Michigan

Please be sure you have read State-Law Rules the Affect Electronic Funds Transfers before proceeding. The introduction describes the limitations of the following summary.

As we pointed out at the beginning of this state-law section, the Federal Reserve Board (FRB) has issued a preemption determination for the Michigan rules shown below. Not all of the provisions shown below were reviewed by the Board. For those that were, we provide the Board’s determination and its reasoning.

Confidentiality of customer information (not reviewed by the FRB)

Generally, a financial institution may not release account information or information about a customer’s electronic transfers unless the customer consents or as provided by law. Credit information may be provided in accordance with the Fair Credit Reporting Act. [Michigan Comp. Laws Ann. Section 488.12]

Furnishing of access devices (not reviewed by the FRB)

Financial institutions may not furnish an access device unless the customer requests or applies for one or the institution is renewing or substituting an existing accepted device. Unsolicited devices may be distributed if certain conditions are met. [Michigan Comp. Laws Ann. Section 488.13]

Liability for unauthorized transfers (preempted)

The customer is liable for unauthorized transfers if caused by the customer’s negligence. Negligence is defined as writing the personal identification number (PIN) on the card, keeping the PIN with the card, or voluntarily permitting the card and PIN to come into the possession of a person who then makes an unauthorized transfer. A customer is also liable for unauthorized transfers made after 30 days after the customer receives a statement showing an unauthorized transfer, if the customer fails to notify the institution of the unauthorized transfer and subsequent transfers could have been prevented by the notification. The customer is not liable for any transfers made after notifying the institution that the access device has been lost or that the security of the customer’s PIN has been violated. [Michigan Comp. Laws Ann. Section 488.14]

The Federal Reserve Board has determined that these rules are preempted by Regulation E. According to the determination:
Section 14 is inconsistent with 12 CFR 1005.6 and is less protective of the consumer than the federal law. The state law places liability on the consumer for the unauthorized use of an account in cases involving the consumer’s negligence. Under the federal law, a consumer’s liability for unauthorized use is not related to the consumer’s negligence and depends instead on the consumer’s promptness in reporting the loss or theft of the access device.

[Commentary, 12 CFR 1005.12(b)-2]

Billing errors (preempted)

Generally, a customer must report an error within 60 days of receiving a statement showing an error. The institution must investigate and report to the customer within ten business days. The customer must meet certain requirements in giving notice of the error to the institution. Likewise, certain requirements apply to the financial institution’s report to the customer. If the institution credits the customer’s account as a result of the investigation, the institution must also credit the amount of interest that the credited amount would have earned. [Michigan Comp. Laws Ann. Section 488.15]

The Federal Reserve Board has determined that these rules are preempted by Regulation E. The preemption is due to the longer time period for resolution allowed under the Michigan rules (up to 70 days). Regulation E requires resolution within 45 days in most cases. [Commentary, 12 CFR 1005.12(b)-2]

Reversal of third-party transfers (not reviewed by the FRB)

If a customer meets certain conditions, the financial institutions involved must reverse transactions in which the customer transferred funds to a third party. [Michigan Comp. Laws Ann. Section 488.16]

Receipts for transfers (preempted)

Customers are entitled to receipts for all electronic funds transfers made at terminals. The receipts must be provided at the time of the transfer or on a regular basis at the option of the customer. [Michigan Comp. Laws Ann. Section 488.17]

The Federal Reserve Board has determined that this provision is preempted by Regulation E. The content of the receipt required by Michigan law is different from the content of the receipt required under Regulation, and the rules are, therefore, inconsistent. The state requirement also allows the consumer to be charged for receiving a receipt if a machine cannot furnish one at the time of a transfer. [Commentary, 12 CFR 1005.12(b)-2]

Account statements (preempted)

Customers are entitled to account statements each month in which a transfer at a terminal is made, but no less frequently than annually. The statement must briefly describe transactions made through a terminal. [Michigan Comp. Laws Ann. Section 488.18]

The Federal Reserve Board has determined that the Michigan requirement for a periodic statement is preempted. It requires a different disclosure of information than does the federal law. [Commentary, 12 CFR 1005.12(b)-2]

Written agreement or disclosure (not reviewed by the FRB)

The institution must supply the customer with a written agreement describing the terms and conditions of the account that is accessible through a terminal. The agreement must include the following:
  1. An explanation of the rules concerning liability for unauthorized use of the account. (This refers to the Regulation E rules since, as pointed out above, the Michigan rules have been preempted.)
  2. The customer’s right to receipts and statements, and the fact that the receipt or statement is admissible evidence.
  3. The specific transactions that the customer may execute through the electronic facility.
  4. Charges for account maintenance or for use of the electronic facility and how the charges are determined.
  5. Limits on the number of transfer services permitted within a given period of time and identification of the account or accounts to be accessed.
  6. The minimum balance required to be able to perform transactions through the electronic facility.
  7. The billing error rules. (This refers to the Regulation E billing error rules since, as pointed above, the Michigan rules have been preempted.)
  8. The name and address of the governmental regulatory authority the consumer can notify if the financial institution violates the Michigan rules.

[Michigan Comp. Laws Ann. Section 488.19]

Security options (not reviewed by the FRB)

The financial institution must give the customer the option of limiting the amount that can be withdrawn in any single day by using a terminal. The customer must also have the option of limiting access through a terminal to one or more specified accounts. [Michigan Comp. Laws Ann. Section 488.20]