On November 23, 2015, the Consumer Financial Protection Bureau (CFPB) issued Compliance Bulletin 2015-06 (click here) providing guidance on the requirements of the Electronic Fund Transfer Act (EFTA) and is implementing Regulation E (12 CFR §1005.1, et seq.) when obtaining consumer authorization for preauthorized electronic fund transfers (ETFs) from a consumer’s account. One of the primary objectives of the EFTA and Regulation E is the protection of individual consumers engaging in EFTs. The CFPB is authorized, subject to certain exceptions, to enforce the EFTA and Regulation E against any person subject to the EFTA and Regulation E. This impacts mortgage lending because many lenders and their servicers solicit and obtain authorization from consumers for payment of mortgage loans by preauthorized EFTs. A brief overview of Bulletin 2015-06 is provided below: • EFTs as defined by the EFTA and Regulation E include any transfer of funds initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account. (15 U.S.C. §1693(a)(7); 12 CFR §1005.3(b)) • Preauthorized EFTs are electronic fund transfers authorized in advance to recur at substantially regular intervals. (12 CFR §1005.2(k))
