Hi,

We have a customer who has disputed the purchase of a $2,600.00 scooter purchased over the Internet consisting of 4 transactions. Something broke on it and the customer is attempting to get their money back within the Warranty period.

They went through the pre-arbitration stage, 30 days, and it appears that of the 4 entries, 3 @ $700, 1 @ $500, two of the $700 were denied and the company agreed to pay the third $700. We are still awaiting the decision on the fourth $500 entry.

We are preparing to inform our customer of the cost of arbitration; however, upon calling Shazam they informed us to review Reg E and that the FI might be liable for the arbitration cost of $250 Filing Fee, a $250 Review Fee, and a potential $100 Technical fee and this is per entry! Why would the FI be responsible for this?

We are still holding the original representment in our dispute G/L but intended to charge the customer if they were not refunded their money.

HELP!

If the charge isn't being contested, but the quality of the product, deny the Reg E claim. Otherwise, unless you have an agreement in place, you can't charge a fee on a valid Reg E claim.

I am not sure I understand what you are saying. The fee is not one we charge it is being charged by VISA to review our customer's claim and the merchant's denial to refund their money.

Why should the FI be liable for any of this? We are the issuer of the card but the customer chose the merchant.

To clarify my understanding......SHAZAM is wrong in stating the FI would pay the VISA arbitration fees. This was an authorized dispute to begin with; so, Reg E would not apply at all.

Wouldn't the customer arbitrating with the merchant be responsible for all VISA fees? (VISA $250 Review Fee, $250 Filing Fee, and the $100 Tech Fee.)

I would think so, but I am not familiar with this process. I don't see how the bank could possibly be liable.

Well first of all, there is this requirement from the Visa Operating Manual: A Member, Processor, or Agent must not
represent to its customer that Visa imposes any charge on its customer (vol 1. Section 9.2).

If you should happen to figure out a way to bypass that requirement, I suggest you contact your Visa Representative so they can explain to you why the arbiration fees are not to be passed on.

I have had rare instances where I did pass on the fees for a lost case but that was after having a specific conversation with the customer where #1) I explained why with my decade of experience in dispute resolution I did not think we would win a decision in our favor; #2) also explaining the exact cost involved without specifically stating the costs come from Visa; and #3) getting written agreement to acceptance of the fees.