Reg E - Notice In lieu of Periodic Statements

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Question:

For an account which electronic fund transfers can be made, may the bank send a notice each time with the date, amount, source and account number and not the other information that would be on the monthly statement as opening and closing balance in place of a periodic statement for each monthly cycle in which an electronic fund transfer has occurred? In particular, on a savings account that is normally sent a quarterly statement when no EFT activity has occurred, will the notice mentioned above suffice for a direct deposit to the account in place of the monthly statement?

Answer:

If the savings account already receives a quarterly statement that conforms to Reg E and the only EFTs to the account are preauthorized transfers to the account (that is, transfers that are recurring and are covered by a single authorization such that the consumer doesn't give separate authorizations for each transfer), the monthly statement requirement is not triggered. See Reg E, section 205.9(c)(1)(ii). No transaction-triggered notice is required.

The best-recognized examples of preauthorized transfers to an account are direct deposits of payroll and social security payments. However, if any EFT debit or an EFT credit that is not preauthorized (for example, an IRS tax refund, which is individually authorized) should hit the account, the monthly statement requirement is triggered and it cannot be satisfied by a notice of the transaction, no matter how detailed it is.

First published on BankersOnline.com 4/16/07