Electronic Fund Transfers Through Accounts Established Primarily for Personal, Family, or Household Purposes Using Emerging Payment Mechanisms

CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1005</CFR> <DEPDOC>[CFPB-2025-0003]</DEPDOC> <SUBJECT>Electronic Fund Transfers Through Accounts Established Primarily for Personal, Family, or Household Purposes Using Emerging Payment Mechanisms</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Notice of proposed interpretive rule; request for comment. <SUM> <HD SOURCE="HED">SUMMARY:</HD> In light of interest by electronic fund transfer system market participants to offer new types of products to transfer funds and make purchases through accounts established primarily for personal, family, or household purposes, the Consumer Financial Protection Bureau (CFPB) is proposing this interpretive rule to assist companies, investors, and other market participants evaluating existing statutory and regulatory requirements governing electronic fund transfers (EFTs). </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received by March 31, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments, identified by Docket No. CFPB-2025-0003, by any of the following methods: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments. A brief summary of this document will be available at <E T="03">https://www.regulations.gov/docket/CFPB-2025-0003.</E> • <E T="03">Email: 2025-Emerging-Payments-Interpretive-Rule@cfpb.gov.</E> Include Docket No. CFPB-2025-0003 in the subject line of the message. • <E T="03">Mail/Hand Delivery/Courier:</E> Comment Intake—2025 Emerging Payments Interpretive Rule, c/o Legal Division Docket Manager, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. <E T="03">Instructions:</E> The CFPB encourages the early submission of comments. All submissions should include the agency name and docket number. Because paper mail is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to <E T="03">https://www.regulations.gov.</E> All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> George Karithanom, Program Analyst, Office of Regulations at (202) 435-7700 or <E T="03">https://reginquiries.consumerfinance.gov.</E> If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> <HD SOURCE="HD2">A. The Passage and Evolution of the Electronic Fund Transfer Act</HD> Advances in automation brought about enormous innovation in the middle of the twentieth century with respect to the movement of funds. In 1969, Chemical Bank installed the first automated teller machine in Rockville Center, New York. New payment networks also launched, forming the foundation of mechanisms facilitating EFTs. However, adoption of these new technologies raised questions about the rights and liabilities of consumers who use EFT services, and the responsibilities of financial institutions that offer them. In particular, while financial firms would reap benefits from automation, consumer adoption might be stymied by concerns about and risks of errors and fraud. To provide fairness, efficiency, and confidence in burgeoning technologies to make payments outside of paper currency, coins, and paper checks, Congress enacted the Electronic Fund Transfer Act (EFTA) in 1978. <SU>1</SU> <FTREF/> To ensure that industry participants in electronic fund transfers (EFTs) had appropriate incentives to guard against errors and fraud, EFTA provides a considerable set of rights to consumers to dispute errors and limit their liability for unauthorized EFTs, among other things. To help vindicate the rights established in EFTA, Congress provided mechanisms for both public and private enforcement. <SU>2</SU> <FTREF/> In addition, courts have held that EFTA is a “remedial statute accorded a broad, liberal construction in favor of the consumer.”  <SU>3</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">See</E> Electronic Fund Transfers, Public Law 95-630, tit. XX, section 2001, 92 Stat. 3728 (1978); <E T="03">see also</E> S. Rept. 95-1273 at 10 (1978) (“EFT payment systems, which now involve billions of dollars annually and are growing in size, must have clearly defined rules to operate fairly, efficiently, and with public confidence.”). </FTNT> <FTNT> <SU>2</SU>   <E T="03">See</E> 15 U.S.C. 1693m, 1693 <E T="03">o.</E> </FTNT> <FTNT> <SU>3</SU>   <E T="03">Clemmer</E> v. <E T="03">Key Bank Nat. Ass'n,</E> 539 F.3d 349, 353 (6th Cir. 2008) (citation omitted); <E T="03">see also Curtis</E> v. <E T="03">Propel Prop. Tax Funding, LLC,</E> 915 F.3d 234, 239 (4th Cir. 2019). </FTNT> The United States was among the first to adopt a framework like EFTA, providing greater certainty and protection for consumers, financial firms, and other participants in electronic fund transfer systems. In enacting that legislation, Congress recognized that electronic fund transfer services would continue to develop in the future. In particular, EFTA's legislative history demonstrates that Congress drafted the definitions used in the statute in a broad manner to ensure that EFTA was “sufficiently flexible to accommodate the continued evolution of electronic fund transfer services.”  <SU>4</SU> <FTREF/> Congress also granted the Board of Governors of the Federal Reserve System (the Board) and later the CFPB the authority to issue regulations and guidance to implement the broad provisions of EFTA. <SU>5</SU> <FTREF/> <FTNT> <SU>4</SU>  Electronic Fund Transfer Act, H. Rept. 95-1315, at 5 (1978) (discussing definition of “financial institution”); <E T="03">see also, e.g.,</E> S. Rept. 95-1273 at 25 (1978) (“The definition of `electronic fund transfer' is intended to give the Federal Reserve Board flexibility in determining whether new or developing electronic services should be covered by the act and, if so, to what extent.”); <E T="03">id.</E> at 26 (noting that “[t]he definitions of `financial institution' and `account' are deliberately broad so as to assure that all persons who offer equivalent EFT services involving any type of asset account are subject to the same standards and consumers owning such accounts are assured of uniform protection”). </FTNT> <FTNT> <SU>5</SU>   <E T="03">See</E> 15 U.S.C. 1693b, 1693m(d). </FTNT> The Board implemented EFTA through Regulation E shortly after the statute's passage in 1978. <SU>6</SU> <FTREF/> Over time, the Board and then the CFPB have amended and interpreted Regulation E in response to the emergence of new electronic payment instruments and systems, broader developments in the market, and new congressional legislation. <SU>7</SU> <FTREF/> Most recently, in 2016, the CFPB issued a final rule to create comprehensive consumer protections for prepaid accounts under Regulation E. <SU>8</SU> <FTREF/> The CFPB noted in the rule that its analysis with respect to virtual currencies and related products and services was ongoing, and that the rule did not resolve issues with respect to the application of existing regulations or the prepaid rule to such products and services. <SU>9</SU> <FTREF/> The CFPB therefore treated comments addressing crypto-assets and related products and services as outside the scope of the rulemaking. <SU>10</SU> <FTREF/> <FTNT> <SU>6</SU>   <E T="03">See</E> 44 FR 18468 (Mar. 28, 1979); 44 FR 59464 (Oct. 15, 1979). </FTNT> <FTNT> <SU>7</SU>   <E T="03">See, e.g.,</E> 61 FR 19662, 19662 (May 2, 1996) (amending Regulation E as part of periodic review to “reflect technological and other developments”); 62 FR 43467 (Aug. 14, 1997) (amending Regulation E with respect to government-administered EBT programs); 71 FR 51437 (Aug. 30, 2006) (amending Regulation E with respect to payroll cards). The CFPB also issued new requirements in subpart B of Regulation E relating to remittance transfers in final rules issued in 2012 and 2013. <E T="03">See</E> 78 FR 30662, 30662 (May 22, 2013) (summarizing 2012 and 2013 rules). </FTNT> <FTNT> <SU>8</SU>  81 FR 83934 (Nov. 22, 2016). The prepaid rule also amended Regulation Z, which implements the Truth in Lending Act, to create consumer protections for prepaid accounts. </FTNT> <FTNT> <SU>9</SU>   <E T="03">Id.</E> at 83978 (discussing “virtual currencies”). </FTNT> <FTNT> <SU>10</SU>   <E T="03">Id.</E> </FTNT> <HD SOURCE="HD2">B. Facebook's 2019 Libra Proposal</HD> While most payment networks rely on significant network effects, like those that exist among banks and merchants through card networks, advances in mobile technology spawned new networks for payments. More recently, large technology firms have begun to explore additional ways to leverage their network effects to facilitate payments. In 2019, the technology firm Facebook announced the creation of a new global currency known as Libra. <SU>11</SU> <FTREF/> Libra was a proposed “stablecoin.”  <SU>12</SU> <FTREF/> Rather than offering Libra to the public for speculative trading, the goal of Libra was to provide a mechanism to make payments throughout the digital world. <SU>13</SU> <FTREF/> Users would transmit Libra through a Calibra wallet account, which would al ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 45k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━