Final Rule on Consumer Authorization Requirements Approved and Request for Comment on a Proposed Rule, Both under Regulation E
November 28, 2006
Circular No. 11824

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

The Federal Reserve Board has announced the approval of a final rule regarding consumer authorization requirements when a person, such as a merchant, seeks to electronically collect a fee for checks or other items that are returned unpaid. The final rule clarifies that the requirement to obtain the consumer's authorization applies to the person seeking to electronically collect the returned item fee. The rule contains additional provisions related to the consumer's authorization and the content of notices that must be given to the consumer. 

The amendments addressing the electronic collection of returned item fees are being made to Regulation E, which implements the Electronic Fund Transfer Act, and to the official staff commentary, which interprets the requirements of Regulation E.  The effective date of the final rule is January 1, 2007.  Certain provisions regarding the content of notices that must be provided to consumers in point-of-sale transactions will have a delayed compliance date of January 1, 2008.

In a separate action, the Board has requested public comment on a proposed rule to except transactions of $15 or less from Regulation E's requirement that receipts be made available to consumers for transactions initiated at an electronic terminal. The proposed exception is intended to facilitate the ability of consumers to use debit cards in retail environments where the receipt requirement may not be practical or cost-effective.

Comments are requested within sixty days after publication in the Federal Register.

See the press release for full details.

Press release
Board’s Final Rule OFFSITE PDF
Board’s Proposed Rule OFFSITE PDF

Public Information

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