A: Yes. As discussed in Electronic Fund Transfers Coverage: Financial Institutions Question 1
, the definition of financial institution includes a bank, savings association, credit union, or any other person that directly or indirectly holds an account belonging to a consumer, or that issues an access device and agrees with a consumer to provide EFT services. 12 CFR 1005.2(i). Here, the account-holding financial institution holds the consumer’s account, and is thus considered a financial institution under Regulation E. Any entity defined as a financial institution under Regulation E has error resolution obligations in the event that a consumer notifies the financial institution of an error, with limited exceptions. 12 CFR 1005.11. As discussed in Electronic Fund Transfers Error Resolution: Unauthorized Transfers Question 4
, since the transaction is an unauthorized EFT, the depository institution must comply with any applicable liability protections for unauthorized transfers in 12 CFR 1005.6.