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#715486 - 04/12/07 05:19 PM
is this unauthorized?
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New Poster
Joined: Apr 2007
Posts: 1
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We had a customer call in today and state that she had a company take money out of her account without authorization. Apparently she had given her debit card number to them back in December to make one payment but did not give them permission this time nor did they warn her they were debiting the account. My supervisor called and spoke to the company who said they had a contact with her that if she fell behind they were able to withdrawal the funds. Are they able to do that?
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#715596 - 04/12/07 06:30 PM
Re: is this unauthorized?
amjohnson
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TN
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I would ask for a copy of the contract during your investigation. If it is as the company states then your customer is incorrect - in my opinion.
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#716135 - 04/13/07 04:07 PM
Re: is this unauthorized?
XODUS
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Joined: Oct 2000
Posts: 2,416
Pleasanton CA USA
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How does paying a bill owed by the customer not benefit the customer?
Al
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Al Miller, CRCM Opinions expressed are my own and not necessarily shared by my employer.
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#716143 - 04/13/07 04:12 PM
Re: is this unauthorized?
Al Miller
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Galveston, TX
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Kick it back as unauthorized and let the company and the customer fight it out. I see too many banks waste too much time trying to figure out who is right in these situations. Calling merchants, trying to get and interpret contracts, etc. are all a waste of time IMHO.
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#716329 - 04/13/07 06:26 PM
Re: is this unauthorized?
rlcarey
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Member
Joined: Sep 2006
Posts: 92
the south
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Al,
If I read correctly, XODUS is agreeing with you...the customer DID benefit so "unauthorized" does not apply.
"as the charge was to pay the bill this does not qualify"
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#716401 - 04/13/07 07:30 PM
Re: is this unauthorized?
OVERWHELMED
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Pleasanton CA USA
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Sometimes the thread bounces around to the point where I now longer know if I agree with me. Al
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Al Miller, CRCM Opinions expressed are my own and not necessarily shared by my employer.
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#716581 - 04/15/07 01:01 PM
Re: is this unauthorized?
XODUS
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Joined: Jul 2001
Posts: 83,363
Galveston, TX
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[quote=XODUS]but as far as charging it back if it's a Visa card you can't. quote]
Why not???
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#716587 - 04/15/07 05:23 PM
Re: is this unauthorized?
rlcarey
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Cape Cod
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Technically, it's not an unauthorized transfer because your customer benefited from it (got credit on an account with the Originator). If you send this back as unauthorized, ask your customer whether he or she has told the Originator not to use EFT to collect again. If not, suggest that your customer do so, and provide you a copy of the written notice. Then, under Reg. E, you will be able to put up a "standing" stop order for further debits.
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#716887 - 04/16/07 06:27 PM
Re: is this unauthorized?
rlcarey
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Power Poster
Joined: May 2005
Posts: 4,384
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[quote=XODUS]but as far as charging it back if it's a Visa card you can't. quote]
Why not??? as part of the chargeback condition it states that the customer knew nothing about the transaction and did not receive any benefit from the transaction. The customer signs agreeing to this. I would suppose can't is the wrong word and shouldn't would be the right word. You can charge it back and get represented by the merchant showing it was to pay their aforementioned bill. Thus resulting in the fees for the chargeback and the representment.
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#717118 - 04/17/07 11:01 AM
Re: is this unauthorized?
XODUS
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Galveston, TX
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But nine times out of ten it never happens. The customer claims it is unauthorized and you have an affidavit in your hand, the merchant gets the return, they then pursue other means of collection rather than submit additional ACH trnasactions. IMHO - You waste more time and money going through any process trying to figure out who is right and wrong than just returning based on the customer claim and being done with it.
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#717423 - 04/17/07 05:10 PM
Re: is this unauthorized?
XODUS
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TN
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Xodus - I believe what Randy is trying to say is that your customer has submitted a signed affidavit that it was unauthorized. It is not our job to verify they are telling the truth. We are required to comply with the regulation when the customer notifies us and completes the document. Then the discrepancy is between your customer and the merchant.
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#717705 - 04/17/07 11:29 PM
Re: is this unauthorized?
XODUS
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Galveston, TX
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Xodus - I think that you have slightly hijacked this thread with a scenario that does not resemble the original post. They stated:
"Apparently she had given her debit card number to them back in December to make one payment but did not give them permission this time nor did they warn her they were debiting the account. My supervisor called and spoke to the company who said they had a contact with her that if she fell behind they were able to withdrawal the funds. Are they able to do that? "
My contention is that in these circumstances - whether the customer received any benefit or not - the charge was unauthorized in the eyes of the customer and the bank should just return the dang thing. Getting involved by calling the merchant, etc. as a waste of bank time as you are not required to play referee. Return it and let the customer and merchant sort it out.
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#718316 - 04/18/07 11:33 PM
Re: is this unauthorized?
XODUS
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Posts: 83,363
Galveston, TX
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So, you're saying that anyone that has my debt card number can subsequently send through charges anytime they want to if they have provided me a product or service and I have no recourse? I'm not sure why you are hung up on having to have "received no benefit". That is not a requirement for a claim of an unauthorized transaction. They exceeded their authority - how I chose to pay for a service is between me and the merchant. I suggest you review your form - many that I have seen do not include such a claim in the affidavit, only that the charge was unauthorized.
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#718612 - 04/19/07 03:25 PM
Re: is this unauthorized?
John Burnett
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Power Poster
Joined: May 2005
Posts: 4,384
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Did you read this? Technically, it's not an unauthorized transfer because your customer benefited from it (got credit on an account with the Originator).
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#718700 - 04/19/07 04:28 PM
Re: is this unauthorized?
XODUS
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On the Net
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Your V/MC rules layer on top of Reg. E. You'll have to define "receiving benefit" because if this is paying a bill, such as a gym membership, the consumer would claim they canceled the membership and didn't receive benefit because they didn't use the gym. If you used my debit card and had a lamp sent to me, if I don't want the lamp or use it, I am not getting benefit even though it was delivered to me.
My point here, be sure to draw your distinction between which layer of rights you are enforcing.
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#720187 - 04/23/07 04:20 PM
Re: is this unauthorized?
XODUS
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Gold Star
Joined: Jan 2006
Posts: 334
San Francisco, CA
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Visa and MasterCard specifically prohibit using their cards for transactions that result from what they term as "uncollectable debt".
Under their rules, these transactions are not authorized since there will not be a valid imprint and signature - contracts don't count. The cardholder may be obligated to pay (see next paragraph) but neither association will allow their card to be used. If you still have time, perform the chargebacks. If you don't, consider pursing a compliance violation.
However, under Reg. E, the transactions are authorized since the merchant is submitting the transactions in accordance with a valid agreement.
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#720297 - 04/23/07 06:31 PM
Re: is this unauthorized?
XODUS
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Joined: Jan 2006
Posts: 334
San Francisco, CA
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Receiving benefit is not authorization. Having the cardholder state that the transaction submitted on the card is unauthorized is not a lie. The consumer did not give permission to charge the card nor the account directly. The Visa chargeback right for unauthorized does not consider benefit and Reg. E does not address what makes a transaction authorized; it only addresses what makes it unauthorized. Reg. E (and not Visa rules) states that to qualify for unauthorized then there can be no receipt of a benefit. Liability then becomes a judgement call. It is important not to not confuse the imposition of payment of the transaction with the (in)ability to use the Visa card to submit the transaction in the first place.
Under Visa rules, a canceled contract is a cancellation issue but individual transactions for newly rendered services or merchandise are unauthorized if the cardholder did not explicitly agree to the transaction. In the situation described, the cardholder provided the account number for one payment 4 months ago and did not sign up for a recurring billing. Any newly submitted transaction are unauthorized, period. Previously providing the card information to the merchant for this singular payment does not give them permission to charge the account whenever they feel like it regardless of how much they might be due payment because of used services
In addition a transaction for uncollectable debt is prohibited in the Visa manual. Compliance violations of the rules are valid and are separate from any chargeback right (though in the instance that a valid chargeback right exists then it, and not the compliance violation, must be pursued).
You may determine the consumer is obligated to pay for the services used but the merchant is prohibited from submitting a transaction onto the Visa card without explicit authorization from the cardholder because the Visa card cannot be used as a collection tool. The merchant will have to pursue the cardholder directly.
Going back to the Reg. E issue, the transaction is not considered unauthorized because the consumer received benefit. Then is the cardholder liable? Reg. E does not address this, it only states that the consumer does not have a valid claim for unauthorized. The question then arises are you obligated to anything? The answer is yes but not because of Reg. E. You have an avenue of recovery and if you pursue cardholder disputes under Visa rules (which I'm guessing you do) then the Visa rules are explicit that you must take action:
"An Issuer shall resolve Cardholder disputes under the Operating Regulations by extending to Cardholders all protections provided on any Visa Card under Federal law or regulation and by utilizing the Issuer’s customary practices to resolve Cardholder disputes, regardless of which type of Visa Card was used."
I discuss this rule requirement in more detail in the May 10th presentation Beginner Reg. E Error Resolution and Chargebacks (Visa and MasterCard) .
Last edited by David Grodsky; 04/23/07 07:15 PM.
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