Proposed Amendments to Regulation E - Electronic Fund Transfer Act
September 15, 2004
Circular No. 11641

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The Federal Reserve Board requests public comment on proposed amendments to Regulation E, which implements the Electronic Fund Transfer Act, and the regulation's official staff commentary. The proposed revisions to the regulation would provide guidance regarding the rights, liabilities, and responsibilities of parties engaged in electronic check conversion transactions and would provide that payroll card accounts are "accounts" covered by Regulation E.

Among the proposed changes, persons, such as merchants and other payees, who make electronic check conversion services available to consumers, would be required to provide notice and obtain the consumer's authorization for such transactions. Currently, merchants and other payees that engage in electronic check conversion transactions are not covered by Regulation E.

Additionally, the revised regulation would provide that payroll card accounts established either directly or indirectly by an employer on behalf of a consumer for the purpose of providing salary, wages, or other employee compensation on a recurring basis are covered by Regulation E. A payroll card account would be subject to the regulation whether the account is operated or managed by the employer, a third-party payroll processor, or a depository institution.

Proposed commentary revisions would provide guidance on preauthorized electronic transfers from a consumer's account, additional electronic check conversion issues, error resolution, and other matters. Comments are due on or before November 19, 2004.

Press release 
Board’s notice OFFSITE PDF

Maryann Campbell
Supervising Examiner
Legal and Compliance Risk Department