The Federal Reserve Board has published a request for public comment on proposed amendments to Regulation E, which implements the Electronic Fund Transfer Act. The proposed revisions to the regulation would, among other things, (i) address its coverage of electronic check conversion services and those providing the services and provide additional guidance regarding rights, liabilities and responsibilities of parties engaged in electronic check conversion transactions and (ii) provide that payroll card accounts established either directly or indirectly by an employer on behalf of a consumer for the purpose of providing salary, wages or other employee compensation on a recurring basis are “accounts” covered by Regulation E.

In regard to electronic check conversion, one of the proposed changes would require persons, such as merchants and other payees, that use information from a check to initiate an electronic fund transfer from a consumer’s account to provide notice to the consumer for each electronic fund transfer and obtain the consumer’s authorization for the transaction. Currently, merchants and other payees that engage in electronic check conversion transactions are not covered by Regulation E.

The Board also seeks comment on proposed revisions to the regulation’s official staff commentary regarding (i) issuance of access devices, (ii) error resolution procedures, (iii) whether a tape recording of a telephone conversation with a consumer could constitute “written authorization” for recurring electronic debits from a consumer’s account under the Electronic Signatures in Global and National Commerce Act, (iv) other issues regarding preauthorized electronic transfers and (v) disclosures at automated teller machines.

Comments are due November 19, 2004. If you would like additional information or assistance in drafting comments, please do not hesitate to contact us.

Carolyn S. Melvin