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What Is Regulation E in Banking?

What Is Regulation E in Banking?
Rebecca Safier
Rebecca SafierUpdated July 27, 2023
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Having your debit card stolen is a scary prospect, but fortunately you may be protected from unauthorized transactions by Regulation E. Regulation E is a federal framework from the Federal Reserve that protects consumers from unauthorized electronic transactions from their bank accounts. As long as you let your bank know as soon as possible about a fraudulent transaction, your liability should be no more than $50 (or $500, depending on when you notify your bank). Read on for a closer look at Regulation E and how it can protect you in the event of fraudulent or incorrect electronic fund transfers (EFTs) to or from your bank account.

What Is Covered By Regulation E?

Regulation E applies to EFTs, such as debit card transactions and direct withdrawals from a bank account. The Consumer Financial Protection Bureau (CFPB) defines EFTs as “any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account.”Here’s a closer look at the types of electronic transactions covered by Regulation E. 

Direct Deposits and Withdrawals

Regulation E covers direct deposits and withdrawals from your bank account, such as those processed by the Automated Clearing House (ACH). If someone gets ahold of your bank account information and withdraws money directly from your account, for example, you can file a dispute and should get reimbursed for the amount by your bank. Keeping track of your statements and reviewing transactions can help you spot any issues. 

Debit Card Transactions

Regulation E also covers transactions made with your debit card. This is especially helpful if your card is lost or stolen or if someone makes withdrawals using your card from an ATM. 

Point-of-Sale Transfers

You’ll also be covered under Regulation E if someone uses your card for point-of-sale transfers. Point-of-sale transfers simply describe paying for something at a store or other type of merchant. Regulation E will cover point-of-sale transfers made with a debit card. 

Fund Transfers via Telephone

You’ll also be protected in the event of fraudulent electronic funds transfers made over the telephone, such as if someone steals your personal information and makes a payment over the phone. However, it may be a gray area if you’re defrauded by the merchant on the other end. In other words, you may not be covered by Regulation E if you were the one who authorized the transaction. Instead, you may need to take other steps to deal with the issue, such as contacting the merchant or reporting it to the Federal Trade Commission. Recommended: 7 Tips to Avoid Debit Card Scams

Person-to-Person Payments

Finally, Regulation E also comes into play if someone makes unauthorized transfers from your bank account using a person-to-person app or service, such as Zelle, Venmo, or PayPal. 

What Is Not Covered By Regulation E?

Regulation E doesn’t come into play in every electronic transaction. Here are a few transaction types that wouldn’t qualify for this framework. 

Credit Card Transactions

Since Regulation E primarily applies to consumer bank accounts, it doesn’t cover transactions made via credit card. If you discover fraudulent charges on your credit card statement, reach out to your credit card issuer. They can usually cancel your card and issue you a new one without holding you accountable for the false charges. Some credit card issuers also let you freeze your card immediately from your online account or mobile app in the event your card is lost or stolen. Recommended: Guide to Reporting Credit Card Fraud

Wire Transfers

Wire transfers also aren’t covered by Regulation E. If you were the victim of wire transfer fraud, it’s worth contacting your bank to see if it can help, especially if you can act quickly. However, once money has been wired, it’s difficult to get it back. 


Since Regulation E applies to electronic funds transfers, it doesn’t cover payments made through checks or other paper instruments. That said, you can ask your bank to cancel a check if it hasn't been cashed yet. 

Why Does Regulation E Matter for Consumers?

Regulation E is important for consumers because it limits your liability if someone steals your money. However, you’ll need to report the issue to your bank in a timely manner.If you report an unauthorized transaction within two business days, you won’t be liable for more than $50. The bank should refund the remainder of the stolen money. If you wait longer than two days, you may be liable for $500 or the amount of the unauthorized transaction, whichever is less. Consumers who notify their banks of unauthorized transactions within 60 days will not be liable for any subsequent unauthorized transactions. If you wait longer than 60 days, you may be liable for the stolen amount, but not for any additional transactions that occur after you notified your bank. If you notice your debit card is missing or there’s a suspicious withdrawal on your bank account, let your bank know right away to limit your liability and hopefully get your money back. 

Can You File a Regulation E Dispute?

If you spot an authorized ATM or debit card transaction or unfamiliar activity on your bank account, you can file a Regulation E dispute with your bank. Call your bank as soon as possible to start the process. The steps will vary by bank — some will let you file a dispute over the phone, while others may want you to file it in writing. Some information you may have to provide includes: 
  • The amount of the unauthorized transaction 
  • The date the transaction occurred and/or was posted to your account 
  • If your debit card was lost or stolen 

How Long Does a Reg E Dispute Take?

Under Regulation E, banks are required to investigate disputes quickly and make a decision within 10 business days. Once the bank has decided on your claim, it should notify you within three business days and correct any errors within one business day.However, it’s possible that the bank may need more time to complete the investigation. In this case, it has up to 45 days to make its decision. In the meantime, though, it should give you a provisional credit to cover the unauthorized funds missing from your account. 

The Takeaway

Understanding Regulation E is important for anyone who has opened a bank account. It can protect you in the event of a stolen debit card or unauthorized transactions, whether made through an ACH withdrawal, point-of-sale transfer, or another mode of electronic payment. At the same time, you can only reap the benefits of Regulation E if you notify your bank promptly. That means telling your bank of a lost or stolen debit card within two days. If you wait up to 60 days, you can also limit your liability. If your bank isn’t being helpful, it may be time to switch to a new one. Some banks have great customer service and offer high annual percentage yields on their savings accounts, so you can earn interest on your savings. Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

What is an example of Regulation E?
What does Regulation E stand for?
Who does Regulation E apply to?
Photo credit: iStock/Brothers91

About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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