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Provisional Credit Reversed - Monitor Account?
Answer by David Dickinson and John Burnett, BOL Gurus
Guru Bio

Question:   If a provisional credit is reversed because the customer contacts the bank and acknowledges the charge, is the bank required to monitor the account for 5 business days?

Answer by David Dickinson:   Refer to section 1005.11(d).
Upon debiting a provisionally credited amount, the financial institution shall:

a. Notify the consumer of the date and amount of the debiting;
and
b. Notify the consumer that the institution will honor checks, drafts or similar instruments payable to third parties and preauthorized transfers from the consumer's account (without charge to the consumer as a result of an overdraft) for five business days after the notification. The institution shall honor items as specified in the notice, but need honor only items that it would have paid if the provisionally credited funds had not been debited.

Answer by John Burnett:   Regulation E doesn't allow for different ways of applying the rules on reversing a provisional credit based on why the credit is to be reversed. It does, however, provide an alternative to the monitoring requirement, in the Supplement I Official Staff Interpretation to section 1005.11(d). If the institution's notice of the reversal is sent five business days in advance of the reversal transaction and notifies the consumer when the reversal will be posted, no monitoring is needed.

First published on BankersOnline.com 2/28/11; citations to regulation updated 12/30/13









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