Consumer Protection for mistake in loan payment transaction

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Question:

Scenario: A bank employee inadvertently makes an error while processing a payment authorized by phone by the customer, for example, customer authorized his/her personal loan monthly payment of $100 but the employee processes a debit for $101, or $96. Could this be considered an unauthorized electronic fund based on the amount error? Can this be considered a violation of other consumer protection law/reg? UDAAP?

Answer:

by Randy Carey:

Yes, that would be an EFT covered error for an improper amount and subject to Regulation E. If this was just a one-off employee error, I do not see why UDAAP would be a consideration.

Answer:

by John Burnett:

If the loan payment was not initiated under a telephone bill-payment or similar written plan — in other words, it was initiated as a "one-off" transfer authorized by phone — it could qualify for exclusion from Regulation E coverage under § 1005.3(c)(6).

But regardless of whether Reg E covers the transaction, it would be a bank error, and the bank needs to correct it.