REG E and BillPayment Part 1

There has been a bit of discussion lately with regard to REG E and our BillPay provider. Since the application of REG E to BP at times requires one to stretch their mind, I wanted to post a few of the issues for feedback from the forum.

Much of the confusion lies around the difference between actually making the customer "whole" vs actions taken to make the customer whole.

Scenario 1
1) Customer requests a payment to XYZ. Payment sent as requested, but does not post with the payee. Customer contacts BP to open an investigation. BP does not consider this item as REG E b/c they issued payment correctly (date and amount), even though the payment was debited from the customer's acct. Attempts are made to contact the payee, but to no avail. BP eventually closes the investigation b/c they cannot make payee contact.

Does this comply with REG E? BP believes so b/c they believe they processed payment correctly, even though posting cannot be verified and no confirmation can be made that the customer is made "whole" (payment posted to intended account).

Here's how Comment #2 to § 205.11(c)(4) puts it:

"2. Scope of investigation. When an alleged error involves a payment to a third party under the financial institution's telephone bill-payment plan, a review of the institution's own records is sufficient, assuming no agreement exists between the institution and the third party concerning the bill-payment service."