A preauthorized electronic fund transfer, under Regulation E (12 CFR § 1005.2(k)), is an electronic fund transfer authorized in advance to recur at substantially regular intervals. An electronic fund transfer is any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer's account (§ 1005.3(b)(1)), and the list of examples includes direct deposits or withdrawals of funds. Section 1005.10 sets out rules specific to these recurring transfers, in both directions.
Two parts: authorized in advance, and set to recur at substantially regular intervals (§ 1005.2(k)).
From your account: unless the account-holding financial institution falls under the small-institution exemption in § 1005.3(c)(7) (assets of $100 million or less on the preceding December 31), preauthorized electronic fund transfers from a consumer's account may be authorized only by a writing signed or similarly authenticated by the consumer, and the person that obtains the authorization shall provide a copy to the consumer (§ 1005.10(b)).
Stop payment: unless the account-holding financial institution falls under the small-institution exemption in § 1005.3(c)(7), a consumer may stop payment of a preauthorized electronic fund transfer from the consumer's account by notifying the financial institution orally or in writing at least three business days before the scheduled date of the transfer; the institution may require written confirmation within 14 days of an oral notification, and an institution that requires it must tell the consumer about the requirement and the address when the oral notification is given, and an oral stop-payment order ceases to be binding after 14 days if the consumer fails to provide the required written confirmation (§ 1005.10(c)).
Small-institution exemption: under § 1005.3(c)(7), the term electronic fund transfer does not include any preauthorized transfer to or from an account if the assets of the account-holding financial institution were $100 million or less on the preceding December 31; those transfers remain subject to § 1005.10(e) regarding compulsory use and sections 916 and 917 of the Electronic Fund Transfer Act regarding civil and criminal liability.
Where you'll see it
In a signed or similarly authenticated authorization for a recurring debit from a checking, savings, or other consumer asset account, which § 1005.10(b) requires, and of which the person obtaining it must give the consumer a copy, unless the account-holding financial institution falls under the small-institution exemption in § 1005.3(c)(7). It also covers recurring credits: when a person initiates preauthorized electronic fund transfers to a consumer's account at least once every 60 days, the account-holding financial institution, unless it falls under that same exemption, must give notice by one of the methods in § 1005.10(a)(1), for example oral or written notice of the transfer within two business days after the transfer occurs. The institution need not provide notice if the payor gives the consumer positive notice that the transfer has been initiated (§ 1005.10(a)(2)).
The rule behind it
“Preauthorized electronic fund transfer” means an electronic fund transfer authorized in advance to recur at substantially regular intervals.
A consumer may stop payment of a preauthorized electronic fund transfer from the consumer's account by notifying the financial institution orally or in writing at least three business days before the scheduled date of the transfer.
Written confirmation (§ 1005.10(c)(2)): the financial institution may require the consumer to give written confirmation of a stop-payment order within 14 days of an oral notification. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification. An oral stop-payment order ceases to be binding after 14 days if the consumer fails to provide the required written confirmation.
Amounts that vary (§ 1005.10(d)): unless the account-holding financial institution falls under the small-institution exemption in § 1005.3(c)(7), when a preauthorized electronic fund transfer from the consumer's account will vary in amount from the previous transfer under the same authorization or from the preauthorized amount, the designated payee or the financial institution shall send the consumer written notice of the amount and date of the transfer at least 10 days before the scheduled date of transfer (§ 1005.10(d)(1)). The designated payee or the institution shall inform the consumer of the right to receive notice of all varying transfers, but may give the consumer the option of receiving notice only when a transfer falls outside a specified range of amounts or only when a transfer differs from the most recent transfer by more than an agreed-upon amount (§ 1005.10(d)(2)).
What the CFPB says
You have the right to stop a company from taking automatic payments from your account, even if you previously allowed them.
After you contact your bank and the company to clarify that you have revoked authorization from the company, any additional payments initiated by that company would be errors, and you can contact your bank for a refund.
Electronic fund transfer is the broader term: any transfer of funds initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer's account, with examples that include point-of-sale transfers, automated teller machine transfers, direct deposits or withdrawals of funds, transfers initiated by telephone, and transfers resulting from debit card transactions (§ 1005.3(b)(1)). A preauthorized electronic fund transfer is one that also meets two parts: it is authorized in advance, and it is authorized to recur at substantially regular intervals (§ 1005.2(k)). The stop-payment right in § 1005.10(c), the written-authorization requirement in § 1005.10(b), and the varying-amount notice in § 1005.10(d) are written for preauthorized transfers from the consumer's account, subject to the small-institution exemption in § 1005.3(c)(7).
Questions people ask
How much notice does a stop-payment request need?
Under § 1005.10(c)(1), unless the account-holding financial institution falls under the small-institution exemption in § 1005.3(c)(7), the consumer notifies the financial institution orally or in writing at least three business days before the scheduled date of the transfer. If the institution requires written confirmation, it must say so and provide the address when the consumer gives the oral notification, and an oral order ceases to be binding after 14 days without that confirmation (§ 1005.10(c)(2)).
What is the difference between revoking authorization and a stop payment order?
The CFPB describes contacting the company to take away its permission and then telling the bank or credit union that the authorization was revoked, after which any additional payments initiated by that company would be errors. It describes a stop payment order as an instruction to your bank or credit union that tells them not to make a payment to a specified company from your account, and says banks and credit unions generally charge fees for stop payment orders.
Does stopping the payment end what I owe?
The CFPB says that if you cancel an automatic payment on a loan, you still have to make payments on the loan using another payment method. Section 1005.10(c) addresses stopping payment of the transfer; it does not mention the underlying debt or contract.
Can a lender make automatic payments a condition of a loan?
Under § 1005.10(e)(1), no financial institution or other person may condition an extension of credit to a consumer on the consumer's repayment by preauthorized electronic fund transfers, except for credit extended under an overdraft credit plan or extended to maintain a specified minimum balance in the consumer's account. The same paragraph says this exception does not apply to a covered separate credit feature accessible by a hybrid prepaid-credit card as defined in Regulation Z, 12 CFR 1026.61.
Do these rules apply at every bank?
Not all of them. Under § 1005.3(c)(7), preauthorized transfers to or from an account are excluded if the assets of the account-holding financial institution were $100 million or less on the preceding December 31; those transfers remain subject to the compulsory-use rule in § 1005.10(e) and to sections 916 and 917 of the Electronic Fund Transfer Act regarding civil and criminal liability. If the institution's assets later exceed $100 million, the exemption for preauthorized transfers terminates one year from the end of the calendar year in which the assets exceed $100 million.
Sources: 12 CFR § 1005.2 (Regulation E definitions) · 12 CFR § 1005.3 · 12 CFR § 1005.10 · CFPB: How do I stop automatic payments from my bank account?
Sources last checked: October 24, 2026.
Everything here is consumer information — not financial or legal advice. It covers what a rule says and where to find it; the decisions stay yours.