How valuable is $100? To a student? To a single unemployed parent? To a well-compensated professional? The Federal Reserve Board apparently believes that the potential loss of $100 is not a tremendous burden on anyone. In a recently proposed rule, the Board exempts stored value cards that contain less than $100 from the same regulations that protect consumers from most types of fraud associated with ATM, debit, and credit cards. Regulation E (Reg E) currently regulates the electronic funds transfers (EFTs) that are at the heart of ATM/debit/credit card transactions by requiring printed receipts, error resolution procedures, periodic statements, initial disclosure of terms of usage, and more. Without these protections, stored value card holders will be easy targets for unscrupulous vendors who shave off an extra few pennies per transaction as well as fraudulent issuers who disburse defective cards. In short, the $100 de minimis exemption of stored value cards from Reg E protection is an open invitation to fraud.
Sean M. O'Connor,
The De Minimis Exemption of Stored Value Cards from Regulation E: An Invitation to Fraud.,
Rich. J.L. & Tech
Available at: http://scholarship.richmond.edu/jolt/vol5/iss2/3