Compliance Blog

Posted by Anthony Demangone

NAFCU's Regulatory Compliance Seminar kicks off today in Grapevine, Texas.  We have a packed agenda and a packed house, as this year's seminar has sold out.  With seminar in full swing, NAFCU's staff back in the home office will be swamped.  Please keep that in mind.  Our email and telephone response times may be a longer than usual, and we appreciate your understanding.  

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As you may be aware, Regulation E creates a system that generally protects consumers from losses due to unauthorized electronic funds transfers - as long as the member notifies you when they become aware of the issue.  Regarding the loss or theft of an access device, you may think that the receipt of a periodic statement should indicate the time when the member has knowledge of the loss or theft of such a card.  The reasoning would go like this: if the member reads their statement and compares it against their transactions, they should be able to learn about the loss or theft of their debit card.  Not so fast my friend.  

Here's what the Fed says in the Official Staff Interpretation to Regulation E:

The fact that a consumer has received a periodic statement that reflects unauthorized transfers may be a factor in determining whether the consumer had knowledge of the loss or theft, but cannot be deemed to represent conclusive evidence that the consumer had such knowledge.  (Emphasis added.)

So, you can use the fact that the member received a statement as a factor, but it is not, by itself, conclusive proof of knowledge.