National Check Professional (NCP) Certification Practice Test

What does Regulation E cover?

1. Check fraud prevention

2. Electronic fund transfers

3. Overdraft protection programs

4. Consumer credit reporting

The correct answer is: Electronic fund transfers

Regulation E is a federal regulation that focuses specifically on electronic fund transfers (EFTs). It was established to protect consumers engaging in electronic transactions, such as ATM withdrawals, debit card purchases, and electronic bill payments. Regulation E outlines the rights and responsibilities of both consumers and financial institutions regarding these types of transactions. One key aspect of Regulation E is that it requires financial institutions to provide disclosures about the terms and conditions of electronic fund transfer services. It also establishes procedures for resolving errors related to these transactions, ensuring consumers have a means to dispute unauthorized transactions. This regulation aims to promote transparency and protect consumers from potential fraud or unauthorized access to their accounts related to electronic transfers. Understanding Regulation E is essential for professionals in the finance and banking industries, as compliance with these regulations affects customer trust and can impact the institution's operations.