CFPB Clarifies Requirements for Preauthorized EFTs

The Consumer Financial Protection Bureau today issued a bulletin clarifying the obligations of entities obtaining customer authorization for recurring preauthorized electronic funds transfers. To be compliant, all automatic recurring EFTs must be authorized by the customer in writing — in either paper or electronic form, as specified by the E-Sign Act — and the customer must be provided with a copy of the authorization terms that includes the timing and amount of the recurring transfers.

The bulletin — issued after the CFPB observed that “some entities may not fully comply” with Regulation E requirements on EFT authorizations — also stated that authorization can be given over the phone if the customer provides authentication by using a code or PIN entered on the phone’s keypad, or if the oral authorization is recorded and retained by the requesting company and follows the requirements of the E-Sign Act.


About Author

Monica C. Meinert

Monica C. Meinert is deputy editor of the ABA Banking Journal and editorial director at the American Bankers Association, where she oversees ABA Daily Newsbytes.