Board Announces Final Amendments to Regulation E on Disclosure Obligations of ATM Operators
January 3, 2006
Circular No. 11758

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

The Federal Reserve Board has announced final amendments to Regulation E (Electronic Fund Transfer Act) that clarify the responsibilities of parties involved in electronic check conversion transactions and require that consumers receive written notification in advance of these transactions.

Additional revisions to the regulation's official staff commentary provide guidance on preauthorized transfers from consumers' accounts, error resolution and disclosures at automated teller machines (ATMs).

In a separate action, the Board also amended Regulation E so that it covers payroll card accounts.

Among other things, the final rule provides that merchants and other payees that convert payments by check into electronic fund transfers must provide a notice to consumers to obtain consumer authorization for the electronic fund transfer.

The final rule addressing electronic check conversion and other matters will take effect 30 days after the date of publication in the Federal Register, which is expected soon. The mandatory compliance date is January 1, 2007.

In addition to the final rule on electronic check conversion services, the Board is adopting a separate interim final rule on payroll card accounts to provide that payroll card accounts established for the purpose of providing salary, wages, or other employee compensation on a recurring basis are accounts covered by Regulation E.

The amendments to address payroll cards are being issued as interim final rules so that interested parties may comment on the new requirements. The Board requests comment within 60 days after publication in the Federal Register.

Both Federal Register notices are attached.

Press release
Final rule, electronic check conversion transactions
Interim final rule, payroll card accounts  
Circular No. 11714 ››

John Ricketti
Vice President
Legal and Compliance Risk Department
(212) 720-2192

William L. Rutledge
Executive Vice President