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Treasury Approves Final EFT 99 Rule

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Treasury Approves Final EFT 99 Rule

After several years in the making, the electronic funds transfer provision of the Debt Collection Improvement Act of 1996 was officially approved this past September.

Commonly known as EFT 99, this provision requires most federal government payments, except tax refunds, to be disbursed electronically starting Jan. 2, 1999. This law has far-reaching effects and underwent an extensive comment period. On Sept. 25, the Treasury released the "final rule" that incorporate feed-back received from more than 200 comment letters from payment recipients, consumer and community-based organizations, financial institutions and other stakeholders. Following is a summary of the major provisions of the final rule.

ETAs

Any individual who receives a federal benefit, wage, salary or retirement payment can open an Electronic Transfer Account (ETA). ETAs are basic, low-cost accounts that provide federal recipients with a safe, convenient and affordable way to receive payments through a financial institution. Initially, ETAs were going to be available only to individuals without accounts at financial institutions. However, the final rule states that ETAs are open to all federal payment recipients.

Although the ETA is part of the final rule, its key attributes still are being defined. The Treasury recently requested public comments on these attributes. If approved, it would be recommended that ETAs:

• accept only electronic federal payments;
• be subject to price caps of $3 per month;
• have a minimum of four cash withdrawals per month (to be included in the monthly fee) through any combination of proprietary ATM and/or over-the-counter transactions;
• require no minimum balance, except as required by federal or state law; and
• provide the same consumer protections available to other account holders.

Federally insured financial institutions are encouraged to offer ETA accounts. The Treasury is considering reimbursing institutions for the one-time cost of setting up ETAs. Federal agencies will contact their beneficiaries and let them know when the ETAs are available, and which financial institutions in their area offer the accounts.

Waivers

The final rule states that a hardship waiver is available for any individual who determines that electronic payments would impose a hardship because of a physical or mental disability, or a geographic, language or literacy barrier. Waivers also are available to recipients who feel electronic payments would cause a financial burden.

People must determine for themselves if electronic payments will impose any of these hardships. Federal agencies can use their discretion in determining whether their beneficiaries are eligible for waivers. Some agencies may require an individual to submit, either orally or in writing, a determination of hardship.

If recipients don't take any action to sign up for direct deposit, this is considered an invocation of a waiver. Those without accounts at financial institutions are eligible for automatic waivers until ETAs become available.

Choices, Choices!

To address the misconception that recipients won't have access to their federal payments unless they use direct deposit, the Treasury emphasizes the importance of communicating to recipients that they will not be disadvantaged or forced into making choices not right for them. In fact, each recipient has three alternatives for receiving federal payments:

1. Receive payments via direct deposit through the financial institution of his or her choice.
2. Do nothing now and wait for an ETA account to become available.
3. Continue to receive a check if electronic payments will cause hardship.

One important point to stress to your customers is that no government agency may delay or withhold payments to individuals who choose not to sign up for direct deposit.

The Eighth District Gets Ready

Various activities are going on across the District in 1999 to help community groups and federal recipients prepare for EFT 99. To ensure federal check recipients are aware of their options, the country is divided into five regions, each of which has a Treasury subcontractor committed to organizing EFT 99 educational efforts within its territory.

Specifically, the regional subcontractors are responsible for communicating rule-related information to financial institutions, community-based organizations and state agencies, as well as organizing collaborative activities among these groups. For more information about these activities, contact Cheryl McCarthy in St. Louis at (314) 444-8459. Additional information on EFT 99, as well as the complete final rule, is available on the Treasury's web site at www.fms.treas.gov/eft.