Is this a regulatory issue or would it fall under a separate legal issue?

The bank originally discloses a 90 day early withdrawal penalty on CDs and inadvertently charges a 180 day penalty.

The bank intends to refund the customer, but did they violate a regulation?

Any help is greatly appreciated!
Thank you

IMHO, technically you have violated your contract and the Truth in Savings Act. By finding and curing it yourself, I believe you would be OK from a legal and regulatory standpoint. Also, if it is a bona fide accident due to some system issue, I think that would work in your favor to some degree. The real problems arise when regulators or dissatisfied customers find these types of issues.

I can certainly see our contract violation, but where would I conclude a TIS violation?
The bank management is demanding to know if a reg is violated, “how” and Where would I point in the reg as proof? 12 CFR 230.?

The background is that these CDs are from a former bank buy-out. When they renew they are suppose to be converted to our bank’s contract. However, occasionally employees will miss one renewing and the customer will close it out. We recently discovered that on one of these the system automatically charged the higher penalty.

It is not a TIS violation. The customer received a disclosure and contract that stated the penalty for early withdrawal. At the time of early withdrawal you assessed a greater penalty. That results in a breach of contact. There is no regulatory violation.