I have a couple questions regarding the REG E requirements on a bill payment transactions. We utilize a third party to process our bill payments and I want to make sure they are complying; but REG E is vague or does not address BP:

A payment has been made to a payee for a customer, but was not applied appropriately by the payee. The BP provider provides proof of the transmission of the transaction to the payee, advises the customer of such, and closes the investigation. Actual validation that the payment has been applied is not performed.

I understand that this inquiry would be covered by REG E, but my question is if proof of the transaction is sufficient to close an investigation. My concern is that either the BP provider needs to follow-up to ensure posting and/or inquiries that take longer than 10 biz days will automatically require a provisional credit to the customer.

Thanks

I don't believe the BP provider has an obligation to confirm the correct application of the payment. Once the BP confirms the check was paid or payment was made, the information (including copies if necessary) should be forwarded to the consumer, who will need to follow up with the payee.

John, I was hoping that you would respond to this question. But, I must ask, is your answer based on the assumption that this transaction was debited from the consumer by the BP provider electronically or via a physical check? Assume that it originates as an electronic debit.

Wouldn't the BP provider have an obligation since with certain methods of remittance it would be necessary for the BP to be involved otherwise the customer might not ever be made whole?

Oh, I think the BP provider must complete the investigation. It's definitely a Reg E thing. But, once the BPP has determined that the payment went to the correct place, that's as far as the BPP is required to go.

That said, particularly if the payment went to the payee electronically, the BPP would have a lot easier time dealing directly with the payee's A/R department than the customer would. So a quality BPP would attempt to stand in for the customer in following the dispute through to the point where the payee figures out what went wrong and corrects it.