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CFPB Announces Settlement for Violations of the EFTA and CFPA

Posted on January 7, 2019 at 8:55 PM
The Consumer Financial Protection Bureau (CFPB) announced a settlement with a federal savings bank for alleged violations of the Electronic Fund Transfer Act (EFTA) and Regulation E, as well as alleged violations of the Consumer Financial Protection Act of 2010 (CFPA). The settlement encompasses an order that the bank provide approximately $12 million in restitution, and pay a $3.5 million civil money penalty. The CFPB alleged: 1) The savings bank violated the EFTA and its implementing Regulation E by (i) failing to correctly honor customers??? stop-payment requests on preauthorized electronic fund transfers (EFTs); and (ii) failing to conduct reasonable error resolution investigations. 2) The savings bank violated the CFPA by reopening deposit accounts that customers had closed without seeking prior authorization or providing adequate notice. Electronic Fund Transfer Act and Regulation E The EFTA and its implementing Regulation E require that financial institutions holding consumers??? accounts allow consumers to stop future payment on preauthorized EFTs. 3) The savings bank failed to enter some stop-payment orders after account holders asked the bank to stop payment on preauthorized EFTs, including by refusing to enter stop payments or by requiring consumers to contact the merchants initiating the EFTs prior to implementing stop payment orders. 4) The savings bank did not have a mechanism to systematically stop payment on preauthorized EFTs processed on debit cards. 5) The savings bank violated the EFTA and Regulation E when it failed to stop payment for preauthorized EFTs after notification from the consumer. Read More: Press Release https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-settles-usaa-federal-savings-bank/ Settlement https://files.consumerfinance.gov/f/documents/bcfp_usaa-federal-savings-bank_consent-order.pdf

Categories: Operations