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#589568 - 07/27/06 04:09 PM Reg E, Again
DazedByRegs Offline
New Poster
Joined: May 2005
Posts: 12
I had posted a question concerning Reg E and Unauthorized Transactions around the middle of July. Client had received a phone call from a collection agency; gave the collection agency permission to charge his checking account for $200 by using his Visa check card, but told them he could not afford any more and they were not authorized to take more out until he talked with them again. The collection company took out the $200 on the 1st of May, then another $1,000 on the 15th of May and the 15th of June. Client was in process of PCSing and did not see the unauthorized charges until they had both gone through. He contacted both the bank and company within a 60 day time frame of the charges hitting; company said to let the bank handle it through the chargeback system; bank did charge the items back but they have given no provisional credit to the client. When I asked them why, I received the following email: "Non-pinned transactions do not fall under the REG E guidelines. If it is done over the phone & the customer gives the card number or if the customer signs for a transaction and runs it through at a register as a credit it is not covered by REG E. I am still trying to see what we can do. To answer your question as to why we don't give the provisional credit, it is because if it does come back to us or we have reason to believe it is coming back to us and it is a signature based item the bank would most likely suffer the loss. We have no control over what the customer is agreeing to do with his card. The customer evidently stated in one of his letters that he was going to close the account. If he closed the account before the charge back was settled we would have no recourse. Because this was a transaction made over the phone and permission was given to debit the customers account it is called a non-pinned transaction. Again, this transaction is not covered by REG E. I will keep you posted if we hear anything from the company involved." Is this actually correct? I also asked this person about the the Visa and Mastercharge requirement that I was told about: the two companies require that the bank issue credit to the account at time of the chargeback. Is the bank correct about the non-pinned items and Reg E not applying, and is it correct about the Visa and Mastercard requirements that the money needs to be credited back to the customer while the investigation is going on? By the way, my client has never said anything to me about closing th account out. And, even if he did close it out, it seems to me as if the bank would not be liable for that money, but rather it could then be returned as account closed. Am I way off base on that supposition? Thanks again for any help given here.

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#589569 - 07/27/06 05:07 PM Re: Reg E, Again
Chiquita Banana Offline
Diamond Poster
Chiquita Banana
Joined: Jun 2002
Posts: 1,044
The banana bin
First, it doesn't matter one iota if it is a PIN based transaction or not. The debit card is an access device...how it 'flows' is of no consequence to Reg E.

Second, if the customer has three transactions that posted to his account but the customer states that the first one was authorized but the other two weren't...then the bank must give provisional credit within 10 business days as the following two charges were unauthorized. AND Visa/MC rules state that provisional credit must be supplied within 5 business days.

You should, in my opinion, give the customer provisional credit.
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My opinions are definately my own. I could be wrong. But I don't think so.

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#589570 - 07/27/06 05:07 PM Re: Reg E, Again
Chiquita Banana Offline
Diamond Poster
Chiquita Banana
Joined: Jun 2002
Posts: 1,044
The banana bin
Just re-read my post. Didn't mean to sound snotty!
_________________________
My opinions are definately my own. I could be wrong. But I don't think so.

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#589571 - 07/27/06 05:46 PM Re: Reg E, Again
Anonymous
Unregistered

Doesn't ยง205.3(c)(6) exclude telephone transfers from Reg E coverage?

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#589572 - 07/27/06 05:55 PM Re: Reg E, Again
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
For the jargon-challenged: "PCSing" refers to a "permanent change of station" in the military. Translated: Moving from one duty station to another, which can take a lot of a service-member's time and attention away from things like managing one's finances.

As for the telephone transfer aspect suggested by our Unregistered friend, that won't wash, I'm afraid. The regulation's reference to telephone transfers refers to movements of funds between the depositors accounts within the same financial institution. Even then, it only exempts what might be called "casual" telephone transfers. If a transfer is made under a telephone transfer service, it's covered by Reg. E.

Chiquita's response was on target.
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John S. Burnett
BankersOnline.com
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