New CFPB Guidance For Preauthorized Transfers

On November 23^rd, 2015 the Consumer Financial Protection Bureau ("CFPB") released Compliance Bulletin 2015-06 (the "Bulletin"), which clarifies requirements under the federal Electronic Fund Transfer Act ("EFTA") and Regulation E for obtaining consumer authorizations for preauthorized electronic fund transfers ("EFTs"). The new guidance touches upon two issues: (1) obtaining oral authorizations for EFTs over the phone; and (2) obligations to provide a copy of EFT authorizations to consumers. 

In the Bulletin, the CFPB points out that under the EFTA and Regulation E, entities sending preauthorized EFTs for consumers must obtain appropriate consumer authorizations and provide a copy of such authorizations to the consumers. The authorization can only be obtained "by a writing signed or similarly authenticated by the consumer." When practical, the CFPB also states that a copy of such authorization should be provided to the consumer before the first preauthorized EFT.