Is this an EFT?

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Question:

We have an item that posted to a customer's account that came through via what appears to be a paper item, although it posts as an "electronic image". However, it seems pretty obvious that the company took the customer's account information, probably via phone, and created a check for a payment of a membership. This was recurring for about 4 months. Is this an EFT, and thus, subject to Reg E?

Answer:

Option 1: The company created a paper document (that probably fits the Reg CC definition of a remotely created check) and that document was truncated to an image. That item is not subject to Regulation E. However, it is subject to a warranty claim as a remotely created check. See Regulation CC section 229.34(d) for more information. Also, if the item was presented via the Fed, check out the Fed's adjustment entry guidelines for your options on returning the item.

Option 2: The company created a paper document as in Option 1, but that item was scanned and converted into a check conversion document. That would be in violation of NACHA rules, since the check wasn't signed by the Receiver. But, it would be subject to Reg. E. I don't think this scenario is likely, because your system is reporting that the item posted as an image, not as an ACH entry.

Option 3: The company actually created an ACH debit entry. This appears unlikely, because of the "electronic image" comment above.

First published on BankersOnline.com 6/02/08