At my former bank we did not permit clients to place stop payments on checkcard purchases. We would perform merchant dispute on the transaction, close the card, reissue a new one in order to prevent future transactions from attempting to post to their card. My current bank allows this practice and are currently scripting a process to place stop payments for recurring checkcard transactions.

Would these transactions fall under reg E 205.10(c)(1)

1. Stop-payment order. The financial institution must honor an oral stop-payment order made at least three business days before a scheduled debit. If the debit item is resubmitted, the institution must continue to honor the stop-payment order (for example, by suspending all subsequent payments to the payee-originator until the consumer notifies the institution that payments should resume).

Debit card payments are electronic transactions subject to the stop payment rights permitted by Reg E. That being said, let's look at your process.

Somewhere in your card agreement should be a clause that states something to the effect "Debit card purchases are considered to be charged to your account when the merchant obtains a valid authorization against your card, and are therefore not ineligble for stop payment orders."
For banks that do not post pending authorizations to a customer's account, the customer may be under the impression that they can rush into the bank and stop a debit card purchase since the funds don't show as charged. Of course, once a valid authorization is obtained, the bank has no way to stop the charge and may not have a valid chargeback reason to file a merchant dispute.

However, for recurring payments such as health club memberships, utility payments, etc. Reg E does allow the customer to come into the bank and request a stop payment if they notify you at least three days prior to the authorization being applied to the card. If you refuse the stop payment and tell the custoemr to go to the merchant since VISA/MasterCard will require merchant contact for you to file your merchant dispute, you're in violation of Reg E and may be liable to ypur customer for a charge that you cannot recover. You can comply with Reg E in one of two ways. First, cancel the card before the authorization is made and issue a new card. Second utilize VISA's Preauthorized Payment Cancelation Service or MasterCard's Recurring Payment Cancellation Service. These services notify the merchant that the cardholder is cancelling. If the merchant processes a charge anyway, you can file a "Cancelled Recurring" chargeback without a cardholder letter and avoid cancelling the card.

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Debit Cards - Error Resolution Problems Solved