Fraud Prevention Payroll Process Review ACH Security Education Compliance BSA/AML compliance Payroll Challenges Fraud Liquidity Management

Regulation E: Error Resolution

Confusion exists among financial institutions regarding the 60-day customer liability window, which could lead to potential violations of the Electronic Funds Transfer regulation. FDIC examinations found that some financial institutions calculated the customer liability window in manners not consistent with Regulation E. The regulation states that, if a customer fails to notify the bank of an error within 60 days of the bank providing a periodic statement showing the erroneous transaction, the customer is liable for all subsequent transactions after 60 days, since the statement and notice to the institution of the erroneous transaction. The FDIC further noted that the official interpretations to Regulation E make clear that where the consumer fails to provide notice within the 60-day time frame, the consumer may be liable for any transfers occurring after the close of the 60 days and before notice is provided to the financial institution. The customer is not, however, responsible for the unauthorized ACH debits occurring during the 60-day time frame from the transmission of the periodic statement. The following tips have been suggested to help your institution remain compliance with Regulation E:

  • Use logs to track the varied timing requirements
  • Ensure new staff are adequately trained and receive updated training periodically

Have questions? Contact KPM Manager Richard Dugas for additional information.

Related Articles

Talk with the pros

Our CPAs and advisors are a great resource if you’re ready to learn even more.