Consumer Rights

Overview

Regulation E is the Federal Reserve regulation that sets rules, liabilities, and procedures for electronic funds transfers (EFT), and establishes consumer protections using EFT systems. This regulation prescribes rules for:

• Solicitation and issuance of electronic funds transfers
• Debit cards
• Consumer liability for unauthorized transfers
• The requirement of financial institutions to disclose at least annually the terms and conditions of EFT services

For example, the regulation sets up an error resolution procedure for errors on EFT related accounts.

Unauthorized Transfers or Transactions

There are procedures for correcting disputed transactions to a consumer's bank account, under Federal Reserve Regulation E. Examples of these transactions include:

• A consumer claiming that funds were taken from an account by another person's unauthorized transfer without prior consent
• A transaction was posted improperly due to a bank bookkeeping error, can have the error corrected by notifying the financial institution holding the account

Once a consumer notifies the financial institution of a suspected unauthorized transaction, the financial institution has from 10 to 45 days to investigate the complaint and re-credit funds debited in error. The consumer's account liability is limited by regulation to $50 if the bank is notified of the error, but otherwise can be as high as $500.

Exceptions

The protection this regulation provides only applies to consumer purpose accounts and does not cover any accounts that are of a non-personal nature. Business purpose and trust accounts are not covered by this regulation.

Other Fraud Protection

Some debit cards issued by MasterCard® through First Merchants Bank also contain additional fraud protection. Please contact Customer Service at 1.800.205.3464 for more information.