I've seen a few posts regarding payday lending and Reg E disputes, but they all seem to involve the customer requesting the loan. I wanted to explain my situation and see if anybody could offer any suggestions for us.

Customer disputes $617.50 debit from a payday lender. We submit a dispute through Shazam and receive documentation for the loan; however, the loan is in a different person's name. After questioning customer about the other person, we find out that it was her ex-boyfriend (supposedly they broke up over a month before the loan was taken out). Since payday lenders credit and debit from the same account, the customer received the $500 credit for the loan proceeds. We reviewed her account, there was not a significant withdrawal for the money, just her regular day-to-day transactions. That being said, it seems clear that her ex-boyfriend in no way benefited from the money.

What are our options? We believe the payday lending company should have to either verify the account information (like whose name it is in) or have authorization from our customer showing to use her account for this person's loan --- doubt we would get anywhere with the payday lender, though. We don't have good recourse against the person because he didn't benefit from the money. Can we request the $500 back from the customer (if she disputes the debit, then the credit would have to be disputed as well) and just write off the $117.50 difference to be done with it?

I would argue that your customer benefitted since the loan went in to the account and that she should deal directly with the lender to resolve it.

I would take the opposite position. The debit is a separate transaction from the deposit. Here, the customer didn't do, authorize or benefit from this transaction because she was not listed on the loan and the money didn't pay her debt.

She could maintain the boyfriend borrowed the money to repay her. Then the lender is going after her for his debt.

I'd look for ways to "undo" that debit thru the system but as to Reg E, it favors the consumer.