:s DU WX'KS1i * (cid:9)
`
`I
`
`*
`
`by
`
`ROBERT C. ZIMMER
`
`and
`
`THERESA A. EINHORN
`
`VOLUME II
`
`Card Services, Inc.
`2100 Pennsylvania Avenue, N.W.
`Suite 600
`Washington, D.C. 20037
`
`eBay et al., Ex.1008, p.1
`
`

`
`Copyright lq78, Card Services. Inc.
`2100 Pennsylvania Avenue, N.W.
`Suite 600
`Washington, D.C. 20037
`
`All Rights Reserved
`
`No part of this publication may be
`reproduced in any form without permission
`from Card Services, Inc.
`
`ABOUT THE AUTHORS
`
`Robert C. Zimmer and Theresa A. Einhorn are lawyers who specializeinfinaocia|
`iouxitudoo, commercial, corporate and antitrust law. In addition to The low of
`Electronic Funds Transfer. Mr. Zimmer and &ds. Einhorn have published several
`eoicicsregurding the financial set-vices industry, in both legal and trade publications.
`They periodically address financial industry lawyers and executives on various
`subjects affecting both providers and consumers of financial services.
`
`eBay et al., Ex.1008, p.2
`
`

`
`FEDERAL REGULATIONS
`
`COMPTROLLER OF THE CURRENCY: DATA PROCESSING
`ACTIVITIES OF NATIONAL BANKS
`.2 C.F.R. § 7.3500
`
`.3500. (cid:9)
`
`Use of data processing equipment and furnishing of data processing
`services.
`
`t is the opinion of the Comptroller that, in general, data processing is a technology
`at her than a service distinct or different from the underlying services or functions to
`vhich the technology is applied. A national bank may use data processing equipment
`tnd technology to perform for itself and others all services expressly or incidentally
`Luthorized under the statutes applicable to national banks.
`
`0)1989, Card Services, Inc.
`11/891
`
`[Page 8 is Blank, Next
`Page is 9]
`
`eBay et al., Ex.1008, p.3
`
`

`
`FEDERAL REGULATIONS
`
`OFFICE OF THRIFT SUPERVISION REGULATIONS:
`FUNDS TRANSFER SERVICES
`12 C.F.R. §545.17 and 533.1
`
`§545.17 Funds transfer services.
`
`A Federal savings association is authorized to transfer, with or without fee, its
`customers' funds from any account (including a line of credit) of the customer at the
`Federal savings association o.r at another financial intermediary to third parties or
`other accounts of the customer on the customer's order or authorization by any
`mechanism or device, including cashier's checks, conforming with applicable laws
`and established commercial practices.
`
`§533.1 Electronic fund transfers subject to Regulation E.
`
`Any electronic fund transfer, as that term is defined by section 903 of the Electronic
`Fund Transfer Act (15 U.S.C. 1693 et seq.) and §205.2 of Regulation E of the
`Federal Reserve Board (12 C.F.R. 205.2), provided by any savings association is sub-
`ject to the provisions of the Electronic Fund Transfer Act and Regulation E.
`
`©1990, Card Services, Inc.
`[ 10/90]
`
`17
`
`eBay et al., Ex.1008, p.4
`
`

`
`FEDERAL REGULATIONS
`
`(ii)
`
`requests validation of an access device issued on an unsolicited basis;'or
`
`receives an access device issued in renewal of, or in substitution for, an
`(iii)
`accepted access device, whether such access device is issued by the initial financial
`institution or a successor.
`
`"Account" means a demand deposit (checking), savings, or other con-
`(b)
`sumer asset account (other than an occasional or incidental credit balance in a credit
`plan) held either directly or indirectly by a financial institution and established
`primarily for personal, family, or household purposes.
`
`"Act" means the Electronic Fund Transfer Act (Title IX of the Consum-
`(c)
`er Credit Protection Act, 15 U.S.C. 1601 et seq.).
`
`(d)
`"Business day" means any day on which the offices of the consumer's
`financial institution are open to the public for carrying on substantially all business
`functions.
`
`(e)
`
`"Consumer" means a natural person.
`
`(f)
`"Credit" means the right granted by a financial institution to a consumer
`to defer payment of debt, incur debt and defer its payment, or purchase property or
`services and defer payment therefor.
`
`"Electronic fund transfer" means any transfer of funds, other than a
`(g)
`transaction originated by check, draft, or similar paper instrument, that is initiated
`through an electronic terminal, telephone, or computer or magnetic tape for the
`purpose of ordering, instructing, or authorizing a financial institution to debit or
`credit an account. The term includes, but is` of limited to, point-of-sale transfers,
`automated teller machine transfers, direct de osits or withdrawals of funds, and
`transfers initiated by telephone. It includes al transfers resulting from debit card
`transactions, including those that do not involve an electronic terminal at the time of
`the transaction. The term does not include payments made by check, draft, or similar
`paper instrument at an electronic terminal.
`
`"Electronic terminal" means an electronic device, other than a telephone
`(h)
`operated by a consumer, through which a consumer may initiate an electronic fund
`transfer. The term includes, but is not limited to, point-of-sale terminals, automated
`teller machines, and cash dispensing machines.
`
`(i)
`"Financial institution" means a State or National bank, a State or
`Federal savings and loan association, a State or Federal mutual savings bank, a
`State or Federal credit union, or any other person who, directly or indirectly, holds
`an account belonging to a consumer. The term also includes any person who issues
`an access device and agrees with a consumer to .provide electronic fund transfer
`services.
`
`(j)
`"Preauthorized electronic fund transfer" means an electronic fund
`transfer authorized in advance to recur at substantially regular intervals.
`
`FIRST ED. (cid:9)
`
`© 1988 Card Services, Inc.
`[1/88]
`
`20
`
`eBay et al., Ex.1008, p.5
`
`

`
`e[H,iiifa1i
`
`(d) Relation to Truth in Lending. (I) A consumer's liability for an unautho-
`rized electronic fund transfer shall be determined solely in accordance with this
`section if the electronic fund transfer
`
`(i) was initiated by use of an access device that is also a credit card as
`defined in 12 CFR 2262(a)(15), or
`
`involves an extension of credit under an agreement between a consumer
`(ii)
`and a financial institution to extend the credit when the consumer's account is
`overdrawn or to maintain a specified minimum balance in the consumer's account.
`
`(2) A consumer's liability for unauthorized use of a credit card that is also
`an access device but that does not involve an electronic fund transfer shall be
`determined solely in accordance with the Truth in Lending Act and 12 C.F.R. Part
`226 (Regulation Z).
`
`§ 205.7 Initial Disclosure of Terms and Conditions
`
`(a) Content of disclosures. At the time a consumer contracts for an electronic
`fund transfer service or before the first electronic fund transfer is made involving a
`consumer's account, a financial institution shall disclose to the consumer, in a readily
`understandable written statement that the consumer may retain, the following terms
`and conditions of the electronic fund transfer service, as applicable:
`
`(I) A summary of the consumer's liibility under § 205.6, or other applicable
`law or agreement, for unauthorized electronic fund transfers and, at the financial
`institution's option, the advisability of promptly reporting loss or theft of the access
`device or unauthorized transfers.
`
`(2) The telephone number and address of the person or office to be notified
`when the consumer believes that an unauthorized electronic fund transfer has been
`or may be made.
`
`(3) The financial institution's business days, as determined under § 205.2(d).
`
`(4) The type of electronic fund transfers that the consumer may make and
`any limitations on the frequency and dollar amount of transfers. The details of the
`limitations need not be disclosed if their confidentiality is essential to maintain the
`security of the electronic fund transfer system.
`
`(5) Any charges for electronic fund transfers or for the right to make
`transfers.
`
`(6) A summary of the consumer's right to receive documentation of
`electronic fund transfers, as provided in § § 205.9, 205.10(a), and 205.10(d).
`
`(7) A summary of the consumer's right to stop payment of a pica uthorized
`
`26-FF
`
`eBay et al., Ex.1008, p.6
`
`

`
`FEDERAL REGULATIONS
`
`(b) Periodic statements. For any account to or from which electronic fund
`
`transfers can be made, the financial institution shall mail or deliver a statement A
`
`each monthly or shorter cycle in which an electronic fund transfer has occurred,
`at least a quarterly statement if no transfer has occurred. The statement shall include
`the following, as applicable:
`
`(1) For each electronic fund transfer occurring during the cycle,a
`
`(1) The amount of the transfer. If a transfer charge was added at the time of
`initiation by the owner or operator of an electronic terminal in accordance with
`paragraph (a)(1) of this section, that charge may be included in the amount of the
`transfer.
`
`(ii) The date the transfer was credited or debited to the consumer's account.
`
`(iii) The type of transfer and the type of the consumer's account(s) to or from
`which funds were transferred.
`
`(iv) For each transfer initiated by the consumer at an electronic terminal, the
`location that appeared on the receipt or, if an identification (such as a code or
`terminal number) was used, that identification and one of the following descriptions
`of the terminal's location: 4a
`
`(A) The address, including number and street (the number maybe omitted if
`the street alone uniquely identifies the terminal location) or intersection, city, an
`state or foreign country;'
`
`(13) A generally accepted name for a specific location (such as a branch of the
`financial institution, a shopping center, or an airport), city, state or foreign country;
`6
`or
`
`(C) The name of the entity, at whose place of business the terminal is located
`or which owns or operates the terminal (such as the financial institution 7 or the seller
`of goods or services), city, and state or foreign country. 8
`
`°The information required by paragraph (b)(1) of this section may be provided on
`accompanying documents. Codes explained on the statement or on accompanying documents
`are acceptable.
`da A financial institution need not identify the terminal location for deposits of cash, checks.
`drafts, or similar paper instruments at electronic terminals.
`5The city and state may be omitted if all the terminals owned or operated by the financial
`institution providing the statement (or by the system in which it participates) are located in the
`same city. The state may be omitted if all the terminals owned or operated by the financial
`institution providing the statement (or by the system in which it participates) are located in
`that state. The state may also be omitted for transfers occurring at terminals within 50 miles of
`the financial institution's main office.
`FSee footnote 5.
`"If the financial institution providing the statement owns or operates terminals at more thall
`one location, it shall describe the location of its electronic terminals by use of paragraphs
`(b)(1)(iv)(A) or (H) of this section.
`tSee footnote 5.
`
`26-JJ
`
`
`
`}
`
`
`
`II
`
`eBay et al., Ex.1008, p.7
`
`

`
`FEDERAL REGULATIONS
`
`(v) The name of any third party to or from whom funds are transferred. 9
`
`(2) The number(s) of the consumer's account(s) for which the statement is
`issued.
`
`(3) The amount of any fees or charges, other than a finance charge under
`2 CFR 226.7(f), assessed against the account during the statement period for
`electronic fund transfers or the right to make such transfers, or for account
`naintenance.
`
`(4) The balances in the consumer's account(s) at the beginning and at the
`close of the statement period.
`
`(5) The address and telephone number to be used for inquiry or notice of
`errors, preceded by "Direct Inquiries To:" or similar language. Alternatively, the
`address and telephone number may be provided on the notice or error resolution
`procedures set forth in § 205.8(b).
`
`If the financial institution uses the notice procedure set forth in § 205.10
`(6)
`(a)(1)(iii), the telephone number the consumer may call to ascertain whether a
`preauthorized transfer to the consumer's account has occurred.
`
`(c) Documentation for certain passbook accounts. In the case of a
`consumer's passbook account which may not be accessed by any electronic fund
`transfers other than preauthorized transfers to the account, 9a the financial institution
`may, in lieu of complying with paragraph (b) of this section, upon presentation of the
`consumer's passbook, provide the consumer with documentation by entering in the
`passbook or on a separate document, the amount and date of each electronic fund
`transfer made since the passbook was last presented.
`
`(d) Periodic statements for certain non passbook accounts. If a consumer's
`account other than a passbook account may not be accessed by any electronic fund
`transfers other than preauthorized transfers to the account,
`9a the financial institution
`need provide the periodic statement required by paragraph (b) of this section only
`quarterly.
`
`(e) Use of abbreviations. A financial institution may use commonly accepted
`or readily understood abbreviations in complying with the documentation require-
`ments of this section.
`
`9A financial institution need not identify third parties whose names appear on checks, drafts, or
`similar paper instruments deposited to the consumer's account at an electronic terminal,
`iu9sAccounts that are also accessible by the intra-institutional transfers described in paragraph
`(h) of this section may continue to be documented in accordance with paragraph (c) or (d) of
`=this section.
`
`26-KK (cid:9)
`
`® 1988 Card Services, Inc.
`[1/88]
`
`eBay et al., Ex.1008, p.8
`
`

`
`FEDERAL REGULATIONS
`§ 205.10 Preauthorized Transfers
`
`(a) Preauthorized transfers to a consumer c account. (l) Where aconsumer's
`account is scheduled to be credited by a preauthorizedeleotronicfoodtraos&erbooz
`the same payor at least once every 60 days, except where the payor provides positive
`notice to the consumer that the transfer has been initiated, the financial institution
`shall provide notice by one of the following means:
`
`(i) The institution shall transmit oral or Written notice to the consumer,
`within 2 business days after the transfer, that the transfer occurred;
`
`(ii) The institution shall transmit oral or written notice to the consumer,
`within 2 business days after the date on which the transfer was scheduled to occur,
`that the transfer did not occur; or
`
`
`(iii) The institution shall provide a readily available telephone line that the
`consumer may call to ascertain whether or not the transfer occurred; and shall
`disclose the telephone number on the initial disclosures required by8 205.7 and on
`
`each periodic statement.
`
`(2) A financial institution that receives a preauthorized /transfer of the type
`described in paragraph (aX1) of this section shall credit the amGunt of the transfer as
`of the day the funds for the transfer are received,
`
`authoriza-
`tion. Preauthorized electronic fund transfers from a consumer's account may be
`authorized by the consumer only in writing, and a copy of tire a uthorization shall be
`provided to the consumer by the party that obtains the authorization from the
`consumer.
`
`Cc) Consume r 's righi to stop payment. A consumer may stop payment of a
`p/eauthodoedckectmnic fund transfer from the consumer's account by notifying the
`financial institution orally or in writing at any time up to 3 business days before the
`scheduled date of the transfer. The financial institution may require written
`confirmation of the stop-payment order to be made within 14 days of an oral
`notification i[, when the oral notification is made, the requirement is disclosed to the
`consumer together with the address to which confirmation should be sent. If written
`confirmation has been required by the financial institution, the oral stop-payment
`order shall cease to be binding 14 days after it has been made.
`
`(d) Notice of transfers varying in amount. Where a preauthorized electronic
`fund transfer from the consumer's account varies in amount from the previous
`transfer relating to the same authorization, or the preauthorized amount, the
`financial institution or the designated payee shall mail or deliver, at least 10 days
`befoi e the scheduled transfer date, a written notice of the amount and scheduled date
`of the transfer. If the financial institution or designated payee informs the consumer
`
`~ 1988 Card Services, Inc.
`D/80
`
`eBay et al., Ex.1008, p.9
`
`

`
`of the right to receive notice of all varying transfers, the consumer may elect to
`receive notice only when a transfer does not fall within a specified range of amounts
`or, alternatively, only when a transfer differs from the most recent transfer by more
`than an agreed-upon amount.
`
`§ 205.11 Procedures for Resolving Errors
`
`(a) Definition of error. For purposes of this section, the term "error" means:
`
`(1) An unauthorized electronic fund transfer;
`
`(2) An incorrect electronic fund transfer to or from the consumer's account;
`
`(3) The omission from a periodic statement of an electronic fund transfer to
`or from the consumer's account that-should have been included;
`
`(4) A computational or bookkeeping error made by the financial institution
`relating to an electronic fund transfer;
`
`(5) The consumer's receipt of an incorrect amount of money from an
`electronic terminal;
`
`(6) An electronic fund transfer not identified in accordance with the
`requirements of §§ 205.9 or 205.10(a); or
`
`(7) A consumer's request for any documentation required by §§ 205.9 or
`205.10(a), or for additional information or clarification concerning an electronic
`fund transfer. This includes any request for documentation, information, or
`clarification in order to assert an error within the meaning of paragraphs (a)(1)
`through (6) of this section. It does not include a routine inquiry about the balance in
`the consumcr'.s account or a request for duplicate copies of documentation or other
`information that is made only for tax or other record-keeping purposes.
`
`(b) Notice of error from consumer. (1) A notice of an error is an oral or
`written notice from the consumer that
`
`(i) Is received by the financial institution'' no later than 60 days after the
`institution
`
`(A) Transmitted a periodic statement or provided documentation under §
`205.9(c) on which the alleged error is first reflected; or
`
`'°A financial institution may require the consumer to give notice only at the telephone number
`reasonable
`or address disclosed by the institution, provided the institution maintains
`procedures to refer the consumer to the specified telephone number or address if the
`consumer attempt s to give notice to the institution in a different manner.
`
`26-MM
`
`eBay et al., Ex.1008, p.10
`
`

`
`FEDERAL REGULATIONS
`
`(2) Make deposits to your (checking)(or)(savings) account.
`
`(3) Transfer funds between your checking and savings accounts whenever
`you request.
`
`(4)
`
`Pay for purchases at places that have agreed to accept the (card)(code).
`
`(5)
`
`Pay bills directly (by telephone) from your (checking)(or)(savings)
`account in the amounts and on the days you request.
`
`Some of these services may not be available at all terminals.
`
`(b) Limitations on frequency of transfers.
`
`(1) You may make only [insert number, e.g., 3] cash withdrawals from our
`terminals each [insert time period, e.g., week].
`
`(2) You can use your telephone bill-payment service to pay [insert number]
`bills each ([insert time period])(telephone call).
`
`(3) You can use our point-of-sale transfer service for [insert number]
`transactions each [insert time period].
`
`For security reasons, there are (other) limits on the number of transfers
`(4)
`you can make using our (terminals)(telephone bill-payment service)(point-of-sale
`transfer service).
`
`(c) (cid:9)
`
`Limitations on dollar amounts of transfers.
`
`(I) You may withdraw up to [insert dollar amount] from our terminals each
`([insert time period])(time you use the (card)(code)).
`
`(2) You may buy up to [insert dollar amount] worth of goods or services
`each ([insert time period)(time you use the (card)(code)) in our point-of-sale transfer
`service.
`
`SECTION A(6)—DISCLOSURE OF CHARGES FOR TRANSFERS OR RIGHT TO
`MAKE TRANSFERS (§ 205.7(a)(5))
`
`(a) Per transfer charge. We will charge you [insert dollar amount] for each
`transfer you make using our (automated teller machines)(telephone bill-payment
`service)(point-of-sale transfer service).
`
`Fixed charge. We will charge you,[insert dollar amount] each [insert
`(b)
`time period] for our (automated teller machine service)(telephone bill-payment
`service)(point-of-sale transfer service).
`Average or minimum balance charge. We will only charge you for using
`(c)
`(automated teller machinesXtelephone bill-payment service)(point-of-sale transfer
`
`91 1988 Card Services, Inc.
`[1/88]
`
`eBay et al., Ex.1008, p.11