
5. Determine that a loyalty, award, or promotional gift card sold or issued by the examined credit union includes the following disclosures, as applicable:
   1. A statement on the front of the card, code, or other device, indicating that the card, code, or other device is issued for loyalty, award, or promotional purposes;
   2. The expiration date for the underlying funds on the front of the card, code, or other device;
   3. The amount of any fees that may be imposed in connection with the card, code, or other device, and the conditions under which they may be imposed. This disclosure must be provided on or with the card, code, or other device; and
   4. A toll-free telephone number and, if one is maintained, a website that a member may use to obtain fee information on the card, code, or other device.
      (§ 1005.20(a)(4)(iii))
6. Determine that a person (the examined credit union) that issues or sells a gift certificate, store gift card, or general-use prepaid card discloses to the member, before purchase, the information required by § 1005.20(d)(2) (dormancy, inactivity, or service fees), § 1005.20(e)(3) (expiration date or phone and web regarding replacement), and § 1005.20(f)(1) (other fees). (§ 1005.20(c)(3))
7. Determine that the fees, terms, and conditions of expiration that must be disclosed before purchase are not changed after purchase. (§ 1005.20(c)(3))
8. Determine that no person (the examined credit union) imposes a dormancy, inactivity, or service fee on a gift certificate, store gift card, or general-use prepaid card, unless:
   1. There has been no activity on the certificate or card in the one-year period ending on the date the fee is imposed;
   2. Required disclosures are provided; and
   3. Not more than one dormancy, inactivity, or service fee is imposed in any given calendar month. (§ 1005.20(d))
9. Determine that the person (the examined credit union) does not sell or issue a gift certificate, store gift card, or general-use prepaid card with an expiration date unless:
   1. Required expiration date disclosures are provided on the certificate or card, as applicable;
   2. It has established policies and procedures to provide members with a reasonable opportunity to purchase a certificate or card with at least five years remaining until the expiration date;
   3. The expiration date for the underlying funds is at least the later of:
      1. Five years after the date the gift certificate was initially issued, or the date on which funds were last loaded to a store gift card or general-use prepaid card; or
      2. The certificate or card expiration date, if any; and
   4. No fee or charge is imposed on the cardholder for replacing the gift certificate, store gift card, or general-use prepaid card or for providing the certificate or card holder with the remaining balance before the funds expiration date, unless the certificate or card has been lost or stolen. (§ 1005.20(e))

Section III – Subpart B – Requirements for Remittance Transfers

If a credit union provides remittance transfers in its “normal course of business,” it is a remittance transfer provider (sometimes abbreviated to “provider” in this discussion) subject to the rule and should be examined based on the following procedures.^[2]

Transaction-Related Examination Procedures

As applicable, conduct transaction testing using the following examination procedures:

1. Obtain and review all available information as it relates to the credit union’s remittance program. Examples of this include but are not limited to:
   1. List of divisions or departments involved in offering or providing remittance transfers (e.g., retail, high net worth, prepaid cards, bill payment, online or mobile banking, foreign exchange and/or treasury departments);
   2. Remittance transfer products offered;
   3. Disclosure forms in all languages (as applicable);
   4. List of foreign countries to which the credit union sends remittance transfers, if available;
   5. List of all foreign currencies in which remittance transfers the credit union sent may be received where there are limitations on the currencies, and identification of the currencies for which the provider controls the exchange rate;
   6. List of all third-party service providers or business partners involved in remittance transfers, including direct correspondent banks, payment networks, payment processors, software providers, foreign currency providers, agents in the United States or abroad, or similar entities;
   7. Locations of U.S. and foreign agents;
   8. Applicable documentation related to remittance transfer operations (e.g., transaction logs, agent/correspondent agreements, advertising and marketing material including any done in foreign languages, and documentation regarding calculation or estimates of fees, taxes, exchange rates, and dates included on disclosures);
   9. Procedural manuals and written policies;
   10. Error resolution files;
   11. Form letters used for errors or questions concerning remittance transfers (including those in foreign languages);
   12. Agreements with third parties allocating compliance responsibilities; and
   13. Member complaint files.

General Form of Disclosures § 1005.31

1. Obtain and review a sample of the credit union’s disclosure forms for its various remittance transfer products. Include disclosures as provided for various products and through various channels (e.g., in person, through a website, by telephone, through a mobile phone application, text message, online bill payment). Verify that:
   1. Disclosures are in the appropriate form, and are clear and conspicuous;
   2. Written and electronic disclosures are in a retainable form (except where expressly permitted not to be retainable);
   3. Pre-payment disclosures match figures disclosed on receipts and match those actually applied to the transfer;
   4. The credit union’s policy for providing oral disclosures is appropriate for the associated transactions;
   5. Scripts used for oral disclosures comply with the regulation;
   6. Disclosures comply with the format requirements for grouping like items, proximity, prominence and size, and segregation from other information; and
   7. Disclosure of amounts required to be disclosed under § 1005.31(b)(1), (2), and (3), use the appropriate terms (e.g., transfer amount, transfer taxes, currency) or substantially similar terms.
2. If applicable, determine whether the credit union complies with the foreign language disclosure requirements outlined in § 1005.31(g).

Pre-Payment Disclosures § 1005.31(b)(1)

1. Based on a review of the credit union’s policies and, if appropriate, sampled transactions, determine that the credit union appropriately categorizes third-party fees as covered or non-covered.
2. Based on a review of the credit union’s policies on pre-payment disclosures and, if appropriate, sampled pre-payment disclosures and related documentation, determine whether the credit union appropriately calculates and discloses:
   1. In the currency in which the remittance transfer is funded:
      1. The amount that will be transferred to the designated recipient, using the term, “Transfer Amount” or a substantially similar term;
      2. Fees imposed and taxes collected on the remittance transfer by the provider, using the terms, “Transfer Fees” and “Transfer Taxes” or substantially similar terms; and
      3. The total amount of the transaction, using the term, “Total” or a substantially similar term;
   2. The exchange rate the credit union uses for the remittance transfer, using the term “Exchange Rate” or a substantially similar term;
   3. In the currency in which the funds will be received by the designated recipient:
      1. The transfer amount, but only if covered third-party fees are imposed, using the term “Transfer Amount” or a substantially similar term;
      2. Any covered third-party fees imposed on the remittance transfer, using the term “Other Fees” or a substantially similar term;
      3. The amount that the designated recipient will receive (total of the transaction minus covered third-party fees), using the term “Total to Recipient” or a substantially similar term; and
   4. If applicable, a statement that non-covered third-party fees or taxes collected on the remittance transfer may apply to the remittance transfer and result in the designated recipient receiving less than the amount disclosed;
   5. If the credit union includes in the statement under (c)(iii) above the optional estimated disclosure of applicable non-covered third-party fees or taxes, determine if the estimates are based on reasonable sources, and are disclosed in the currency in which the transfer is to be received.

Note: The exchange rate used to calculate the amounts under (c) is before any rounding.

Receipt Disclosures § 1005.31(b)(2)

1. Review policies on receipt disclosures, sample receipts, and related documentation to determine whether the credit union appropriately calculates and discloses:
   1. Information disclosed in the pre-payment disclosure;
   2. The date in the foreign country on which funds will be available to the designated recipient, using the term “Date Available” or a substantially similar term;
   3. The name and, if provided by the sender, the telephone number and/or address of the designated recipient, using the term “Recipient” or a substantially similar term;
   4. A statement about the rights of the sender regarding the resolution of errors and cancellation;
   5. The name, telephone number(s), and website of the remittance transfer provider; and
   6. A statement that the sender can contact the Consumer Financial Protection Bureau (“CFPB”), NCUA, and if applicable, the state agency that licenses or charters the remittance transfer provider with respect to the remittance transfer and for questions or complaints about the remittance transfer provider, as well as their telephone number(s), and website addresses.

Note: For any remittance transfer scheduled by the sender at least three business days before the date of the transfer, the statement about the cancellation rights of the sender must state that the sender must request the cancellation at least three business days before the next scheduled transfer. The statement must also note that the request must enable the credit union to identify the sender’s contact information and the particular transfer to be cancelled.

Combined Disclosures § 1005.31(b)(3)

Note: Complete this section only if the credit union provides combined disclosures as an alternative to the pre-payment and receipt disclosures.

1. Review policies on combined disclosures, sample disclosures, and related documentation to:
   1. Determine that they contain all the information required for the pre-payment disclosure and receipt disclosure as described above;
   2. Determine that the credit union provides a proof of payment after payment is made for each transaction; and
   3. Determine that the proof of payment is clear and conspicuous, provided in writing or electronically, and provided in a retainable form.

Accuracy and Timing § 1005.31(e) and (f)

1. Review, as appropriate, all available information including transactions or investigations/trace logs/records or similar documents to verify (subject to the disclaimer statement with respect to non-covered third-party fees and third-party taxes) the accuracy of disclosures provided to members.
   1. In instances where the credit union provides pre-payment disclosures and receipts that do not contain estimates, confirm for any transaction for which payment was made that the information on the most recent pre-payment disclosure and the information on the transaction receipt are the same.
   2. For amounts that are not estimates, confirm that the disclosed amounts were accurate at the time that payment was made.
   3. For amounts that are estimates, determine whether the credit union calculated estimates according to the applicable bases outlined in § 1005.32.
   4. In the case of estimates pursuant to §§ 1005.32(a), 1005.32(b)(1), and 1005.32(b)(2) that are based on an approach that is not one of the listed bases in § 1005.32(c), determine that the recipient received the same or a greater amount of funds than the credit union disclosed.
2. Review processes and procedures or records, as appropriate, to determine whether the credit union provided the required disclosures according to the timing requirements in § 1005.31(e).
   1. Determine whether pre-payment disclosures are provided when the sender requests the remittance transfer, but before payment.
   2. Determine whether receipts are provided when payment is made, or according to § 1005.31(e)(2) for transactions conducted by telephone.

Long Form Error Resolution and Cancellation Notice § 1005.31(b)(4)

1. Determine the credit union’s policy for providing long form error resolution and cancellation notices to senders upon request.
2. Review the credit union’s records of senders’ requests and determine that a long form error resolution and cancellation notice is promptly provided in response to each request.
3. Review sample notices to determine that they use the language in Model Form A-36 (Model Form for Error Resolution and Cancellation Disclosures (Long)) in Appendix A to Subpart B or substantially similar language.

Estimates § 1005.32

Temporary Exception for Insured Institutions § 1005.32(a)

1. Determine that the remittance transfer provider is an insured institution within the definition of the rule. If so, review the appropriate information including transaction logs/records, etc., to identify remittance transfer transactions that were sent from the sender’s account with the credit union. From the list, identify transactions for which the credit union used estimates.

Note: An insured institution acting as an agent on behalf of another for a remittance transfer is not a remittance transfer provider.

2. Review transactions for which estimates were used, and related disclosures, and any other relevant procedures, processes and documentation of information included in disclosures, as appropriate, to:
   1. Assess the adequacy of the credit union’s policy and procedures for determining that it could not determine exact amounts for reasons beyond its control;
   2. Determine that estimates were used only in cases where the credit union could not determine the exact amounts for reasons beyond its control;
   3. Determine the bases used for the estimates under § 1005.32(c) and consider their appropriateness; and
      1. If the credit union provided estimates according to one of the bases listed in Regulation E (§ 1005.32(c)), review documentation to confirm that inputs to estimates are appropriate.
      2. If estimates are based on an approach that is not one of the listed bases, determine as appropriate, that the designated recipient received the same or greater amount than the credit union disclosed.
   4. Determine that the estimated amounts are appropriately labeled with the term “Estimated” or a substantially similar term and placed in close proximity to the term described; and
   5. Determine that related calculations were performed appropriately.

Note: Unless CFPB extends it, this exception will not apply after July 21, 2020.

Permanent Exception for Transfers to Certain Countries § 1005.32(b)(1)

1. Review and assess the adequacy of the credit union’s policy for determining that:
   1. The laws of the recipient country do not permit a determination of the exact amount; or
   2. The methods by which transactions are made in the recipient country do not permit a determination.
2. Review the credit union’s transaction logs/records to identify remittance transactions that were sent to countries on the list provided by the CFPB for which estimates may be provided on remittance transfer-related disclosures to determine if the credit union properly relied on the list in making estimates.
3. Determine whether the credit union gave estimates for transactions for a country that is not on the list provided by the CFPB. Review related documentation to confirm that the recipient country does not legally permit (or the method by which transactions are conducted in that country do not permit) determination of exact amounts.
4. Review records to determine:
   1. The bases used for the estimates under § 1005.32(c) and their appropriateness:
      1. If estimates were provided in accordance with one of the bases listed in § 1005.32(c), review documentation to confirm that inputs to estimates are appropriate; or
      2. If estimates are based on an approach that is not one of the listed bases, determine, as appropriate, that the designated recipient received the same or a greater amount of funds than the remittance transfer provider disclosed.
   2. That the estimated amounts are appropriately labeled with the term “Estimated” or a substantially similar term and placed in close proximity to the term described.

Permanent Exception for Transfers Scheduled Before the Date of Transfer § 1005.32(b)(2)

1. Review and assess the adequacy of the credit union’s policy and procedures for using estimates in the case of transfers scheduled five or more business days before the date of transfer.
2. Review and assess transactions for which estimates were used as well as related disclosures (required by § 1005.36(a)), and any other relevant documentation, as appropriate, to determine compliance with § 1005.32(b)(2).
3. Review the credit union’s policies and procedures on error resolution. (§ 1005.33)
4. Review relevant error resolution statements/files, member complaints, form letters, etc., used to address errors or questions concerning remittance transfer transactions.
5. Assess the credit union’s compliance program to determine whether it includes adequate written policies and procedures designed to ensure compliance with the error resolution requirements for remittance transfers. Consider:
   1. The procedures for receiving error complaints from branches, agents, or other locations where a member may lodge a complaint;
   2. The procedures for identifying complaints alleging “errors” as identified in § 1005.33(a); and
   3. The procedures for investigating, responding to, and resolving complaints.
6. Determine the extent of the credit union’s compliance with its error resolution policies and procedures.
7. Determine the credit union’s compliance with the regulatory requirements for investigating alleged errors and notifying members within allotted time frames.
8. Determine the timeliness and adequacy of the credit union’s remedies for addressing identified errors.
   1. For errors under § 1005.33(a)(1)(iv) other than those that occurred because the sender provided incorrect or insufficient information, consider:
      1. If the credit union notified the sender of the error investigation.
      2. If the sender requested a remedy, whether the credit union offers the selected remedy.
      3. If a default remedy is provided, determine whether the sender had a reasonable time to designate a remedy after receiving a report of the error.
      4. If the remedy is delivery of the amount appropriate to correct the error, determine whether the credit union corrects the error within one business day, or as soon as reasonably practicable, applying the same exchange rate, fees, and taxes stated in the disclosure for the remittance transfer with respect to which the error was made.
   2. If the remedy is a refund, determine whether the credit union refunds the appropriate amount within one business day or as soon as reasonably practicable thereafter; provided the error relates to:
      1. An incorrect amount paid by the sender;
      2. A computational or bookkeeping error of the remittance transfer provider; or
      3. Failure to make the amount of currency stated in the disclosures available to the designated recipient.
9. Determine whether the credit union either:
   1. Refunds the amount of funds the sender provided (in case of a transaction that was not properly transmitted) or the amount appropriate to resolve the error; or makes available to the designated recipient the amount appropriate to resolve the error without additional cost to the sender or the designated recipient.
   2. If the error relates to the failure to make funds available to the designated recipient by the disclosed date of availability (other than an error resulting from incorrect or insufficient information the sender provided), determine whether the credit union:
      1. Either:
         1. Refunds to the sender the amount that was not properly transmitted or the amount appropriate to resolve the error; or
         2. Makes available to the designated recipient the amount appropriate to resolve the error; and
      2. Refunds to the sender any fees and, to the extent not prohibited by law, taxes collected on the remittance transfer.
   3. In the case of errors involving incorrect or insufficient information provided by the sender for the transfer:
      1. Determine whether the credit union a) refunds to the sender the amount that was not properly transmitted or the amount appropriate to resolve the error, b) refunds the fees and taxes paid by the sender for the remittance transfer, and c) only deducts those fees actually deducted by a person other than the provider and (where not prohibited by law) taxes actually collected for the original unsuccessful transaction, within three business days of providing the written explanation of findings.
      2. Alternatively, if the credit union has not yet processed a refund and agrees to the sender’s request to apply the funds towards a new remittance transfer instead of a refund, determine whether the credit union treats the request as a new remittance transfer, provides the appropriate disclosures, and deducts only those fees actually deducted by a person other than the provider and (where not prohibited by law) taxes actually collected for the original unsuccessful transaction.
10. Determine that the credit union is keeping records of compliance for no less than two years from the date a member submitted a notice of error to the provider or the provider was required to take action.

Procedures for Cancellation and Refund of Remittance Transfers § 1005.34 & § 1005.36(c)

1. Review and assess the credit union’s policies and procedures for cancelling and refunding remittance transfer transactions, including:
   1. The procedures for receiving requests of cancellation from branches, agents, or other locations where a member may request cancellation.
   2. The procedures for identifying which transactions are eligible for cancellation.
   3. The procedures for issuing refunds.
2. Determine the extent of the credit union’s compliance with its own policies and procedures on cancellations and refunds.
3. Determine the credit union’s compliance with the regulatory requirements regarding senders’ requests for cancellation and refund.
4. Determine whether the credit union complies with any oral or written request to cancel any remittance transfer scheduled by the sender at least three business days before the date of the remittance transfer.

Acts of Agents § 1005.35

Note: Complete this section if the credit union uses an agent(s) to conduct any element of remittance transfer transactions.

1. Review the credit union’s agreements with agents used for remittance transfers to determine whether they are appropriate for the activities delegated.
2. Determine whether the credit union has established appropriate internal controls and review procedures for the work done by agents on its behalf to ensure compliance with the regulatory requirements. Consider:
   1. The extent to which the credit union has established and maintained policies or procedures for compliance, including policies, procedures, or other appropriate oversight measures designed to assure compliance by an agent or authorized delegate including:
      1. The degree of control the agent exercises over remittance transfer activities it performs on the credit union’s behalf;
      2. The quality and frequency of training the credit union provides to ensure that agents are aware of the regulatory requirements and the credit union’s internal policy guidelines; and
      3. The adequacy of the credit union’s oversight of agents’ activities.
3. Select a sample of agents the credit union uses and review their records in addition to relevant records the credit union holds to determine that the activities agents perform comply with regulatory requirements.

Transfers Scheduled Before the Date of Transfer § 1005.36

1. Review and assess the adequacy of the credit union’s policies and procedures for transfers scheduled before the date of transfer.
2. As appropriate, select a sample of records of transfers scheduled before the date of transfer to determine whether the provider complies with the timing of disclosures, accuracy of disclosures (and estimates pursuant to § 1005.32(b)(2)), and the sender’s request for cancellation. Use the same methods identified in the sections above regarding other disclosures. Consider the following:
   1. For one-time transfers scheduled five or more business days before the date of transfer or for the first in a series of preauthorized remittance transfers, determine whether the credit union provides either a pre-payment disclosure and a receipt or a combined disclosure when the sender requests the transfer but before payment.

      Note: If any of the disclosures provided contain estimates as permitted by § 1005.32(b)(2), the credit union must mail or deliver an additional receipt no later than one business day after the date of the transfer. If the transfer involves the transfer of funds from the sender’s account held by the provider, the credit union may provide this additional receipt on or with the next periodic statement for that account, or within 30 days after the date of the transfer if the credit union does not provide a periodic statement.

   2. For each subsequent preauthorized remittance transfer, determine whether the credit union provides an updated receipt if any of the information (other than temporary disclosures or disclosures permitted to be estimated) on the most recent receipt is no longer accurate.

      Note: The receipt must clearly and conspicuously indicate that it contains updated disclosures; it must be mailed or delivered to the sender within a reasonable time before the scheduled date of the next subsequent preauthorized remittance transfer. Ten business days for mail and five business days for hand or electronic delivery is deemed a reasonable time.

   3. If there is no updated information and the remittance transfer does not involve the transfer of funds from a sender’s account the credit union holds, determine whether the provider mails or delivers a receipt to the sender no later than one business day after the date of the transfer for each subsequent preauthorized transfer.
   4. If there is no updated information and the remittance transfer involves the transfer of funds from a sender’s account the credit union holds, determine whether the receipt is provided on or with the next periodic statement for that account, or within 30 days after the date of the transfer if a periodic statement is not provided.
   5. For any subsequent transfer in a series of preauthorized remittance transfers, determine whether the credit union discloses the information required by § 1005.36(d)(1) no more than 12 months and no less than five business days before the date of the subsequent preauthorized remittance transfer.

      Note: While the rule generally provides flexibility as to when and where future transfer dates may be disclosed, for any subsequent preauthorized remittance transfer for which the date of transfer is four or fewer business days after the date payment is made, the disclosure must generally be provided on or with the receipt for the initial transfer in that series.

ELECTRONIC FUND TRANSFER ACT (EFTA)
(REGULATION E)
CHECKLIST

Subpart A

Issuance of Access Devices – § 1005.5

Consumer Liability for Unauthorized Electronic Fund Transfers (EFTs) – § 1005.6

NOTE: The first two tiers of liability (§ 1005.6(b)(1) and (2), discussed in questions 5 and 6 do not apply to unauthorized transfers from a member’s account made without an access device. (Comment 1005.6(b)(3)-2)

Initial Disclosures – § 1005.7

Change-in-Terms Notice; Error Resolution Notice – § 1005.8

Receipts at Electronic Terminals; Periodic Statements – § 1005.9

Preauthorized Transfers – § 1005.10

NOTE: An oral stop-payment order ceases to be binding after 14 days if the member fails to provide the required written confirmation. (§ 1005.10(c)(2))

Procedures for Resolving Errors – § 1005.11

NOTE: The time period (for question 36) is extended in certain circ*mstances. (§ 1005.11(c)(3))

Record Retention – § 1005.13

Disclosures at Automated Teller Machines (ATMs) – § 1005.16

Requirements for Overdraft Services – § 1005.17

NOTE: Fees or charges may generally be assessed only on transactions paid after the confirmation has been mailed or delivered.

NOTE: If the amount of the fee is determined on the basis of the number of times the member has overdrawn the account, the amount of the overdraft, or other factors, the credit union must disclose the maximum fee that may be imposed. (§ 1005.17(d)(2))

NOTE: The credit union may also disclose the member’s right to revoke consent. The response portion of Model Form A-9 may be tailored to the methods offered for opting-in, and may include reasonable methods to identify the account, such as a bar code. (§ 1005.17(d)(6) and Comments 1005.17(d)-1 through -5))

Payroll Card Accounts – § 1005.18

NOTE: The history of account transactions must include the information in § 1005.9(b).

NOTE: A credit union may comply with the provision above by limiting the member's liability for an unauthorized transfer as provided under § 1005.6(b)(3) for any transfer reported by the member within 120 days after the transfer was credited or debited to the member's account.

NOTE: The credit union may comply with the requirements for resolving errors by investigating any oral or written notice of an error from the member that the credit union receives within 120 days after the allegedly erroneous transfer was credited or debited to the member's account.

Requirements for Gift Cards and Gift Certificates – § 1005.20

Subpart B – Requirements for Remittance Transfers

Complete the rest of the checklist if the credit union offers remittance transfers in the normal course of business.

Disclosures – § 1005.31

(Unless otherwise indicated, the disclosure requirements apply to all remittance transfer transactions, including those scheduled before the date of transfer).

NOTE: specific content of disclosures are addressed below.

NOTE: For a one-time transfer scheduled five or more business days in advance or for the first in a series of preauthorized remittance transfers, disclosures must be accurate when a sender makes payment except to the extent estimates are permitted. For any subsequent transfer in a series of preauthorized remittance transfers, disclosures must be accurate as of the date the preauthorized remittance transfer it pertains to is made. (§ 1005.36(b))

Pre-payment Disclosures - § 1005.31(b)(1)

Receipt – § 1005.31(b)(2)

NOTE: If the transfer is scheduled at least three business days before the date of the transfer, the statement about the sender’s cancellation rights should reflect the requirements of § 1005.36(c).

NOTE: The statement must include the name, telephone number(s) and website of the state agency, and the name, toll-free telephone number(s) and website of NCUA and CFPB.

Combined Disclosure – § 1005.31(b)(3)

Complete this section only if the credit union issues combined disclosures as an alternative to separate pre-payment disclosures and receipts.

NOTE #1: The proof of payment must be clear and conspicuous, and provided in writing or electronically in a retainable form.

NOTE #2: For one-time transfers scheduled five or more business days in advance or for the first in a series of preauthorized transfers, the credit union may provide confirmation that the transaction has been scheduled instead of the proof of payment, if payment is not processed at the time the remittance transfer is scheduled. No further proof of payment is required when payment is later processed.

Long Form Error Resolution and Cancellation Notice – § 1005.31(b)(4)

NOTE: For a remittance transfer scheduled at least three business days before the date of the transfer, the description of the rights of the sender regarding cancellation must instead reflect the requirements of § 1005.36(c).

Estimates – § 1005.32

Temporary Exception for Insured Institutions – § 1005.32(a)

Permanent Exception for Transfers to Certain Countries – § 1005.32(b)(1)

NOTE: A credit union cannot rely on the CFPB list if it has information that the laws of a country on the list permit exact disclosures.

Permanent Exception for Transfers Scheduled Before the Date of Transfer – § 1005.32(b)(2)

Bases for Estimates – § 1005.32(c)

NOTE: For transfers scheduled five or more business days before the date of the transfer for which estimates may be provided, the requirements of § 1005.32(d) apply.

Procedures for Resolving Errors – § 1005.33

NOTE: The credit union can ask the sender to designate a preferred remedy when the sender provides notice of the error but must indicate that a resend remedy may be unavailable if the error occurred because the sender provided incorrect or insufficient information.

NOTE: A default remedy is not applicable where the sender provided incorrect or insufficient information.

NOTE: The credit union 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.

Procedures for Cancellation and Refund of Remittance Transfers – § 1005.34

NOTE: The request to cancel must enable the credit union to identify the sender’s name and address or telephone number and the particular transfer to be cancelled, and the transferred funds must not have been picked up by the designated recipient or deposited into an account of the designated recipient. (§ 1005.34(a)(1) and (2))

NOTE: The funds to be refunded include 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 credit union or a third party, such as an intermediary institution, the agent or bank in the recipient country, or a state or other governmental body. (§ 1005.34(b))

Acts of Agents – § 1005.35

Transfers Scheduled Before the Date of Transfer – § 1005.36

NOTE: If any of the disclosures contain estimates, the credit union must mail or deliver an additional receipt no later than one business day after the date of the transfer. If the transfer involves the transfer of funds from the sender’s account held by the credit union, this receipt may be provided on or with the next periodic statement, or within 30 days after the date of the transfer if a periodic statement is not provided. (§ 1005.36(a)(1)(ii))

NOTE: The receipt must clearly and conspicuously indicate that it contains updated disclosures and must be mailed or delivered to the sender within a reasonable time before the scheduled date of the next subsequent preauthorized remittance transfer. A disclosure mailed no later than ten business days or hand or electronically delivered no later than five business days is deemed to have been provided within a reasonable time. (§ 1005.36(a)(2)(i) and Comment 1005.36(a)(2)-3)

NOTE: While the rule generally provides flexibility as to when and where future transfer dates may be disclosed, for any subsequent preauthorized remittance transfer for which the date of transfer is four or fewer business days after the date payment is made, the disclosure must generally be provided on or with the receipt for the initial transfer in that series. (§ 1005.36(d)(2)(ii))

NOTE: The request to cancel must:

• Enable the credit union to identify the sender’s name and address or telephone number and the particular transfer to be cancelled; and
• Be received by the credit union at least three business days before the scheduled date of the remittance transfer. (§ 1005.36(c))

Footnotes

^[1]The term “overdraft service” means a service under which a credit union assesses a fee or charge on a consumer's account held by the credit union for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account (12 CFR 1005.17(a)). “Overdraft service” does not include a service that transfers funds from another account held by a consumer or a line of credit.

^[2]Subpart B provides for a 100-transfer “safe harbor.” To qualify for the “safe harbor,” a credit union must have provided 100 or fewer remittance transfers in the current and the previous calendar year. If a credit union crosses the 100-transfer threshold either in the previous or the current calendar year, it is deemed to be providing remittance transfers in its “normal course of business” and must begin complying with the rule within a reasonable period of time (not to exceed six months) unless, under the facts and circ*mstances, it would not be deemed a provider.