The bank has received a dispute from a customer that states his M/C debit card was charged from DirectTV and he did not authorize it. He has used their service in the past. We are reaching the 10 days in the investigation period and will need to give provisional credit to extend the investigation timeframe. My question is, can we withhold a max of $50 from the provisional credit as stated in section 205.11 of Reg E below? I am assuming the $50/$500 amount to withhold mentioned in section 205.6 only applies to an access device that was lost or stolen? Please advise.

(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.

Have him sign a affidavit and kick it back. Why waste anymore time?

Not only does the $50 consumer liability from 1005.6 (CFPB Reg E citation) not apply, when you file a chargeback for 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.


As Randy said, file the chargeback and provide provisional credit for the full amount of the transaction.

I agree on the Mastercard side of it, but what we are wondering is about Reg E. Here's a little more background. 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 rules only apply to lost or stolen cards?

The first two tiers of liability under §1005.11(b) only apply if there has been a loss or theft of the access device. Note that those layers of liability are connected to the date on which the consumer learns of the loss or theft. The reason that liability attaches so early in these cases is that there is an event (the learning of the loss or theft of the device) that triggers responsibility for the consumer to act. If he fails to act, liability starts piling up because the bank wasn't alerted and could not stop the "bleeding."

In contrast, the third layer of liability is triggered by another event of which the consumer should have knowledge, even if he doesn't know his access device was lost or stolen -- the sending of a statement showing an unauthorized transfer.

Does that help explain the difference?

Answering your questions more directly -- if the consumer was not aware of the loss/theft of his card (since the card was not lost or stolen) no liability can attach to the consumer for that transaction under Regulation E if it's determined to be unauthorized. The ball is in your court -- you need to investigate to determine whether DirectTV had an authorization for the transaction.

Thanks John! I appreciate your explanation on this. This helps a lot!