The Reg E Reader

Overdraft fees have been a persistent concern for lawmakers and regulators since the rise of electronic banking in the late 20th century.

Since President Trump took office, the administration has substantially curtailed the Consumer Financial Protection Bureau’s (Bureau) rulemaking and enforcement activity. 

On March 25, President Trump signed an Executive Order requiring federal agencies to stop issuing paper checks for most disbursements by September 30. Exec. Order No. 14,247, 90 Fed. Reg. 14001 (Mar. 25, 2025). To combat what the Executive Order describes as the “risks of fraud, lost payments, thefts, and inefficiencies” associated with paper checks, all executive departments and agencies will be required to transition to electronic funds transfer (EFT) methods, such as direct deposit or credit card payments. This move will bring the vast majority of federal disbursements under Reg E’s purview, as Reg E governs most EFTs initiated to or from a consumer’s personal accounts.

Since taking office, the Trump administration has significantly curtailed the CFPB’s rulemaking and enforcement activity. Recently, Congress and federal courts have been grappling with what that means for CFPB employees and the rules the CFPB has enacted and enforces. On April 9, 2025, the United States House of Representatives voted to pass a joint resolution disapproving a CFPB rule that would make certain large payment companies subject to Regulations E and Z. The same day, the Court of Appeals for the D.C. Circuit heard oral arguments to resolve a TRO that would maintain the existence of the CFPB as it stood before the administration change. What does this mean for you and your clients? 

Since 2010, the CFPB has been the primary enforcer of the federal consumer protection laws, recovering over $20 billion for American consumers

On March 4, 2025, a Mississippi federal judge granted two outside nonprofits intervenor status in a lawsuit defending the CFPB’s $5-overdraft-fee rule, amending Reg E and Reg Z, allowing nonprofits to mount a vigorous defense that the judge believed the CFPB would have presented absent administration changes in January. In receiving intervenor status, the nonprofits are now parties to the ongoing lawsuit and can fully participate in defending their interests accordingly.

As the new Trump administration implements its deregulatory agenda, work at the CFPB has been brought to a halt, at least temporarily. On February 8, acting Director Russell Vought sent an email memorandum to Bureau personnel to stop all work.

The US Supreme Court dealt a near-fatal blow last year to the Securities and Exchange Commission’s already weakened administrative law judge program. The expected return of Paul Atkins as SEC chairman will likely weaken the ALJ program even further, relegating the in-house judges to the fringe of any enforcement activities.

On December 12, 2024, the Consumer Financial Protection Bureau issued a final rule amending Regulation E to prohibit large financial institutions from conditioning overdraft credit services on repayment through preauthorized electronic funds transfers.

On January 10, the CFPB proposed a new rule that would expand key definitions within the Electronic Funds Transfer Act (EFTA) to capture certain virtual currency products. If finalized, the rule would require many businesses to adjust their practices to provide the consumer protections that EFTA and Reg E demand.

Regulation E (Reg E), the implementing regulation of the Electronic Fund Transfer Act, establishes the basic rights, liabilities, and responsibilities of consumers who use electronic funds transfers and remittance transfer services, and of the financial institutions or others that offer these services. 

Winston is pleased to announce the launch of our blog, the Reg E Reader, featuring insights from Winston’s multidisciplinary Financial Services Group on legal and enforcement developments relating to all things Regulation E (12 C.F.R. § 1005 et seq.), which governs the electronic transfer of funds.