WASHINGTON -- The Federal Reserve Board recently adopted a final amendment to Regulation E regarding consumer authorization requirements for electronic fee collection for items returned as unpaid. In related news, the board has also asked for comment on a proposal that would eliminate a requirement for receipts for small dollar transactions.

The final rule clarifies that the requirement to obtain the consumer's authorization applies to a person seeking to electronically collect the returned item fee. Additionally, the modifications explain that if the amount of the fee could vary based on the transaction amount or other factors, an explanation of the calculation may be provided.

The rule explained that for point of sale transactions two separate notices are necessary: one prominently posted and another for the consumer to retain; the potential for varied fee amounts must appear on the posted notice.

The effective date of the final rule is Jan. 1, 2007, but the provisions on notice content will have a delayed compliance date of Jan. 1, 2008.

Separately, the Fed has set a 60-day comment period on a proposed rule to exclude transactions under $15 from Reg E's consumer receipt requirement for transactions from an electronic terminal. "The proposed exception is intended to facilitate the ability of consumers to use debit cards in retail environments where the receipt requirement may not be practical or cost-effective," according to the Fed. The proposal states, "The Board also believes that the risks to consumers of not receiving a receipt for their transactions [and the benefit of receiving a receipt] would be minimal given the small value of the transaction. In particular, the Board notes that consumers would continue to receive a listing of each transaction on their periodic statements, regardless of the transaction amount, and would have the right to assert errors that may arise from any such transaction, provided such notice was provided within the required time frames."

Instant Insights /

Fed Approves Reg E Revisions, Requests Public Comment on Proposal

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