Reg E, Stored Value Cards, and Periodic Statements

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Question:

I am not sure if this is the proper category, but I am trying to find some information regarding stored value cards and Reg. E. In particular, how does the periodic statement requirement apply in this instance? Our holding company has elected to provide electronic statements if a customer purchased a card through the Internet; however, if the customer purchases a card at POS, then how does the periodic statement requirement apply? Can "periodic" mean monthly?

Answer:

In 1996, the Federal Reserve Board proposed amendments to Reg E and the Reg E commentary to clarify how, and under what circumstances, Reg E would apply to stored value cards. That proposal was never finalized. Instead, the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) was passed and it required the FRB to study and report to Congress on the impact of application of the EFTA to stored value cards, which the FRB did in 1997.

In most cases, a stored value card does not access a consumer's account and thus would not even arguably come within the purview of Regulation E.

At any rate, in order to allow the technology to evolve without overly burdensome regulation, the FRB has taken a pretty hands-off attitude for now.

It's a good idea to look at what protections (including, where practical, statements) you may want to voluntarily extend to the stored value cardholders. Also, be mindful of regulatory guidance regarding guarding against the risks posed by stored value card activity.

First published on BankersOnline.com 3/11/02