Charging Fees For An Erroneous Error Report on an EFT

by Mary Beth Guard, BOL Guru

Question: Sometimes when customers report an EFT error or unauthorized charge on their card and we get the research back it ends up the customer did make the transaction and forgot. This costs us around $15.00 to $20.00. If the customer made a mistake can we pass the charge on to them, or since it falls under REG E, is the bank is liable for all costs?

Answer: I see nothing in Regulation E or the EFTA that would prohibit this type of fee. However, as BOL user Sean Kulczycki noted, there is a sentence in the commentary to the Regulation that reads as follows:

Charges for error resolution. If a billing error occurred, whether as alleged or in a different amount or manner, the financial institution may not impose a charge related to any aspect of the error- resolution process (including charges for documentation or investigation). Since the act grants the consumer error-resolution rights, the institution should avoid any chilling effect on the good- faith assertion of errors that might result if charges are assessed when no billing error has occurred. (emphasis added)

You may be able to charge a fee for fraudulent claims of error (since the commentary is only aimed at preventing the chilling effect a charge might have on good faith assertions of error). It's one thing, however, to make a determination that no error occurred and decline to recredit a customer's account; it would be a much more difficult matter to establish that the very claim of error was fraudulent. When you label something "fraud", you'd better be ready to prove it.

The original version appeared in the March 2002 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 7/29/02