We have a dispute in which the customer said they didn't receive cash at the ATM. We provisionally credited the withdrawal amount, however the overdraft fees were not credited at the time we provisionally credited the withdrawal amount. We've since denied the claim and honored overdrafts for 5 business days (and subsequently refunded most of the fees assessed), but I believe we have a technical violation since overdraft fees were not refunded at the time of provisional credit (and thus the customer was NOT given full use of her funds during the investigation). Is that a correct assessment?

I'm really not sure if this was Reg E compliant but this is how our card department handled it....

We used to wait to refund the fees associated with
the dispute. After investigation if the decision was for the customer we would then refund the fees, if not we wouldn't have to debit the fee credit along with the provisional credit.

A literal read of section 205.11 and the OSC only mentions the refunding of fees in connection with the final determination, adjustment, etc. I don't think you've violated the regulation at all.

Thanks for the confirmation

A little more information on this one... The other bank actually recredited the customer for the disputed transactions (ATM). So, since they were already credited, we denied the dispute. Shouldn't we have refunded all the fees, though, associated with these items if the dispute was valid- the merchant just beat us to the punch to refund??

As much as the ATM owning bank may have tried to be customer-friendly in adjusting for the cash dispense error, that's not the way things should happen, of course. However, you are correct to say that you should (in fact must) refund any fee that you charged your customer that resulted from the error. The dispute was, in fact, valid. The resolution was irregular and that's what threw you off.