3.1 Extended Error Rules and Remittance Transfers

Extended Timelines for New Accounts, POS Debits, and Foreign Transfers

Under 12 CFR § 1005.11(c)(3), the standard 10-business-day and 45-calendar-day timelines are substantially expanded under specific operational circumstances:

• Provisional Credit Window Extended to 20 Business Days: If the alleged error occurred within 30 calendar days after the first deposit to a newly opened account (new account exception), the bank has 20 business days (instead of 10) to complete its investigation or grant provisional credit.
• Investigation Window Extended to 90 Calendar Days: The institution may extend the investigation period up to 90 calendar days (instead of 45) if the alleged error involves:
  • A transfer occurring within 30 calendar days after the first deposit to the account;
  • A transaction resulting from a point-of-sale (POS) debit card purchase; or
  • An electronic fund transfer initiated outside the United States (foreign transaction).

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Post-Investigation Procedures & Consumer Rights (12 CFR § 1005.11(d))

Upon completing the investigation, the depository institution must execute specific post-investigatory obligations based on its findings.

Correction of Error

If the institution determines that an error occurred (whether the alleged error or a different error):

• It must correct the error within 1 business day of determination, including crediting any lost interest and refunding any overdraft, NSF, or third-party fees caused by the error.
• It must deliver written notice of the correction to the consumer within 3 business days of completing the investigation (or on the periodic statement if mailed within that timeframe).
• If provisional credit was granted, it makes the provisional credit permanent.

Finding of No Error or Different Error

If the institution determines that no error occurred, or that an error occurred in a manner or amount different from that reported by the consumer:

• Written Explanation: The bank must deliver a written explanation of its findings within 3 business days after completing the investigation.
• Supporting Documentation: The explanation must inform the consumer of their legal right to request the documents and records upon which the institution relied in reaching its conclusion.
• Notice of Revocation / Debiting: If provisional credit was issued, the bank must provide written notice disclosing the exact date and dollar amount that will be debited from the account.
• The Mandatory 5-Day Overdraft Protection Rule: To protect consumers from sudden negative balances, the institution must honor checks, drafts, and preauthorized debits payable to third parties without assessing overdraft or NSF fees for 5 business days following the notification of debiting, up to the full amount of the debited provisional credit.

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Remittance Transfer Rules (12 CFR Part 1005, Subpart B)

Added to Regulation E under Section 1073 of the Dodd-Frank Act, Subpart B (§ 1005.30 et seq.) establishes dedicated consumer protection standards for international electronic money transfers.

Covered Scope and the 500-Transfer Safe Harbor

• Definition: A remittance transfer is an electronic transfer of funds requested by a consumer sender in the United States to a designated recipient located in a foreign country, conducted by a remittance transfer provider.
• Normal Course of Business Safe Harbor: Under 12 CFR § 1005.30(f)(2), an institution is deemed not to provide remittance transfers in the normal course of business if it executed 500 or fewer remittance transfers in the previous calendar year and executes 500 or fewer in the current calendar year. Exceeding 500 ends the safe harbor, but normal-course-of-business status still requires evaluating the facts. Once the institution is providing transfers in the normal course, it has a reasonable transition period no longer than six months to comply.

Mandatory Disclosure Framework

Remittance transfer providers must furnish clear, standardized disclosures:

1. Pre-Payment Disclosure (§ 1005.31(b)(1)): Provided before the consumer pays for the transfer. It must disclose the transfer amount, all fees and taxes imposed by the provider, the exact exchange rate, the transfer amount in the foreign currency, covered third-party fees, and the total net amount to be received by the foreign recipient.
2. Receipt / Combined Disclosure (§ 1005.31(b)(2)): Provided when payment is completed. It incorporates all pre-payment disclosures plus: the promised date of availability, the recipient's name, error resolution rights, cancellation rights, and regulatory contact information (including CFPB and state regulator phone numbers).

30-Minute Cancellation Rights (12 CFR § 1005.34)

Consumer senders have a strict statutory right to cancel a remittance transfer:

• The sender must request cancellation within 30 minutes after making payment.
• The provider must issue a full refund of all funds paid, including all transaction fees and taxes, within 3 business days of receiving the cancellation notice, provided the funds have not already been picked up by or deposited into the recipient's foreign account.

Remittance Error Resolution (§ 1005.33)

• Notice Timing: The sender must notify the provider of an alleged error within 180 calendar days after the disclosed date of availability.
• Investigation Window: The provider must investigate and determine results within 90 calendar days of receiving notice.
• Statutory Remedies: If an error occurred (e.g., funds not delivered by the promised date), the provider must apply the remedy for the particular error under § 1005.33(c). Nondelivery can give a choice of refund or corrected delivery; exclusions and sender-supplied incorrect account information require separate analysis.