Answer:
If the pre-authorized transaction happens in the underlying checking account and it causes the OD line to advance, the error resolution would be handled under the normal Reg E error resolution procedures. If the error is confirmed, the bank is required to make the customer whole and any fees or interest assessed on the OD line would also have to be refunded.
Section 205.12 Relation to other laws.
(a) Relation to Truth in Lending. (1) The Electronic Fund Transfer Act and this part govern:
(i) The addition to an accepted credit card, as defined in Regulation Z (12 CFR 226.12(a)(2), footnote 21), of the capability to initiate electronic fund transfers;
(ii) The issuance of an access device that permits credit extensions (under a preexisting agreement between a consumer and a financial institution) only when the consumer's account is overdrawn or to maintain a specified minimum balance in the consumer's account; and
(iii) A consumer's liability for an unauthorized electronic fund transfer and the investigation of errors involving an extension of credit that occurs under an agreement between the consumer and a financial institution to extend credit when the consumer's account is overdrawn or to maintain a specified minimum balance in the consumer's account.
First published on BankersOnline.com 6/23/08
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