A customer disputes two POS transactions. He authorized them but stated that he never received the merchandise. Merchant says they credited his account but the funds have not credited to his account yet (60+days). We disclosed all appropriate paperwork to our 3rd party vendor to work the dispute. Apparently all the paperwork did not make it to the vendor. They replied recently that the transactions were authorized and that dispute was closed. They made this decision based on limited paperwork received. Should have been worked as an "authorized" but "items not received". They requested we re fax paperwork and they will now process appropriately.

However, we are now past the 90 days under Reg E. We gave provisional credit as required but wonder what to tell the customer now. Since we missed the 90 timeframe due to something beyond our control I think we should just notify the customer that more time was needed and that we will allow them to keep the provisional credit until a decision is made.

Do you think we could be cited as not being in compliance with the reg in this case? It is not our fault they did not receive all the information we faxed to them.

How would you handle the customer now? What type of notice would you give them?

If the customer authorized the transactions, then they really have no claim under Reg E. Reg E does not cover disputes with respect to quality or receipt of goods. If the transactions were truly POS, i.e. not run through Visa/Mastercard, then the customer is on his/her own to resolve the dispute with the merchant. If the transactions were Visa or Mastercard, then their rules apply. I am not familiar with all of their rules, but there is probably some provision for merchants and processors to provide timely information, just as you are required to provide timely resolution. You are still ultimately liable to your customer but might have some recourse against those parties that did not comply with the rules, if that is the case.

If you feel the customer is being honest with their situation, I would make their credit final, then finish the complaint. You should have 180 days on non receipt of merchandise to file your dispute. Is this ACH or debit/credit? I know nothing of ACH so do not apply my above statement to ACH's.

Assuming the consumer advised you within 60 days of the statement where the error occurred then this is a Reg. E violation.

The Reg. E error is NOT the delivery of merchandise. The error is the lack of credit on the account on the date the merchant promised it. However, the chargeback you would pursue is not Credit Not Processed but rather Non-Receipt of Merchandise.

Your vendor made a mistake. This dispute type qualifies under Non-Receipt of Merchandise for both Visa and MasterCard (Visa would probably accept it as Credit Not Processed due to the verbal promise of credit, though it is not as strong a chargeback. MasterCard never recognized verbal promises of credit.).

The error date for this type of chargeback is the last anticipated date of delivery of the merchandise. Your chargeback must clear no later than 120 days from that date.

According to the information you stated, your vendor received this information in time. Even if they didn't, for Visa you can still pursue this issue under Compliance (which was 5.2.P last time I checked) for the promise of credit and the non-delivery of merchandise. The date of discovery would be the date your bank was notified of the information.