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Automobile Fraud: 7.7.3 Scope

Dealer licensing statutes apply to those in the business of selling vehicles. Whether “curbstone” dealers or those who sell vehicles occasionally or not from fixed locations must be licensed varies by state. The state may also create an explicit exception to the licensing requirement for banks or others that acquire and then resell vehicles as part of a different business (for example, making car loans).

Automobile Fraud: 7.7.4 Compliance with State Title Laws

A number of states specifically provide that a dealer’s failure to comply with state titling laws, such as by failing to provide a buyer with a certificate of title, can be grounds for revoking or suspending a license.320 State title laws are discussed in detail in Chapter 3, supra.

Consumer Banking and Payments Law: 5.1.4 Treatment of State Law and Limited EFTA Preemption

In general, this chapter does not cover state law regulating electronic transfers because only a few states have enacted comprehensive statutes relating to general electronic fund transfers.25 Some state laws govern disclosure of ATM fees.26 New Mexico law requires efforts to protect the confidentiality of information received about the consumer’s account when the consumer uses the point-of-sale (POS) terminal.27 Minnesota and New Mexico prohibit use of

Consumer Banking and Payments Law: 5.1.5.1 Overview; Key Terms

The EFTA and Regulation E generally govern any “electronic fund transfer” that authorizes a “financial institution” to debit or credit a “consumer’s account.”45 Some rights and responsibilities apply more broadly to “persons” beyond financial institutions and consumers.46

Consumer Banking and Payments Law: 5.1.5.2.1 Basic definition of “account”

To fall within EFTA’s scope, the electronic transfer (EFT) must authorize a debit or credit to an “account.”53 “Account” is defined in the statute as “a demand deposit, savings deposit, or other asset account (other than an occasional or incidental credit balance in an open end credit plan as defined in section 1602(i) of this title), as described in regulations of the Board, established primarily for personal, family, or household purposes, but such term does not include an account held by a financial institution pursuant to a bona fide trust

Consumer Banking and Payments Law: 5.1.5.2.3 Prepaid cards used for government benefits

Regulation E has special definitions of “account” and “financial institution” that cover some prepaid card accounts that are used for government benefits.77 Electronic benefits transaction (EBT) cards used by state or local government agencies to pay needs-based benefits are exempt under the statute.78 However, Regulation E covers electronic distribution of benefits by the federal government79 and of non-needs-tested state and local government benefits,

Consumer Banking and Payments Law: 5.1.5.2.5 Multi-function cards; hybrid credit/debit cards and mobile payment systems

Some debit cards are multi-function cards, combining debit, credit, or other features. Mobile payment systems may also access different accounts or sub-accounts that may be asset accounts or credit accounts.100

The CFPB’s Prepaid Accounts Rule has extensive rules, effective April 1, 2019, governing prepaid cards that have credit features, including rules that detail when either Regulation E or Regulation Z applies.101

Consumer Banking and Payments Law: 5.1.5.3.2 Exclusion for certain automatic bank transfers

Regulation E excludes from the definition of “electronic fund transfer” certain automatic transfers by an account-holding institution. The exclusion covers any transfer “under an agreement between a consumer and a financial institution which provides that the institution will initiate individual transfers without a specific request from the consumer” in one of three situations:

Consumer Banking and Payments Law: 5.1.5.3.3.1 Overview

The EFTA’s definition of an “electronic fund transfer” excludes “a transaction originated by check, draft, or similar paper instrument.”142 A consumer’s payment that originates with a check is generally covered by the checking laws analyzed in Chapter 2, supra, even if the payment is later converted electroni

Consumer Banking and Payments Law: 5.1.5.3.4 Exclusion for Fedwire and similar wire transfer systems

The EFTA statute excludes from the definition of “electronic fund transfer” “any transfer of funds, other than those processed by automated clearinghouse,177 made by a financial institution on behalf of a consumer by means of a service that transfers funds held at either Federal Reserve banks or other depository institutions and which is not designed primarily to transfer funds on behalf of a consumer.”178

Consumer Banking and Payments Law: 5.1.5.3.5 Transfers initiated by telephone call

Telephone transfers are generally within the scope of the EFTA.204 However, the EFTA and Regulation E exclude transfers that are (i) initiated by a telephone communication between a consumer and a financial institution making the transfer; and (ii) do not take place under a telephone bill-payment or other written plan in which periodic or recurring transfers are contemplated.205

Consumer Banking and Payments Law: 5.1.5.4.1 In general

Most of the EFTA’s substantive provisions (subpart A of Regulation E) apply only to “financial institutions.”213 (The requirements of subpart B apply to remittance transfer providers.214) However, the EFTA casts liability on “any person” who fails to comply with it,215 and Regulation E applies to any “person” for purpo

Consumer Banking and Payments Law: 5.1.5.4.1a Electronic fund transfer service providers that do not hold consumer accounts; implications for account-holding institution

Separate from the definition of “financial institution,” Regulation E has special “service provider” rules stating that “a person that provides an electronic fund transfer service to a consumer but that does not hold the consumer’s account” is nonetheless subject to all of the requirements of Part A of Regulation E (with some adjustments) if two conditions are met: the service provider (1) issues

Consumer Banking and Payments Law: 5.1.5.4.2 Are digital wallet providers “financial institutions”?

The growth of digital wallets and mobile payments has presented complicated issues about whether the entities involved with these systems are “financial institutions” or are otherwise subject to the EFTA.248 This is especially important for unauthorized charges and error resolution, in particular the following questions: To whom should the consumer give notice? Which entity is liable? And who has responsibility for investigating and correcting an error?