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#1721319 - 07/18/12 08:00 PM REG E dispute - possible fraudulent claims
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
Ok - here's a doozy.

Customer receives satement and comes into the bank and files a claim that multiple transactions on their account were conducted without their authorization. When speaking with the FSR, they provided the FSR with periodic statements which included comments about which items were were not authorized - while the FSR was copying the statements the package included email correspondence with the merchant where the customer states that they did authorize the transacations.

1. We beleive the customer has falsified her claim to us. 2. The account type this customer has requires ebanking and e-statements and we have the log where they logged into their ebanking account multiple times on each of the days they are claiming unauthorized transactions occured. So we beleive the customer had knowledge of the transactions prior and could have prevented any additional "unauthorized" transactions.


Do we have to give provisional credit? Do we honor this claim? What other issues do we face?

Any help is greatly appreciated - opinions and comments too!!!

Thanks.

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eBanking / Technology
#1721353 - 07/18/12 08:48 PM Re: REG E dispute - possible fraudulent claims Tryin-2-Comply
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,272
Illinois
Quote:
the package included email correspondence with the merchant where the customer states that they did authorize the transacations.


I'm going to play devil's advocate with this one. It is also possible that the customer tried to obtain a refund from the merchant prior to filing a complaint with the bank and the merchant refused to work with them.

Quote:
The account type this customer has requires ebanking and e-statements and we have the log where they logged into their ebanking account multiple times on each of the days they are claiming unauthorized transactions occured. So we beleive the customer had knowledge of the transactions prior and could have prevented any additional "unauthorized" transactions.


The Reg E liability in Section 1005.6 cannot be modified due to customer negligence and is based on when the customer learned of a theft of an access device. While you have logs proving the customer signed into the account, you do not have proof that they saw and identified the unauthorized charges as such. The customer could argue that they skimmed the account information just to check a balance or pay a bill and did not look carefully at the transaction history. Also if these transactions were done using a VISA/MasterCard debit card, your customer may be protected by Zero Liability making 1005.6 a moot point.

Quote:
Do we have to give provisional credit?


Yes if you cannot complete your investigation in 10 business days (5 business days on a VISA debit card)

Some suggestions for your investigation:

1. Does the customer have any transactions from these merchants that are not being disputed? I often see small "free trial" purchases of 1.95-5.95 turn into $75-$99 disputed transactions when the customer failed to read what terms to which they were agreeing.

2. Did the merchant respond to the customer emails? If so, do these responsed provide any clues regarding the nature of the transactions?

3. If debit card charges and you can't prove the charges are valid through research, you may need to file chargebacks to get the merchant's side of the story. If ACH debits, as long as you are in your timeframes, return the transactions and be done.
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
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#1721391 - 07/18/12 09:45 PM Re: REG E dispute - possible fraudulent claims Tryin-2-Comply
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
Thanks for the quick reply.

1. The customer does have other transactions from the same merchant prior to these charges. Similar amounts.
2. Yes, the merchant told the customer to contact the issuer of the card and for the issuer to submit chargebacks.

Question: the customer logged into their ebanking account every day, sometimes as many as 8 times in a single day. And these charges occured nearly every day.

Question: So, if the customer agreement falls under the Visa Zero liability, then, we must refund the charges.

Ok, i'm sorry - the REG E disputes are new to my area. I am confused. So, even if the customer appears to have been negligent by logging into their account each day and seeing these transactions (there are so many each day - they had to). the bank looses?

Is there some information on BOL or elsewhere that is easier to understand and digest?

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#1721398 - 07/18/12 10:10 PM Re: REG E dispute - possible fraudulent claims Tryin-2-Comply
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,272
Illinois
If the customer is asserting fraud, the VISA Zero Liability would reduce the customer's liability to $0 assuming that you determine the transactions are truly unauthorized.

The $50 and $500 liability schedule in Section 1005.6 only applies to a lost/stolen access device. If you customer still has their VISA card in their possession, then you must look at 1005.6(a)(3) which gives the customer 60 days from the delivery date of the first statement to file a claim.

If the merchant is willing to accept liability and the bank successfully files the chargebacks, the bank will only be out any chargeback fees charged by your processor. If the merchant provides documentation that leads to conclude that the customer authorized the charges, then you revoke the provisional credit.

Also your rights will vary depending on whether these charges were card present or card absent transactions.

BOL is a great source for training on this topic.

The ATM/Debit Card section of the BOL Learning Connect Training Catalog has past webinars by Andy Zavoina on Reg E, and by me on Debit Card Compliance, and VISA Chargeback procedures.

I'm also working on a new program Skimmers & Hackers & Phishers...Oh my! which will take place on September 19th on the topic of Debit Card Fraud loss prevention. In November I will again be offering a webinar on VISA Chargeback procedures. (Not yet on the BOL calander.)
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
www.tcaregs.com

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#1721450 - 07/19/12 01:36 PM Re: REG E dispute - possible fraudulent claims Tryin-2-Comply
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
Thanks so much for your help. I do appreciate it. I am going to review the materials and see if i can get my head wrapped around this.

Thanks again!

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