CFPB updates Regulation E FAQs to address P2P payments and providers

Happy Friday, compliance friends!  I’m coming at you today from my new office at the new house!  It will take some work to get settled and make it cozy, but for now, I’m so excited to have my own space in our very own home.

Today, we’re talking about the CFPB’s Regulation E FAQs.  We previously blogged about the Regulation E FAQs in June of 2021 when the bureau issued this helpful compliance aid; and on December 13, 2021, they updated it.  The update encompasses additional questions and answers regarding person-to-person/peer-to-peer (P2P) payments and payment providers in relation to Regulation E.  It is important to note that, while the FAQs help provide some clarity for financial institutions, they do not provide any new obligations or requirements under Regulation E.  The FAQs simply seek to clarify existing rules and provide insight into the CFPB’s understanding of the regulation.

Some of the new FAQs appear to stem from the bureau’s Fall 2021 Supervisory Highlights, where the CFPB identified issues with some financial institutions’ error resolution processes for misdirected payments.  These misdirected payments were a result of various “token errors” during the P2P payment process, where the consumer entered the correct identifying token information for the recipient, but there was inaccurate or outdated information in the digital payment network directory.  The bureau found that “institutions violated Regulation E by failing to determine that token errors constituted “incorrect EFTs” under the regulation.

 

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