With all the debate that surrounds Regulation E and campus cards, there is one thing that is certain… There are just two ways to be completely sure you do not violate the regulation. The first is to conduct no financial transactions via your campus card. The second is to rely on the services of a chartered financial institution to conduct all the financial transactions occurring with your card. This is seldom possible, however, because even institutions with banking partnerships typically offer some on-campus transactions (e.g. vended products, dining halls) from another account or funds pool.
So nearly every campus with a card program must consider Reg E at least to some degree. In prior articles, CR80 News has addressed whether a campus card program is subject to the regulation. We will not focus on that topic here. Suffice to say that it is an issue still up for debate, and one unlikely to see firm resolution in the near future. In this article, we will examine what a campus would need to do to be compliant if it wished to–or ultimately was forced to–do so.
It is really not that complex to understand as the number of requirements is few. It is a bit harder, however, to accomplish. The following items are extracted from the Federal Reserve Board’s Regulation E Compliance Guide for Small Entities (www.federalreserve.gov/regulations/cg/regecg.htm.)
Section 205.7 Initial disclosures
Requires financial institutions to provide to consumers initial disclosures of the terms and conditions of EFT services. Institutions must disclose the consumer’s liability for unauthorized EFTs, the types of EFTs the consumer may make, and any limit on the frequency or dollar amount; fees charged by the institution; and error-resolution procedures. Institutions must also provide a summary of various consumer rights under the regulation.
Section 205.9 Receipts at electronic terminals; periodic statements
States that consumers must be provided documentation in two forms: terminal receipts and periodic statements. Consumers must receive a receipt when they initiate an electronic transfer and monthly in the form of periodic statements. Both documents must include the type of electronic transfer; the amount and date of the transaction; the location of the terminal; and other information.
Section 205.6 Liability of consumer for unauthorized transfers
Limits a consumer’s liability for unauthorized electronic fund transfers, such as those arising from loss or theft of an access device, to $50; if the consumer fails to notify the depository institution in a timely fashion, the amount may be $500 or unlimited.
Section 205.11 Procedures for resolving errors
States that if a consumer notifies an institution that an error involving an EFT has occurred, the institution must investigate and resolve the claim within specified deadlines. Errors covered by this requirement include unauthorized EFTs, incorrect EFTs, and the omission from an account statement of an EFT that should have been included.
Though there are other minor requirements, these four are the most significant. Many campuses, proactively working toward compliance, are meeting some of these requirements already. Initial disclosure statements and periodic monthly statements are becoming more common with campus card programs today. Error resolution procedures are also readily attainable.
The provision of receipts presents a bit of a technical hurdle. Point of sale readers and registers are often receipt-capable but, obviously, vending and copier readers are not. Some believe that these transactions are unlikely to be included. Others believe that by making electronic “receipts” available online, the intent of the requirement can be met.
Limiting the consumer’s liability in the event of unauthorized use of the card is less talked about in campus card circles. It is, however, simply a business and policy decision that may one day have to be made in the quest to comply with Reg E.