Can a Banking Regulation Be Your Good Friend?

By Gail Rickards

Use your debit card at a local store for a point-of-sale purchase, authorize your car insurance company to automatically charge your checking account for monthly premium payments, make a transfer between accounts using your online banking service, tell your bill payment service which bills to pay this week and how much to pay–Regulation E stands right behind you in case there’s an error. That’s a good friend.

Regulation E, one of the FDIC’s consumer protection regulations, has been in effect since the birth of ATMs and electronic fund transfers. We all receive a copy of it when we sign up for an ATM or debit card, online banking, or create an EFT transaction agreement. Since most of us can’t remember what Regulation E’s all about, here’s a quick review of its principal benefits.

ID and Password Missing?
Call your bank within 2 days of realizing that you can’t find your ID and password. You’ll probably be asked to follow-up in writing, but from the moment you notify the bank, you’re protected from unauthorized transactions beyond $50.

If you wait more than 2 days, you could be liable for $500 in unauthorized activity. If your ATM or debit card is missing, too, be sure you don’t wait! The bank will quickly issue you a new ID and password (and a replacement card if needed), and everything will return to normal.

Strange Transactions on Your Statement?
You have 60 days from the date your bank statement is mailed to you to let the bank know about any mysterious transactions. The more often you pay with your debit card, withdraw cash from an ATM, or pay your bills electronically, the more you need to scrutinize your statement.

First, call your bank to let them know. You’ll be asked to provide a written description, generally within 10 days. You may also be asked to complete and sign a Reg. E form–a simple process that takes just a minute. To be sure you have Reg. E protection, take the time to do what’s necessary.

The bank begins its research as soon as it’s first notified and removes the questionable transaction from your account within 10 days. The bank will inform you of its findings, and you will want to monitor your future statements carefully. Reg. E requires that if a bank error caused the problem, the bank must correct it promptly.

If you have more than one suspicious transaction, on a single statement or on subsequent statements, it’s time to order a replacement ATM or debit card with a new account number, ID, and password. Talk with your banker when you file your first report.

Need to Stop Payment on an E-Bill or Transfer?
You can stop a pre-authorized regular payment or transfer that has a set dollar amount (such as your mortgage payment or a transfer to your savings account). Call your bank at least 3 business days before the payment is due to take place. Be sure to follow up when asked to e-mail your request or sign a stop payment form. If the transaction goes through despite your order to stop it, the bank will be liable under the terms of Reg. E.

You can stop a bill payment that has a different amount due each month from being sent (such as your utility bill). Each bill payment service is required by Reg. E to notify you 10 days before a bill is due to be paid and ask you what you want done. At that time, you are free to cancel the payment just once or permanently.

Don’t Ask Your Friend to Cover For You
If your system or internet browser fails while you’re paying e-bills, Reg. E isn’t liable for errors. If you give someone your debit card, ID, and password, Reg. E isn’t liable. If 6 months after receiving a bank statement, you question a transaction, Reg. E won’t help you.

So be a good friend in return: write down your transactions, protect your cards and identity, and balance your statement as soon as it arrives. You’ll enjoy a mutually beneficial relationship.

Do you have questions, comments or topic requests?
E-mail me at: gail@rickardsconsulting.com