Reg E '12 SS final_mtd

Federal Trade Commission
Supporting Statement for Information Collection
Provisions of Regulation E
(Electronic Fund Transfer Act)
12 C.F.R. 205; 12 C.F.R. 1005
(OMB Control Number: 3084-0085)
1.

Necessity for Collecting the Information

The Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. 1693 et seq., requires accurate
disclosure of the costs, terms and rights relating to electronic fund transfer (“EFT”) services to
consumers. Entities offering EFT services must provide consumers with full and accurate
information regarding consumers’ rights and responsibilities in connection with EFT services.
These disclosures are intended to protect the rights of consumers using EFT services, such as
automated teller machine (“ATM”) transfers, telephone bill-payment services, point-of-sale
transfers at retail establishments, electronic check conversion, payroll cards, preauthorized
transfers from or to a consumer's account, overdraft protection, gift cards, and remittance
transfers. The EFTA also establishes error resolution procedures and limits consumer liability
for unauthorized transfers in connection with EFT services.
Subject to the discussion below, the Federal Trade Commission (“FTC” or
“Commission”) enforces the EFTA as to all entities providing EFT services except those that are
subject to the regulatory authority of another federal agency (such as federally chartered or
insured depository institutions). The EFTA also contains a private right of action with a oneyear statute of limitations for aggrieved consumers.
The Board of Governors of the Federal Reserve System (“FRB”) promulgated the
original Regulation E (12 C.F.R. Part 205) to implement the EFTA, as required by the statute.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”),
Pub. L. 111-203, 124 Stat. 1376 (2010), however, almost all rulemaking authority for the EFTA
transferred from the FRB to the Consumer Financial Protection Bureau (“CFPB”) on July 21,
2011 (“transfer date”). To implement this transferred authority, the CFPB has published for
public comment interim final rules for new regulations in 12 C.F.R. Part 1005 (Regulation E),
which it amended thereafter by issuing rules for remittance transfers for those entities under its
rulemaking jurisdiction.1 Although the Dodd-Frank Act transferred most rulemaking authority
under EFTA to the CFPB, the FRB retained rulemaking authority for certain motor vehicle

1

12 C.F.R. 1005 (Reg. E) (76 Fed. Reg. 81,020, Dec. 27, 2011) (amended, 77 Fed. Reg. 6194, Fed. 7, 2012).
Because both the FRB and the CFPB have certain rulemaking authority under Regulation E – as discussed further
below – citations to both aspects of the regulation are included in this document. Hence, 12 C.F.R. 205 refers to the
FRB-issued Regulation E; 12 C.F.R. 1005 refers to the CFPB-issued Regulation E. In most instances, these two
aspects of Regulation E are virtually identical, other than occasional minor technical differences, and citations.
However, the CFPB-issued Regulation E includes remittance transfer requirements, added by amendments in
February 2012; the FRB-issued Regulation E does not.

dealers2 and also for certain interchange-related requirements under EFTA.3
As a result of the Dodd-Frank Act, the FTC and the CFPB now share the authority to
enforce Regulation E for entities for which the FTC had enforcement authority before the Act,
except for certain motor vehicle dealers. The FTC generally has sole authority to enforce
Regulation E regarding motor vehicle dealers predominantly engaged in the sale and servicing of
motor vehicles, the leasing and servicing of motor vehicles, or both.4
Recordkeeping
Section 205.13(c)/1005.13(c) of Regulation E requires entities subject to the EFTA to
retain for two years evidence of compliance with the regulation. Regulation E also provides that
any entity subject to the EFTA that is notified by the FTC (or other administrative agency) that it
is being investigated or is the subject of an enforcement proceeding, or that has been notified of
a private or criminal action being filed, shall retain evidence of compliance until final disposition
of the matter, or such earlier time as allowed by a court or agency order. The recordkeeping
requirement insures that records that might contain evidence of violations of the EFTA remain
available to the FTC and other agencies, as well as to private litigants.
Disclosure
The vast majority of Regulation E's disclosure requirements are statutorily mandated by
the EFTA. See, e.g., consumer liability for unauthorized use, 12 C.F.R. 205.6, 12 C.F.R. 1005.6,
15 U.S.C. 1693g; initial disclosures, 12 C.F.R. 205.7, 12 C.F.R. 1005.7, 15 U.S.C. 1693c(a);
change in terms, 12 C.F.R. 205.8, 12 C.F.R. 1005.8, 15 U.S.C. 1693c(b); receipts at electronic
terminals, 12 C.F.R. 205.9(a), 12 C.F.R. 1005.9(a), 15 U.S.C. 1693d(a); periodic statements, 12
C.F.R. 205.9(b), 12 C.F.R. 1005.9(b), 15 U.S.C. 1693c; preauthorized transfers, 12 C.F.R.
205.10, 12 C.F.R. 1005.10, 15 U.S.C. 1693e; error resolution, 12 C.F.R. 205.11, 12 C.F.R.
1005.11, 15 U.S.C. 1693f; gift cards, 12 C.F.R. 205.20, 12 C.F.R. 1005.20, 15 U.S.C. 1693l-1;
remittance transfers, 12 C.F.R. 1005.30-36, 15 U.S.C. 1693o-1.
The FRB and CFPB have issued model forms and clauses that can be used to comply
with the written disclosure requirements of the EFTA and Regulation E. See Appendix A to 12
C.F.R. Part 205; Appendix A to 12 C.F.R. Part 1005. Correct use of these model forms and
clauses protects entities from liability for the respective requirements under the EFTA and
Regulation E. Id.

2

Generally, these are dealers “predominantly engaged in the sale and servicing of motor vehicles, the leasing and
servicing of motor vehicles, or both.” See Dodd-Frank Act, § 1029(a), -(c).

3

See Dodd-Frank Act, § 1075 (these requirements are implemented through FRB Regulation II, 12 C.F.R. Part 235,
rather than EFTA’s implementing Regulation E).

4

See Dodd-Frank Act, § 1029(a), -(c).

2

2.

Use of the Information

The FTC, other agencies, and private litigants use the records to ascertain whether
accurate and complete disclosures of EFT services and other required actions (for example, error
resolution and limitation of consumer liability for unauthorized transfers) have been provided.
This information provides the primary evidence of law violations in EFTA enforcement actions
brought by the FTC. Without the Regulation E recordkeeping requirement, the FTC's ability to
enforce the EFTA would be significantly impaired.
Consumers rely on the disclosures required by the EFTA and Regulation E to facilitate
informed EFT decisionmaking. Without this information, consumers would be severely
hindered in their ability to assess the true costs and terms of the transactions offered. Also,
without the special error resolution and limitation of consumer liability provisions, consumers
would be unable to detect and correct errors in their EFT transactions and fraudulent transfers.
These disclosures and provisions are necessary for the FTC and private litigants to enforce the
EFTA and Regulation E.
3.

Consideration of the Use of Improved Information Technology

The FRB and CFPB have issued rules to establish uniform standards for using electronic
communication to deliver disclosures required under Regulation E, within the context of the
Electronic Signatures in Global and National Commerce Act (“ESIGN”), 15 U.S.C. 7001 et seq.
72 Fed. Reg. 63,452 (Nov. 9, 2007); 76 Fed. Reg. 81,020 (Dec. 27, 2011); 77 Fed. Reg. 6194
(Feb. 7, 2012). These rules enable businesses to utilize electronic disclosures and compliance,
consistent with the requirements of ESIGN. Use of such electronic communications is also
consistent with the Government Paperwork Elimination Act (“GPEA”), codified at 44 U.S.C.
3504, note. ESIGN and GPEA serve to reduce businesses’ compliance burden related to federal
requirements, including Regulation E, by enabling businesses to utilize more efficient electronic
media for disclosures and compliance.
Regulation E also permits entities to retain records on microfilm, microfiche, magnetic
tape or other methods capable of accurately retaining and reproducing information. Business
entities need only retain evidence demonstrating that their procedures reasonably ensure the
consumer’s receipt of required disclosures and documentation; the entity need not retain records
of the actual disclosures and documentation given to each consumer. Section 205.13(b)-1 of the
FRB Official Staff Commentary; Section 1005.13(b)-1 of the CFPB Official Staff Commentary.
4.

Efforts to Identify Duplication/Availability of Similar Information

The recordkeeping requirement of Regulation E preserves the information an affected
entity uses in making disclosures and other required actions regarding EFT services. The entity
is the only source of this information. No other federal law mandates its retention. State laws do
not duplicate these requirements, although some states may have other rules applicable to EFT
services.
3

Similarly, covered entities are the only source of the information contained in the
disclosures required by the EFTA and Regulation E. No other federal law mandates these
disclosures. State laws do not duplicate these requirements, although some states may have
other rules applicable to EFT services.
5.

Efforts to Minimize Burdens on Small Businesses

The Regulation E recordkeeping and disclosure requirements are imposed on financial
institutions and entities offering EFT services. The recordkeeping requirement is mandated by
Regulation E. The disclosure requirements are mandated by the EFTA and/or Regulation E. As
previously noted, the FTC’s role in this area is limited to enforcement; the EFTA vested
rulemaking authority in the FRB and CFPB.
As discussed above, entities need not retain every disclosure form provided to consumers
if they retain evidence demonstrating procedures that reasonably ensure the consumer’s receipt
of required disclosures and records. Further, financial institutions need not make a receipt
available at the time a consumer initiates an EFT of $15 or less at an electronic terminal. EFTA
also exempts preauthorized transfers to or from an account if the assets of the account-holding
financial institutions have $100 million or less in assets.
Additionally, as noted above, Regulation E provides model forms and clauses that may
be used in compliance with its requirements. Correct use of these forms and clauses insulates a
financial entity from liability for the respective requirements.
6.

Consequences of Conducting Collection Less Frequently

The current record retention period of two years supports the one-year statute of
limitations for private actions, and the FTC’s (and other administrative agencies') need for
sufficient time to bring enforcement actions regarding EFT transactions. If the retention period
were shortened, consumers who sue under the EFTA, and the administrative agencies that
enforce the EFTA, might find that the records needed to prove EFTA violations no longer exist
As noted, the current disclosure requirements are needed to foster informed EFT
decisionmaking and to identify errors and unauthorized transfers. Without these requirements,
consumers would not have access to this critical information, their right to sue under the EFTA
would be undermined, and the FTC and other administrative agencies charged with enforcing the
EFTA could not fulfill their mandates.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

Regulation E’s recordkeeping and disclosure requirements are consistent with the
guidelines contained in 5 C.F.R. 1320.5(d)(2).
8.

Consultation Outside the Agency
4

The recordkeeping and disclosures requirements of Regulation E were issued by the FRB
and CFPB. Before the regulation was initially issued and prior to each amendment, the
amendments were published for public comment in the Federal Register.
More recently, the FTC sought public comment in connection with its latest PRA
clearance request for these regulations, in accordance with 5 C.F.R. 1320.8(d). See 77 Fed. Reg.
6114 (Feb. 7, 2012). No comments on Regulation E were received. Consistent with 5 C.F.R.
1320.12(c), the FTC is again seeking public comment contemporaneously with this submission.
9.

Payments or Gifts to Respondents
Not applicable.

10. & 11.

Assurances of Confidentiality/Matters of a Sensitive Nature.

The required recordkeeping and disclosures also contain private financial information
about consumers who use EFT services, which is protected by the Right to Financial Privacy
Act, 12 U.S.C. 3401 et seq. Such records may also constitute confidential customer lists. Any
of these records provided to the FTC would be covered by the protections of Sections 6(f) and 21
of the FTC Act, 15 U.S.C. 46(f) and 57b-2, by Section 4.10 of the Commission’s Rules of
Practice, 16 C.F.R. 4.10, and by the applicable exemptions under the Freedom of Information
Act, 5 U.S.C. 552(b).
12.

Estimated Hours Burden: 4,410,917 ( 391,120 recordkeeping hours: 375,881 + 15,239
carve-out for motor vehicles + 4,019,797 disclosure hours: 4,002,868 + 16,929 carve-out
for motor vehicles)

Because of their shared enforcement jurisdiction for Regulation E, the two agencies have
divided the FTC’s previously-cleared PRA burden between them,5 except that the FTC retained
all of the part of that burden associated with certain motor vehicle dealers (for brevity, referred
to in the burden summaries below as a “carve-out”).6 The division of PRA burden hours not
attributable to certain motor vehicle dealers is reflected in the CFPB’s recent PRA clearance
requests to OMB.7 The FTC’s burden estimates below reflect both the shared enforcement
jurisdiction and the FTC’s separate accounting under the PRA for its exclusive jurisdiction to
enforce Regulation E for such motor vehicle dealers.
5

The CFPB also factored into its burden estimates respondents over which it has jurisdiction but the FTC does not.

6

These are dealers specified by the Dodd-Frank Act under § 1029 (a), but as limited by subsection (b). Subsection
(b) does not preclude CFPB regulatory oversight regarding, among others, businesses that extend retail credit or
retail leases for motor vehicles in which the credit or lease offered is provided directly from those businesses, rather
than unaffiliated third parties, to consumers. It is not practicable, however, for PRA purposes, to estimate the
portion of dealers that engage in one form of financing versus another (and that would or would not be subject to
CFPB oversight). Thus, FTC staff’s “carve-out” for this PRA burden analysis reflects a general estimated volume of
motor vehicle dealers. This attribution does not change actual enforcement authority.

7

OMB Control Number 3170-0014 (Regulation E).

5

Recordkeeping
Staff estimates that Regulation E’s recordkeeping requirements affect 391,120 firms
offering EFT services to consumers and subject to the Commission’s jurisdiction, at an average
annual burden of one hour per firm, for a total of 391,120 hours.
Disclosure
Regulation E applies to financial institutions, retailers, gift card issuers and others that
provide gift cards, service providers, various federal and state agencies offering EFTs,
remittance transfer providers, etc. Below is staff’s best estimate of burden applicable to this very
broad spectrum of covered entities.
Regulation E: Disclosures – Burden Hours

Disclosures

Initial terms
Change in terms
Periodic statements
Error resolution
Transaction receipts
Preauthorized transfers1
Service provider notices
Govt. benefit notices
ATM notices2
Electronic check conversion3
Payroll cards4
Overdraft services5
Gift cards6
Remittance transfers7
Disclosures
Error resolution
Agent compliance

--------------- Setup/Monitoring --------------Average
Total Setup/
Burden per
Monitoring
Respondents Respondent
Burden
(hours)
(hours)

---------- Transaction-related--------Average
Total
Number of Burden per Transaction
Transactions Transaction
Burden
(minutes)
(hours)

Total
Burden
(hours)

50,000
12,500
50,000
50,000
50,000
257,620
50,000
5,000
250
57,620
125
50,000
50,000

.5
.5
.5
.5
.5
.5
.25
.5
.25
.5
.5
.5
.5

25,000
6,250
25,000
25,000
25,000
128,810
12,500
2,500
63
28,810
63
25,000
25,000

500,000
16,500,000
600,000,000
500,000
2,500,000,000
6,440,500
500,000
50,000,000
50,000,000
1,152,400
500,000
2,500,000
2,500,000,000

.02
.02
.02
5
.02
.25
.25
.25
.25
.02
3
.02
.02

167
5,500
200,000
41,667
833,333
26,835
2,083
208,333
208,333
384
25,000
833
833,333

25,167
11,750
225,000
66,667
858,333
155,645
14,583
210,833
208,396
29,194
25,063
25,833
858,333

35,000
35,000
35,000

1
1
1

35,000
35,000
35,000

18,000,000
36,000,000
18,000,000

1
1
1

300,000
600,000
300,000

335,000
635,000
335,000

Total

4,019,797

1

Estimated preauthorized transfers have increased from the FTC’s previously cleared estimate.
Estimated ATM transactions have increased from the FTC’s previously cleared estimate.
3
Estimated electronic check conversion has decreased from the FTC’s previously cleared estimate.
4
Payroll card entities and transactions have increased greatly over the years, in large part due to the evolving economy as well as companies
seeking ways to cut costs and reduce the amount of paper used in daily operations.
5
Regulation E now covers overdraft services.
6
Regulation E now, in part, covers gift cards.
7
Regulation E now covers remittance transfers.
2

6

Associated labor cost: $135,042,449 ($6,805,488 recordkeeping costs: $6,540,328 +
$265,160 carve-out for motor vehicles + $128,236,961 disclosure costs: $127,696,924 +
$540,037 carve-out for motor vehicles)
Staff calculated labor costs by applying appropriate hourly cost figures to the burden
hours described above. The hourly rates used below ($49 for managerial time, $30 for skilled
technical time, and $16 for clerical time) are averages.
Recordkeeping
For the 391,120 recordkeeping hours, staff estimates that 10 percent of the burden hours
require skilled technical time and 90 percent require clerical time. As shown below, the total
recordkeeping cost is $6,805,488.
Disclosure
For each notice or information item listed, staff estimates that 10 percent of the burden
hours require managerial time and 90 percent require skilled technical time. As shown below,
the total disclosure cost is $128,236,961.
Regulation E: Recordkeeping and Disclosures – Cost
Required Task

------Managerial-----Time
Cost
(hours)
($49/hr.)

Recordkeeping
Disclosures:
Initial terms
Change in terms
Periodic statements
Error resolution
Transaction receipts
Preauthorized transfers
Service provider notices
Govt. benefit notices
ATM notices
Electronic check conversion
Payroll cards
Overdraft services
Gift cards
Remittance transfers
Disclosures
Error resolution
Agent compliance

0

$0

-----Skilled Technical----Time
Cost
(hours)
($30/hr.)
39,112

--------Clerical-------Time
Cost
(hours)
($16/hr.)

Total
Cost
($)

$1,173,360

352,008

$5,632,128

$6,805,488

2,517
1,175
22,500
6,667
85,833
15,565
1,458
21,083
20,840
2,919
2,506
2,583
85,833

$123,333
$57,575
$1,102,500
$326,883
$4,205,817
$762,685
$71,442
$1,033,067
$1,021,160
$143,031
$122,794
$126,567
$4,205,817

22,650
$679,500
10,750
$322,500
202,500 $6,075,000
60,000 $1,800,000
772,500 $23,175,000
140,080 $4,202,400
13,125
$393,750
189,750 $5,692,500
187,556
0 $5,626,680
26,275
$788,250
22,557
$676,710
23,250
$697,500
772,500 $23,175,000

0
0
0
0
0
0
0
0
0
0
0
0
0

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

$802,833
$380,075
$7,177,500
$2,126,883
$27,380,817
$4,965,085
$465,192
$6,725,567
$6,647,840
$931,281
$799,504
$824,067
$27,380,817

33,500
63,500
33,500

$1,641,500
$3,111,500
$1,641,500

301,500 $9,045,000
571,500 $17,145,000
301,500 $9,045,000

0
0
0

$0
$0
$0

$10,686,500
$20,256,500
$10,686,500

Total Disclosures

$128,236,961

Total Recordkeeping and Disclosures

$135,042,449

7

13.

Estimated Capital and Other Non-Labor Costs

The applicable requirements impose minimal start-up costs, as financial entities generally
have or obtain necessary equipment for other business purposes. For the same reason, staff
believes that the cost of printing and copying needed to comply with Regulation E is minimal.
Staff anticipates that the requirements noted above necessitate ongoing, regular training so that
financial entities stay current and have a clear understanding of federal mandates. This training,
however, would be a small portion of and subsumed within the ordinary training that employees
receive apart from that associated with collecting information to comply with Regulation E.
14.

Estimated Cost to the Federal Government

The FRB and CFPB issued the recordkeeping requirement of Regulation E, so there is no
cost to the FTC for that purpose. Enforcement of the recordkeeping requirement of Regulation E
is incidental to overall enforcement of the EFTA. In the course of compliance investigations,
staff routinely requests records of EFT disclosures and other required actions. If the records
requested are not available, it indicates that records are not being retained as required. Staff
estimates that the current fiscal year cost to the FTC Bureau of Consumer Protection of
implementing and administering this requirement will approximate $78,909, which is a
representative years’ cost of enforcing Regulation E’s requirement during the three-year
clearance period sought. This estimate is based on the assumption that one-half of one attorney
work year will be expended. Clerical and other support services are included in this estimate.
The FRB and CFPB issued the disclosure requirements of Regulation E, so there is no
cost to the FTC for that purpose. Regarding the enforcement of the disclosure requirements for
Regulation E, staff estimates that the cost to the FTC Bureau of Consumer Protection will
approximate $631,266. This estimate is based on the assumption that three attorney work years
and one other professional work years will be expended to enforce various aspects of the
disclosure requirements. Clerical and other support services are also included in this estimate.
15.

Program Changes or Adjustments

Staff has adjusted upward the FTC’s previous annual burden estimate by 679,574 hours
(from 3,731,343 to 4,410,917). Notwithstanding the burden splitting noted above regarding
shared enforcement authority with the CFPB, staff has increased its prior estimate because of an
increase in entities offering EFT services to consumers, and new requirements for gift cards,
overdraft services, and remittance transfers. Moreover, estimated preauthorized transfers have
greatly increased from the FTC's 2009 cleared estimate.
16.

Publishing Results of the Collection of Information
Not applicable.

8

17.

Display of Expiration Date for OMB Approval
Not applicable.

18.

Exceptions to the Certification for PRA Submissions
Not applicable.

9