Electronic Fund Transfers FAQ 7 – If a consumer provides notice to a financial institution about an unauthorized electronic fund transfer (EFT), can the financial institution require that the consumer first contact the merchant about the…?

Compliance > Regulation E - EFTA
Q:   If a consumer provides notice to a financial institution about an unauthorized electronic fund transfer (EFT), can the financial institution require that the consumer first contact the merchant about the potential unauthorized EFT before the financial institution initiates its error resolution investigation?
 
A:   (UPDATED 6/4/2021): No. A financial institution must begin its investigation promptly upon receipt of an oral or written notice of error and may not delay initiating or completing an investigation pending receipt of information from the consumer. See Comments 11(b)(1)-2 and 11(c)-2. For example, in 2019-BCFP-0001, the Bureau found that the practice of requiring a consumer to contact the merchant before initiating an error resolution investigation was a violation of Regulation E. Similarly, the Fall 2014 edition of Supervisory Highlights discussed instances where examiners found that one or more financial institutions had instructed consumers to contact the merchant instead of promptly initiating an error investigation.
 
 
This Q&A was contained in the CFPB’s Electronic Fun Transfers FAQs that were released in June 2021 (which may be updated from time to time).  This may be found on the CFPB’s website here:  https://www.consumerfinance.gov/compliance/compliance-resources/deposit-accounts-resources/electronic-fund-transfers/electronic-fund-transfers-faqs/
 

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