Regulation E (Reg E) governs how your business manages electronic payments, from how quickly you handle fraud claims to who ends up with the loss. Your payment vendor’s systems, policies, and governance all have a direct impact on your compliance risk. But you can mitigate this risk upfront without turning your request for proposal (RFP) into a legal memo.

Below, we explain how to comply with Reg E without slowing your process down.

What’s in this article?

• What is Reg E, and why does it matter in electronic payments?
  
• How should Reg E compliance inform the structure of a payments RFP?
  
• Which vendor controls and documentation guarantee compliance with Reg E?
  
• What are the risks of inadequate Reg E oversight?
  
• How Stripe Payments can help
  

What is Reg E, and why does it matter in electronic payments?

Reg E is a set of rules in the US that protects consumers in electronic payments. It’s part of the Electronic Fund Transfer Act (EFTA), and it covers many everyday transactions, such as ACH transfers, debit card purchases, ATM withdrawals, and peer-to-peer payments.

Reg E gives people specific rights when they send or receive money electronically.

It requires that:

• Institutions investigate reported errors quickly, typically within 10 business days

• Customers receive provisional credit if the issue isn’t resolved right away

• Consumers aren’t liable for unauthorized transactions beyond set limits

• Important terms, fees, and rights are clearly disclosed up front

Reg E (Reg E) is customer-centric. If there’s an error or fraud, the default assumption is that the consumer should be made whole, and quickly. That puts the burden on businesses to get electronic payments right.

The Consumer Financial Protection Bureau (CFPB) enforces Reg E. Regulatory actions and lawsuits have forced institutions to pay substantial restitution and penalties. Some violations are caused by mishandling fraud claims, while others resulted from failing to notify customers of their rights or dragging out investigations past Reg E deadlines.

If you’re issuing a payments RFP, any payments partner you consider needs Reg E compliance infused into their operations. You shouldn’t be carrying the risk alone.

How should Reg E compliance inform the structure of a payments RFP?

Reg E is a core operating requirement. If you’re building an RFP for a payments vendor, make it obvious that Reg E compliance is required from a payments partner.

Here are the main factors to include.

Signal that compliance is a priority

Include a dedicated compliance section in the RFP that directly asks whether the vendor is compliant with Reg E, and if they verify it in their operations. Consider also asking whether they have been subject to regulatory exams related to EFTA, and if so, what the outcomes were.

Ask for evidence

Request policies and documentation. Look for a track record and a framework that indicates a long-term commitment to compliance. A solid vendor should be able to show their process for handling errors and disputes, including timelines for investigations and provisional credits. Request customer communication templates used during investigations and any third-party audits or internal controls assessments that touch on Reg E compliance.

Include a scenario

Include a question with a real-life scenario that reveals how deeply a vendor understands Reg E, and whether their systems are built to support it. This could look like: “A customer reports an unauthorized $500 debit 40 days after it occurred. Walk us through how your system and team handle this.”

Structuring your vendor selection around these principles makes it more likely you’ll choose a partner that can scale with you without putting you or your customers at unnecessary risk.

What vendor controls and documentation guarantee compliance with Reg E?

If a payments vendor says they support compliance, you need to know how they do it and whether their systems are built for it. Your vendor’s controls become an extension of your own.

Here’s what to look for.

Authorization workflows

Reg E expects that every electronic debit has been authorized by the customer. If a transaction turns out to be unauthorized, regulators will expect you to produce this data quickly. Your vendor should be ready to do that.

You need to verify:

• How they capture authorization, especially for recurring or phone-based transactions

• If they store evidence of consent, such as electronic signatures or call recordings

• How they verify authorization on disputed payments

Dispute handling and timelines

Institutions generally have 10 business days to investigate a reported error or provide provisional credit. Your vendor should have clear procedures for initiating and tracking disputes, tools or application programming interfaces (APIs) for submitting claims and receiving updates, and a team that can walk through timelines and decisions. Stripe’s dashboard, for example, offers dispute submission and resolution support, and automates important steps that help businesses comply with Reg E’s timeframes.

Records that hold up

Regulators often want you to show your work. Make sure vendors explain what records they maintain for each transaction. They should be able to tell you how long they keep records and whether you’ll have access to those logs directly or need to request them.

Experts you can talk to

Ask who’s responsible for complying with Reg E in their organization. They might provide client training or alerts on changes in the law. While they’re not official compliance consultants, their teams should be fluent in what counts as an “error,” what timelines apply, and when to issue provisional credit.

What are the risks of inadequate Reg E oversight?

Reg E is very specific about what businesses owe customers. Whether the compliance issue starts with your team or your payments vendor, your institution is responsible.

Here are the two main types of consequences for noncompliance.

Regulatory action

Reg E has historically been a core priority for CFPB enforcement. If you mishandle error investigations or delay provisional credits, this can mean:

• Enforcement actions and consent orders

• Civil money penalties

• Mandates to refund consumers and fix internal processes

Even routine findings by the CFPB can force costly remediation, such as retraining staff, overhauling systems, and rewriting disclosures. CFPB has imposed approximately $5 billion in civil penalties on companies and individuals since its founding in 2010. And it’s returned more than $21 billion to customers through other forms of consumer relief.

Consumer lawsuits

Reg E violations also expose you to private lawsuits. Consumers can sue for statutory damages and legal fees, even when the individual dollar amounts seem small. And plaintiffs’ attorneys know that Reg E cases are paperwork-driven: if your vendor can’t produce documentation or timelines, that makes your business an easier target.

Class actions have been filed over mishandled disputes, denials without proper investigation, and failure to provide required notices. These suits can cost institutions reputational damage and millions in settlements.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.

• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.