Question: If a customer is suspected of fraud and disputes electronic transfers (that occurred prior to the account being restricted), is the bank
required to provisionally credit the customer?
Answer: Suspicion of fraud is not an excuse for failure to comply with the requirements of §205.11 of Regulation E. Assuming that the consumer
has met the customer requirements to be entitled to provisional credit (timely delivery of the written notice of claim), and that the bank has failed to complete
its investigation by the tenth business day after receipt of the initial notice of claim (whether written or oral), the bank must make the provisional credit.
If the bank has completed its investigation by the 10th business day and has determined that no error occurred,
no provisional credit need be made, but the bank must comply with the notice requirements in §205.11.
The original version appeared in the September/October 2004 edition of the Oklahoma Bankers Association Compliance Informer.
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