What is Regulation E? Staying protected from electronic banking fraud and errors

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It may not be well known to many banking customers, but Regulation E is an important source of protection to anyone with a bank account.

Most of the time, you won’t need to know that it exists. But if you ever see a debit card purchase or withdrawal you didn’t approve, you’ll need to file a Reg E dispute to start the process of getting your money back.

Regulation E applies to any electronic fund transfer that authorizes a financial institution to debit or credit money from a consumer’s account. This regulation determines the framework and steps for the dispute process. The Consumer Financial Protection Bureau (CFPB) issues Reg E following the Electronic Fund Transfer Act.

What transactions fall under Regulation E?

The following types of transactions are electronic fund transfers and fall under Reg E, according to the CFPB:

  • Point-of-sale transfers
  • ATM transfers
  • Withdrawal of funds
  • Debit card transactions

All debits and withdrawals aren’t considered electronic fund transfers. The following transactions aren’t covered under Reg E:

  • Checks
  • Wire transfers

Introductory or trial offers, where you pay a low amount to try a product and then are enrolled in a subscription for that product, are common. And these don’t fall under Regulation E, says Kelly Pickle, operations officer at Heritage Bank.

“(People) don’t necessarily read the fine print,” Pickle says. “And they end up needing to have canceled within like 30 days otherwise they’re enrolled in this subscription.” Pickle says these should be disputes with the vendor or merchant.

The Reg E submission process may differ from bank to bank

Some banks may require you to submit your dispute in writing, even though you already gave it to a representative over the phone.

Some banks, such as First Interstate Bank, have an online form. The form, which is used for debit card and ATM card disputes, asks for information such as:

  • the amount of the transaction you’re disputing
  • the type of merchandise or service
  • the date the transaction was made
  • the date the transaction posted to your account
  • whether you had lost your debit card

Currently, Heritage Bank is in the process of upgrading its digital banking platform, Pickle says. The upgrade will allow customers to dispute a transaction within the app as they see the transaction. But even technology faces a slowdown due to the regulation.

“But there are some parts of the rule that still require a signature in order for the next step of that process to happen,” Pickle says.

How long your dispute could take

Reg E requires your bank to investigate your dispute within 10 business days of receiving your claim, according to the FDIC. But this could take 20 business days for recently opened bank accounts.

Your bank might need to take up to 45 days for investigations that aren’t able to be completed within the 10-20 business day period. In those instances, your bank must generally provide a provisional credit within 10 days after the bank received your dispute.

Keeping an eye on your account can limit your liability

Getting text alerts of transactions, checking your bank’s mobile app on a regular basis or logging into your online banking can help you keep track of your finances.

“We don’t know what’s legitimate and what’s not until the customer tells us,” Pickle says.

Monitoring your account can also save you some potential liability.

  • Reporting a loss or theft of a debit card within two business days means your liability won’t exceed the lesser of $50 or the amount of the unauthorized withdrawals that occurred before notifying your bank.
  • Not giving timely notice, letting your bank know within two days of realizing your debit card is missing, will increase your potential liability.

At the very least check your bank statement

Getting transaction alerts and checking your account on a regular basis are the best ways to catch and stop unauthorized transfers from happening after the initial one. You must report an unauthorized debit that appears on your statement within 60 days of your bank issuing the statement to avoid being responsible for future transfers.

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