What Is a Descriptive Statement?

Kenneth W. Michael Wills

Commonly issued by a financial institution, a descriptive statement will provide the account holder an accounting of all electronic transactions occurring on his or her account for the period covered by the statement, usually listed in chronological order and grouped under transaction categories. These transactions will include payments initiated from the account, all electronic deposits, all withdrawals and associated fees. Normally, all transactions that do not have a physical item attached or enclosed, such as a check, are listed on the descriptive statement. Under Regulation E of the Securities and Exchange Commission (SEC) in the United States, all financial institutions must provide account holders a statement every month in which an electronic transaction occurs. Failure to do so can result in penalties and sanctions.

A descriptive statement may contain information on a banking customer's withdrawals.
A descriptive statement may contain information on a banking customer's withdrawals.

According to Regulation E under the SEC, electronic transfers will include debit card transactions, ATM transactions or any transfer initiated electronically without operator or teller assistance. In the event an account has no electronic transfers, then the financial institution will only need to send a statement every quarter. Regulation E is written specifically for the governance of electronic funds transfers (EFT) and was drafted to carry out the Electronic Fund Transfer Act. Established to outline the rights, responsibilities and privileges for consumers making use of EFT and financial institutions that offer such services, the Electronic Funds Transfer Act is meant to protect consumers. Issuing a descriptive statement as required serves as disclosure to the account holder.

A descriptive statement will provide the account holder an accounting of all electronic transactions occurring on his or her account for the period covered by the statement.
A descriptive statement will provide the account holder an accounting of all electronic transactions occurring on his or her account for the period covered by the statement.

Disclosure under Regulation E requires the information on the descriptive statement to be concise, easy to understand, and in writing as well as allows for the customer to retain a copy for his or her records. Therefore, a descriptive statement is usually issued in a paper format, often sent by postal mail. Consent of the account holder is required if the financial institution wants to send the statement electronically. Financial institutions are permitted, however, to combine various disclosures and statements from multiple accounts to reduce wastage.

Account holders also have responsibilities under Regulation E, including notifying the financial institution promptly of unauthorized EFT transactions. The account holder must provide notice in person, in writing or by telephone within 60 days of when the financial institution transmitted the descriptive statement. That notice is binding regardless of whether the representative actually takes such notice and responds. Failure to adhere to the 60-day rule results in account holder liability for the transaction, but nothing more. Thoroughly reading the descriptive statement, however, gives most consumers the ability to catch unauthorized transactions in a timely manner.

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