The Bureau of Consumer Financial Protection (“Bureau”) has issued an interpretive rule to allow the disbursement of funds by a government agency for COVID-19 relief through an electronic fund transfer, an alternative to direct deposit or the issuance of paper checks. Regulation E prohibits requiring consumers to establish an account for receipt of electronic fund transfers with a particular financial institution as a condition of receipt of a government benefit. However, the Bureau’s interpretive rule addresses that certain pandemic relief payments are not “government benefits” for purposes of Regulation E and so are not subject to this prohibition if certain conditions are met. Specifically, government benefits do not include payments from federal, state, or local governments if those payments: (1) are made to provide assistance to consumers in response to the COVID-19 pandemic or its economic impacts; (2) are not part of an already-established government benefit program; (3) are made on a one-time or otherwise limited basis; and (4) are distributed without a general requirement that consumers apply to the agency to receive funds.
This rule would allow government agencies to disburse funds via electronic fund transfers in circumstances where an agency may be unable to make payments via direct deposit because they do not have access to a consumer’s account information or a consumer receiving payments does not have an existing account that can accept direct deposits. This method of disbursement is also a safe, fast, and inexpensive alternative — for the government agency and consumer alike — to sending paper checks.
This rule is effective on the date that it is published in the Federal Register.