Electronic Money with Compliance Hazards

The Electronic Fund Transfer Act (EFTA, 12 CFR 1005) was passed by the U.S. Congress in 1978 and signed by President Jimmy Carter, to establish the rights and liabilities of consumers as well as the responsibilities of all participants in electronic funds transfer activities.

If your institution is still debating the future of Remittance Transfers (RT), you’re not alone. Despite a fast-approaching deadline, many banks and credit unions are woefully unprepared to decide if they will continue to offer RT in accordance with the final rules provided by Regulation E (Reg E). The rules, designed to increase protections for consumers who send funds to others in foreign countries, impact disclosures, error resolution and cancellation rights for remittance transfers.

Bearing the burden of frequent and voluminous regulation changes, few institutions have been motivated to decide the future of these transactions – much less prepare for compliance with the new rules.  If your firm is dragging its feet on the high speed lane of CFPB compliance changes, you should know the following points:-

• Penalty of up to $1,000 in an individual action; $500,000 or 1% of Bank’s net worth in a class action; plus actual damages, costs, and attorneys’ fees
• Criminal penalty $5,000 and one year in jail for failure to comply; $10,000 and ten years for fraudulent activities

                                                                                                                                             (Resources from CFPB website)

Financial institutions must ensure that they are correctly interpreting Reg E and are compliant with all of the requirements for processing error disputes for debit card transactions and ACH.  Offering your customers electronic fund transfer (EFT) helps keep your bank profitable and competitive. But making sure those transactions are compliant with Reg E can be a headache.

The increase in alleged EFT error claims challenges financial institutions as they are tasked with processing EFT transactions, while meeting customers’ electronic banking demands.

Software platforms like Predict360 for Reg E, automates and simplifies frustrating manual processes of Regulation E compliance by eliminating errors and increasing efficiency for your business. With this advanced & robust Enterprise risk platform your bank can:

• Replace your costly and inconsistent manual process for investigating Reg E claims with our automated Web-based compliance software solution
• Lead employees through every step of EFT error resolution procedures with an automated case management system that ensures deadlines are met within mandated Reg E timelines
• Minimize risk of civil or regulatory action due to inaccurate handling of EFT claims
• Utilize a more accurate cost/benefit analysis for investigating and paying EFT claims according to Reg E
• Create enhanced reports on EFT claims or impending due dates for EFT claims using the application dashboard and reports option
• Minimize your losses and streamline the EFT transaction process for your employees

 

360factors can help.  Please give us a call @ 866-385-2341 

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