The Consumer Financial Protection Bureau (“CFPB”) issued a compliance bulletin (“Bulletin”) reminding entities of their obligation to obtain consumer authorization prior to automatically debiting a consumer’s account for recurring electronic fund transfers. The Bulletin states that the CFPB has observed that some entities may not fully comply with the authorization requirements imposed by the Electronic Fund Transfer Act (“EFTA”) and Regulation E, or that some entities may not be certain of these obligations or the intersection of these obligations and the Electronic Signatures in Global and National Commerce Act (“E-SIGN Act”). Nonetheless, the Bulletin emphasizes that, if the CFPB determines that an entity has engaged in acts or practices that violate the EFTA and Regulation E, or any other Federal consumer financial law, the agency will take appropriate supervisory or enforcement action to address the violations and seek all appropriate corrective measures, including remediation of harm to consumers and assessment of civil money penalties.

AUTHORIZATION REQUIREMENTS -

The Bulletin reminds companies of their obligations under the EFTA and its implementing Regulation E to obtain consumer authorization prior to initiation of recurring automatic debits from a consumer's account and to provide the consumer with a copy of the terms of the authorization.