We received a dispute from a customer that stated his cable company charged his debit card, and he didn't authorize it. We are in the investigation process, but have not yet given him provisional credit. My understanding is we do not have to give provisional credit until after the 10 business days is up, and we end up needing to extend the investigation period to 45 days. Is this correct?

Reg E says that the provisional credit must be provided "within" not "after" the 10 business days. Since the error involves a point of sale debit card transaction, Section 1005.11 (c)(3)(ii)(B) allows you to extend you investigation up to 90 calendar days.

The liability rule applies when an accepted access device is used. In this case the company retained the data of the "accepted access device" and it could be argued either way that it was or wasn't and that the liability rules do or don't apply.

In this case there was no device to lose per se. The time between when the transfer happened and he notified you is moot here. Did he notify you within 2 business days of learning of the transaction? If so, the $500 liability doesn't even come into play. The liability is based on when they learned of the loss or theft of the access device. Again, there was info, but no physical device to lose. One could argue that the liability rule wouldn't apply at all here or the alternative is to replace the card after every time the data is given. I've read no legal opinions on this. (Anyone?)

And if you exceeded the 10 business day credit, I wouldn't hold him to the $50 either. You're making a bad situation worse. How much are we talking and do you think you'll get a credit for all of it from the vendor anyway?

I assume that before my response was posted newbie deleted the question on liability when 3 days passed after the transfer and the report. Any way, that is what my post was in response to.

I agree on the Mastercard side of it, but what we are wondering is about Reg E. The customer did not notify us of the transaction until 3 days after it posted to the their account. The card is not lost or stolen and is in the customer’s possession. Because the customer had prior affiliation with the company and provided their card, even though they no longer use the company, is the transaction still considered fraudulent? Would the customer be liable under the $500 rule? Or does it not apply because the card is still in the possession of the customer? Does Reg E $50/$500/unlimited rules only apply to lost or stolen cards? If the card is still in the possession of the customer, then Reg E liability rules do not apply?

Sorry Andy, I did delete my post and moved it over under my other post that I made on this subject. Still learning how to do the posts on here. Thank you for your input. I was a little confused on that section of reg E and if the $50/$500 liability applied strictly to lost or stolen access devices. The operations dept handling this is just trying to clarify if they have an option to withhold any of the provisional amount since in Reg E section 205.11 it states (i) Provisionally credits the consumer's account in the amount of the alleged error (including interest where applicable) within 10 business days of receiving the error notice. If the financial institution has a reasonable basis for believing that an unauthorized electronic fund transfer has occurred and the institution has satisfied the requirements of Sec. 205.6(a), the institution may withhold a maximum of $50 from the amount credited.

Thanks!

Since the access device was given to the cable company, I believe that this claim would be governed by Section 1005.6(b)(3) Timely notice not given/Periodic Statment. While it is true that you have the right under Reg E to withhold $50 from the provisional credit, if your investigation determines that an error occured, you must reimburse your customer the $50 since 1005.6(b)(1)(2) would not apply.

Also, since this transaction involved a MasterCard, section 1.4 of MasterCard Chargeback Guide states:
It is very important to note that when an issuer has billed a transaction to its cardholder’s account for payment and then chooses to exercise a chargeback right, the issuer must credit the cardholder’s account for the amount of the chargeback.

Due to the MasterCard rule, you would be unable to withold the $50.00 as this would violate your contract with MasterCard and your cardholder agreement with the customer.

Newbie, make sure you also look up some of the free tools available, like the Reg E Liability Calculator.

http://www.bankersonline.com/tools/tools.html#Regulatione