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#1267413 - 10/15/09 07:10 PM Possible Reg E situation
Double U Offline
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Double U
Joined: Jul 2008
Posts: 219
BBN
I am writing in response to a situation that has come up about unauthorized transactions by an electronic device. Our customer keeps a large balance in her account at all times ($10,000+). Her account has never gone overdrawn until this past week. It seems the reason her account was overdrawn due to numerous Visa purchases. She appeared on our NSF list and a call was placed by a CSR to check with her about her account. Our customer told our CSR that she has never used her VISA debit card. This was also confirmed by video suveillance checked by the local police authority and caught the perpetrator on video. The first transaction took place at the end of June. No more transactions took place until the end of August. Her statement cut at the beginning of July. She had never notified us until we placed the call last week. Looking at the rules, it states that we are required as a financial institution to follow rule 205.6 and has the chart of allocation for loss. Our card services manager contacted our data processor vendor and talked with a card services representative. Our manager was told that VISA rules supercede Reg E rules. I just need a little clarification on this and a little help in cyphering this out.

Any help is greatly appreciated!

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#1267694 - 10/15/09 10:59 PM Re: Possible Reg E situation Double U
C_Groat Offline
Member
Joined: Mar 2006
Posts: 70
Salt Lake City, UT
The Visa rules only supercede Reg E when it provides greater benefit for the customer. For instance, Visa Zero Liability states provisional credit is to be issued within 5 business days where Reg E indicates 10 and provides a $0 liability where Reg allows for $50/$500 depending on when CH identified the loss and reported it.

If these are PIN based transactions, Visa Zero Liability does not apply and you fall strickly to Reg E. If Sig based, Visa Rules may help you in recovering some losses via chargebacks depending transaction types.

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#1267963 - 10/16/09 03:24 PM Re: Possible Reg E situation C_Groat
Double U Offline
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Double U
Joined: Jul 2008
Posts: 219
BBN
Under Visa rules, it's my understanding that if the transactions are POS, we have no chargeback rights. All of the transactions that took place are POS. With that said, do we refund no money to the customer? I just want to make sure we do everything we can for the customer. If we can't refund any of the transactions, is the customer's only option to recoup anything is to press charges against the person who stole her card. Thanks for the insight C_Groat and any other help is greatly appreciated.

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#1268069 - 10/16/09 04:49 PM Re: Possible Reg E situation Double U
C_Groat Offline
Member
Joined: Mar 2006
Posts: 70
Salt Lake City, UT
Yes give the customer provisional credit and send Provisional Credit Letter advising she has use of the funds until the investigation has been completed. Since they were Visa transactions done via POS, for the most part you will not have chargeback rights, but we request all sales drafts greater than $50. If the merchant provides an incorrect, illegible or does not provide a draft within 30 days of request you would have a chargeback right against those - about 12% of our total recoveries come from these merchant errors. On lost/stolen cards you also have chargeback rights for any automated fuel dispencer pump (5542) tramnsactions. Under Reg E you have 90 days to investigate for POS transactions so make sure you send any final resolution letters before this timeframe.

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#1268080 - 10/16/09 04:59 PM Re: Possible Reg E situation C_Groat
Georgia Plum
Unregistered

How did the perpetrator get the card? Did she still have her card in possession or was it stolen? Is the perp related to her or known by her?

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#1268140 - 10/16/09 05:44 PM Re: Possible Reg E situation
Double U Offline
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Double U
Joined: Jul 2008
Posts: 219
BBN
It was her housekeeper. She does not have possession of the card. After we found all of these purchases had been made without her consent, we closed the card. This person is of no relation, but she does know that it was her housekeeper due to the video surveillance from the local Wal-Mart.

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#1268667 - 10/18/09 04:31 PM Re: Possible Reg E situation Double U
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Don't forget to file a SAR on the housekeeper. It's >$5,000 and you know how the suspect is.
_________________________
David Dickinson
http://www.bankerscompliance.com

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