Regulation E states that preauthorized EFTs from a consumer’s account may be authorized only by a writing signed or similarly authenticated by the consumer. Does this mean lenders can’t obtain such authorizations over the phone?


Under EFTA and Regulation E, a lender can obtain a consumer’s authorization for preauthorized EFTs in paper form or electronically. Regulation E commentary explains that the regulation “permits signed, written authorizations to be provided electronically,” and specifies that the “writing and signature requirements . . . are satisfied by complying with the [E-Sign Act] which defines electronic records and electronic signatures.” This means companies can obtain signed, written authorizations from consumers over the phone if the E-Sign Act requirements for electronic records and signatures are met.

Examples of potentially acceptable methods of obtaining authorization over the phone include asking the consumer to communicate consent to preauthorized EFTs by entering a code into their telephone keypad, or by recording and retaining the consumer’s verbal authorization.

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