12 C.F.R. § 205.3 Coverage.
Title 12 - Banks and Banking
(a) General. This part applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's account. Generally, this part applies to financial institutions. For purposes of §§205.3(b)(2), 205.10(b), (d), and (e) and 205.13, this part applies to any person. (b) Electronic fund transfer—(1) Definition. The term electronic fund transfer means any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer's account. The term includes, but is not limited to— (i) Point-of-sale transfers; (ii) Automated teller machine transfers; (iii) Direct deposits or withdrawals of funds; (iv) Transfers initiated by telephone; and (v) Transfers resulting from debit card transactions, whether or not initiated through an electronic terminal. (2) Electronic fund transfer using information from a check. (i) This part applies where a check, draft, or similar paper instrument is used as a source of information to initiate a one-time electronic fund transfer from a consumer's account. The consumer must authorize the transfer. (ii) The person that initiates an electronic fund transfer using the consumer's check as a source of information for the transfer shall provide a notice that the transaction will or may be processed as an EFT, and obtain a consumer's authorization for each transfer. A consumer authorizes a one-time electronic fund transfer (in providing a check to a merchant or other payee for the MICR encoding, that is, the routing number of the financial institution, the consumer's account number and the serial number) when the consumer receives notice and goes forward with the transaction. For point-of-sale transfers, the notice must be posted in a prominent and conspicuous location, and a copy of the notice must be provided to the consumer at the time of the transaction. (iii) The person that initiates an electronic fund transfer using the consumer's check as a source of information for the transfer shall also provide a notice to the consumer at the same time it provides the notice required under paragraph (b)(2)(ii) that when a check is used to initiate an electronic fund transfer, funds may be debited from the consumer's account as soon as the same day payment is received, and, as applicable, that the consumer's check will not be returned by the financial institution holding the consumer's account. For point-of-sale transfers, the person initiating the transfer may post the notice required in this paragraph (b)(2)(iii) in a prominent and conspicuous location and need not include this notice on the copy of the notice given to the consumer under paragraph (b)(2)(ii). The requirements in this paragraph (b)(2)(iii) shall remain in effect until December 31, 2009. (iv) A person may provide notices that are substantially similar to those set forth in Appendix A–6 to comply with the requirements of this paragraph (b)(2). (3) Collection of service fees via electronic fund transfer. A consumer authorizes a one-time electronic fund transfer from the consumer's account to pay a fee for the return of an electronic fund transfer or a check unpaid due to insufficient or uncollected funds in the consumer's account, when the consumer receives a notice stating that the fee will be collected by an electronic fund transfer from the consumer's account, along with a disclosure of the amount of the fee, and the consumer goes forward with the transaction. If the service fee for insufficient or uncollected funds may be collected in connection with a point-of-sale transfer, the notice must be posted in a prominent and conspicuous location, and a copy of the notice must be provided to the consumer at the time of the transaction. (c) Exclusions from coverage. The term electronic fund transfer does not include: (1) Checks. Any transfer of funds originated by check, draft, or similar paper instrument; or any payment made by check, draft, or similar paper instrument at an electronic terminal. (2) Check guarantee or authorization. Any transfer of funds that guarantees payment or authorizes acceptance of a check, draft, or similar paper instrument but that does not directly result in a debit or credit to a consumer's account. (3) Wire or other similar transfers. Any transfer of funds through Fedwire or through a similar wire transfer system that is used primarily for transfers between financial institutions or between businesses. (4) Securities and commodities transfers. Any transfer of funds the primary purpose of which is the purchase or sale of a security or commodity, if the security or commodity is: (i) Regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission; (ii) Purchased or sold through a broker-dealer regulated by the Securities and Exchange Commission or through a futures commission merchant regulated by the Commodity Futures Trading Commission; or (iii) Held in book-entry form by a Federal Reserve Bank or federal agency. (5) Automatic transfers by account-holding institution. Any transfer of funds under an agreement between a consumer and a financial institution which provides that the institution will initiate individual transfers without a specific request from the consumer: (i) Between a consumer's accounts within the financial institution; (ii) From a consumer's account to an account of a member of the consumer's family held in the same financial institution; or (iii) Between a consumer's account and an account of the financial institution, except that these transfers remain subject to §205.10(e) regarding compulsory use and sections 915 and 916 of the act regarding civil and criminal liability. (6) Telephone-initiated transfers. Any transfer of funds that: (i) Is initiated by a telephone communication between a consumer and a financial institution making the transfer; and (ii) Does not take place under a telephone bill-payment or other written plan in which periodic or recurring transfers are contemplated. (7) Small institutions. Any preauthorized transfer to or from an account if the assets of the account-holding financial institution were $100 million or less on the preceding December 31. If assets of the account-holding institution subsequently exceed $100 million, the institution's exemption for preauthorized transfers terminates one year from the end of the calendar year in which the assets exceed $100 million. Preauthorized transfers exempt under this paragraph (c)(7) remain subject to §205.10(e) regarding compulsory use and sections 915 and 916 of the act regarding civil and criminal liability. [Reg. E, 61 FR 19669, May 2, 1996, as amended at 71 FR 1659, Jan. 10, 2006]
Title 12: Banks and Banking
PART 205—ELECTRONIC FUND TRANSFERS (REGULATION E)
§ 205.3 Coverage.
