(a) Relation
to Truth in Lending.
(1) The Electronic Fund Transfer Act and this part govern:
(i) The addition to an accepted
credit card, as defined in Regulation Z (12 CFR 1026.12, comment 12-2),
of the capability to initiate electronic fund transfers;
(ii) The issuance of an access device
(other than an access device for a prepaid account) that permits credit
extensions (under a preexisting agreement between a consumer and a
financial institution) only when the consumer’s account is overdrawn
or to maintain a specified minimum balance in the consumer’s account,
or under an overdraft service, as defined in section 1005.17(a) of
this part;
(iii) The addition
of an overdraft service, as defined in section 1005.17(a), to an accepted
access device; and
(iv) A consumer’s
liability for an unauthorized electronic fund transfer and the investigation
of errors involving:
(A) Except with respect to a prepaid account, an extension of credit
that is incident to an electronic fund transfer that occurs under
an agreement between the consumer and a financial institution to extend
credit when the consumer’s account is overdrawn or to maintain a specified
minimum balance in the consumer’s account, or under an overdraft service,
as defined in section 1005.17(a);
(B)
With respect to transactions that involve a covered separate credit
feature and an asset feature on a prepaid account that are both accessible
by a hybrid prepaid-credit card as those terms are defined in Regulation
Z, 12 CFR 1026.61, an extension of credit that is incident to an electronic
fund transfer that occurs when the hybrid prepaid-credit card accesses
both funds in the asset feature of the prepaid account and a credit
extension from the credit feature with respect to a particular transaction;
(C) Transactions that involves credit
extended through a negative balance to the asset feature of a prepaid
account that meets the conditions set forth in Regulation Z, 12 CFR
1026.61(a)(4); and
(D) With respect
to transactions involving a prepaid account and a non-covered separate
credit feature as defined in Regulation Z, 12 CFR 1026.61, transactions
that access the prepaid account, as applicable.
(2) The
Truth in Lending Act and Regulation Z (12 CFR part 1026), which prohibit
the unsolicited issuance of credit cards, govern:
(i) The addition of a credit feature
or plan to an accepted access device, including an access device for
a prepaid account, that would make the access device into a credit
card under Regulation Z (12 CFR part 1026);
(ii) Except as provided in paragraph
(a)(1)(ii) of this section, the issuance of a credit card that is
also an access device; and
(iii)
With respect to transactions involving a prepaid account and a non-covered
separate credit feature as defined in Regulation Z, 12 CFR 1026.61,
a consumer’s liability for unauthorized use and the investigation
of errors involving transactions that access the non-covered separate
credit feature, as applicable.
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(b) Preemption of inconsistent state laws.
(1) Inconsistent requirements. The Bureau shall determine, upon
its own motion or upon the request of a state, financial institution,
or other interested party, whether the Act and this part preempt state
law relating to electronic fund transfers, or dormancy, inactivity,
or service fees, or expiration dates in the case of gift certificates,
store gift cards, or general-use prepaid cards.
(2) Standards
for determination. State law is inconsistent with the requirements
of the Act and this part if state law:
(i) Requires or permits a practice or
act prohibited by the Federal law;
(ii) Provides for consumer liability for unauthorized electronic
fund transfers that exceeds the limits imposed by the Federal law;
(iii) Allows longer time periods
than the Federal law for investigating and correcting alleged errors,
or does not require the financial institution to credit the consumer’s
account during an error investigation in accordance with section 1005.11(c)(2)(i)
of this part; or
(iv) Requires
initial disclosures, periodic statements, or receipts that are different
in content from those required by the Federal law except to the extent
that the disclosures relate to consumer rights granted by the state
law and not by the Federal law.
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(c) State exemptions.
(1) General rule. Any state may apply for an exemption from the requirements of the Act
or this part for any class of electronic fund transfers within the
state. The Bureau shall grant an exemption if it determines that:
(i) Under state law
the class of electronic fund transfers is subject to requirements
substantially similar to those imposed by the Federal law; and
(ii) There is adequate provision
for state enforcement.
(2) Exception. To assure that the
Federal and state courts continue to have concurrent jurisdiction,
and to aid in implementing the Act:
(i) No exemption shall extend to the
civil liability provisions of section 916 of the Act; and
(ii) When the Bureau grants an exemption,
the state law requirements shall constitute the requirements of the
Federal law for purposes of section 916 of the Act, except for state
law requirements not imposed by the Federal law.
