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#109969 - 08/26/03 07:07 PM Reg E on debit cards
RBanker Offline
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Austin Texas
Help - I'm confused - Does Reg E cover debit card transactions - I know this sounds dumb, but here I thought it was, and our disclosures indicate same, but was just told at Fraud and Security Seminar that it doesn't!!!! Can someone tell me the 'rest of the story?'
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#109970 - 08/26/03 07:16 PM Re: Reg E on debit cards
Anonymous
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Yes, debit card transactions are covered under Reg E. I'm not sure why you were told that they weren't covered.

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#109971 - 08/26/03 07:18 PM Re: Reg E on debit cards
JacF Offline

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Reg E does indeed cover debit card transactions. However, your debit card processor may impose shorter timeframes for error resolution than what is allowed under Reg E. Could this be the point the presenter was trying to convey?

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#109972 - 08/26/03 09:08 PM Re: Reg E on debit cards
Terah2 Offline
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Found this under the Coverage section for reg E.:
Regulation E

Sec. 205.3 Coverage.

(a) General. This part applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's account. Generally, this part applies to financial institutions. For purposes of Secs. 205.10 (b), (d), and (e) and 205.13, this part applies to any person.

(b) Electronic fund transfer. The term electronic fund transfer means any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit an account. The term includes, but is not limited to:

(1) Point-of-sale transfers;
(2) Automated teller machine transfers;
(3) Direct deposits or withdrawals of funds;
(4) Transfers initiated by telephone; and
(5) Transfers resulting from debit card transactions, whether or not initiated through an electronic terminal.
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#109973 - 08/27/03 12:44 PM Re: Reg E on debit cards
Andy_Z Offline
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I'm guessing that they may have meant that there are generally more stringent rules and they preempt Reg. E as you can make it better for the customer, but not worse.

You can't do less than Reg. E requires.

The other option is that the trainer was mistaken.
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#109974 - 08/27/03 03:12 PM Re: Reg E on debit cards
John Burnett Offline
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And the other possibility is that the trainer was talking about merchant disputes that don't qualify for error resolution treatment under Regulation E, but may be subject to Visa/MasterCard handling rules. These include things like quality of merchandise or service.
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#109975 - 08/27/03 07:28 PM Re: Reg E on debit cards
slloyd Offline
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We were also recently told the same thing regarding signature based transactions performed with a debit card, since these would fall under Visa/MC rules. We have never been able to get a definite answer one way or the other- it depends on who you ask. Right now, we treat the card as if it were two- ATM/POS disputes under reg E rules, signature trans disputes under Visa. Are we wrong??

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#109976 - 08/27/03 07:56 PM Re: Reg E on debit cards
John Burnett Offline
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You're not wrong to think of it this way if you provide your customer with at least as much protection under the credit card association rule as you do under Regulation E.

An example: Suppose a customer challenges as unauthorized a $585.00 signature POS debit put thru by a rental car company. If you apply the Visa/MC rules, you may have up to six months of batting this thing back and forth. Ultimately, you determine that the car rental folks had a contractual right to assess the fee, which turns out to be for a body-shop repair the agency demonstrates your customer was responsible for.

You decide the transaction was authorized in the contract, so you decide to rescind the provisional credit you gave the customer 6 months ago. [Note: this time period may be out of whack, but it could certainly be more than 90 days.] The problem: This transaction was subect to regulation E. The allegation turned on whether the transaction was authorized by the consumer. This is a legitimate error allegation under 205.11, and you only had 90 days in which to complete your investigation.
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#109977 - 08/28/03 03:32 AM Re: Reg E on debit cards
Andy_Z Offline
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One possible exception to this is if the transaction was processed though the VISA ATM network. I have heard of this but not been exposed to it. In this case the VISA rules should apply, from what I have been told. I've never been a VISA issuer for this.
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#109978 - 08/28/03 12:41 PM Re: Reg E on debit cards
John Burnett Offline
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As you can see, it's critical, once a consumer has entered an error claim, to determine first whence the transaction came. As Andy points out, POS transactions come from more than one direction. For example, all of my bank's POS debit card transfers come in via Fiserv EFT. But their origins may have been:
  • STAR Network

  • NYCE Network

  • Visa signature debit

  • Interlink (Visa's PIN debit POS network)

Transactions coming through the first two networks are subject to Reg. E; those coming through the latter two networks are subject to both Reg. E and Visa rules.
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