Banking

What Is Regulation E?

By Staff Author

Updated on November 14, 2021

Reviewed by

Michael J Boyle

Male wearing a gray sweater holding a credit or debit card and ordering something on a laptop — Photo:
monkeybusinessimages / Getty Images

Definition

Regulation E refers to a set of federal rules that protect consumers who use electronic-fund transfers (EFTs).

Key Takeaways

Regulation E was created to enforce the Electronic Fund Transfer Act.
It protects consumers when they use Electronic Fund Transfers (EFTs) such as debit card transactions, direct deposits, and ATM transfers.
Understanding Regulation E will help resolve transaction errors and protect your rights in the event of fraud.

Definition and Examples of Regulation E

Created by the Federal Reserve, Regulation E offers protections to consumers who use EFTs. EFTs are any transactions that involve computers, phones, or magnetic strips and enable a bank or other financial institution to credit or debit a customer’s account. Some of the most common EFTs include:

Direct deposits
Debit card transactions
Automated teller machine (ATM) transfers
Pre-authorized withdrawals from bank accounts
Phone-initiated transfers

Note

Regulation E does not cover traditional credit card payments, gift cards, and prepaid phone cards.

How Regulation E Works

To truly understand Regulation E, it’s important to get a good grasp on the Electronic Fund Transfer Act. Passed in 1978, the act requires financial institutions to clearly outline the amount they’ll charge consumers for EFTs.

Essentially, Regulation E offers the framework to enforce the act. Both the Electronic Fund Transfer Act and Regulation E can help you as a consumer in a number of ways. Both require that financial institutions disclose information such as their phone numbers and addresses so you can report lost or stolen cards.

This legislation will protect you from unauthorized transactions and help resolve transaction errors. If someone uses your debit or ATM card before you report it lost or stolen, how quickly you report it to your financial institution will determine your liability.

Note

Report fraudulent activity as soon as you can because the longer you wait, the more liability you’ll face.

Time Since Fraudulent Activity	Maximum Loss Allowed Under Regulation E
Before any unauthorized charges have been made	$0
Within two business days after you find out about the loss or theft	$50
More than two business days after you find out about the loss or theft, but less than 60 calendar days after you receive your statement	$500
More than 60 calendar days after you receive your statement	All the money lost or stolen from your ATM/debit card account, and potentially more

Regulation E vs. Regulation Z

Regulation Z implements the Truth in Lending Act, which has been around since 1968. It protects consumers from predatory lending practices and standardizes how lenders must share the cost of borrowing with consumers.

As mentioned, Regulation Z is relevant for credit cards, mortgages, home equity lines of credit, installment loans, and some student loans. While Regulation Z is similar to Regulation E, there are several notable differences between the two.

Regulation E	Regulation Z
Includes EFTs such as debit card transactions and direct deposits	Covers open-end credit transactions such as credit cards and lines of credit
Enforces the Electronic Fund Transfer Act	Supports the Truth in Lending Act

What It Means for Individual Savers and Investors

If you’re a saver and investor with a bank account, Regulation E is important. It explains what your rights are when you need to dispute a transaction involving an ATM, debit card, or other EFT because of an accident or fraud.

Under Reg E, you have 60 calendar days to report an unauthorized transaction to your financial institution. The time period starts with the date you receive the first statement containing the transaction.

Note

Review your statements carefully each month as soon as you receive them to look for unauthorized transactions.

In the event that you face a lost or stolen ATM or debit card, inform your financial institution immediately. If you do so within two business days, your liability will be limited to $50. However, if you wait and only report it within 60 days, you may be on the hook for up to $500 in losses.

Take the time to familiarize yourself with Regulation E so that you can correct transaction errors properly and protect yourself as a consumer.

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Sources

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

Federal Reserve. "Compliance Guide to Small Entities." Accessed May 28, 2021.
Federal Deposit Insurance Corporation. "Electronic Fund Transfer Act." Accessed May 28, 2021.
Federal Trade Commission. "Lost or Stolen Credit, ATM, and Debit Cards." Accessed May 28, 2021.