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Must the bank provide notice of an electronic payment to customers who have established a recurring ACH transfer from their consumer account to make payments on a commercial loan if the amount of the payment varies?

My bank has a question about §1005.10(d)(1) of Regulation E. That section requires banks to provide a 10-day advance notice of a recurring electronic payment if the amount of the payment may vary. Must the bank provide that notice to customers who have established a recurring automated clearing house (ACH) transfer from their consumer account to make payments on a commercial loan?

Yes. The notice is required for any such electronic transfers from an “account,” which is defined as “a demand deposit (checking), savings, or other consumer asset account…established primarily for personal, family, or household purposes.”

It is the purpose of the account that controls, not the purpose of the payment. The consumer has the right to receive the 10-day notice unless the consumer agreed to a range of payments as provided in §1005.10(d)(2). (December 2019)

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