Watch for disclosure signs at checkout

by Center for Personal Finance editors

MADISON, Wis. (7/12/06)--If you write checks, you've probably experienced an electronic check conversion. Now you need to be on the lookout for new disclosure signs--both at checkout and on your statement--because of recent amendments to Regulation E, which governs these types of transactions (Center for Personal Finance).

Check conversion--the process of converting the payment you make by check into an electronic payment--isn't new. It's been in place for more than five years. It results in speeding up the transaction process as well as increasing the security of your payment.

What is new is an amendment to Regulation E that requires merchants to do certain things: They must inform you that an electronic transfer from your account will occur, and that the withdrawal may happen soon--perhaps that day. If your check is going to be converted electronically, the merchant must post a prominent and conspicuous notice at the point of sale and must provide a written copy of the notice at the time of the transaction--usually on your receipt.

For account receivable conversions--such as when you mail a check to pay your credit card or public utility bill--you'll see the new notice on your billing statement or invoice.

If you're going to be charged a nonsufficient funds fee and it's collected electronically, the merchant is required by law to disclose the fee amount and get your authorization.

Watch for the new notices, but don't hold your breath. Merchants who convert checks electronically are required by law to comply with the new rules by Jan. 1, 2007.