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#1819342 - 05/31/13 07:44 PM Reg E dispute resolution
Gigi03 Offline
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During a review of our Reg E dispute process handling, it was found that once the disputed entry went through our processor and returned with no chargeback rights, within the 45 day (or 90 for POS) period the operations person was not notifying the customer within 3 days. They understood they should wait until closer to the 45 day expiration date because of their experience with some dispute credits being reversed after the initiating vendor provided the sales slip or other documentation. Either way, the bank has been absorbing the expense in this case. The question was if they could wait longer than the 3 day period to notify the customer the dispute was resolved, an error did occur (probably fraudulent card)and the provisional credit was final?

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#1819360 - 05/31/13 08:10 PM Re: Reg E dispute resolution Gigi03
BrianC Offline
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Once they found that the bank had no chargeback rights, did the investigation cease or did they continue to work the case? Based your your description of the course of events it sounds like you have ceased your investigation and should be providing notice at that time.

There is no need to wait for a merchant credit once you have concluded your investigation. If the merchant provides credit after you have closed your investigation, you can simply reverse the duplicate credit.

Revoke Duplicate Credit

Taking back Final Credit

Debit Card Dispute Right to Take Credit Back
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#1819366 - 05/31/13 08:24 PM Re: Reg E dispute resolution Gigi03
Gigi03 Offline
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Once they are notified there are no chargeback rights, they typically close the investigation and send the final resolution letter. What happened recently was a credit was received from the processor and the letter sent to customer, finalzing the provisional credit. Two weeks later a reversal of the credit came in based on the vendor's claim they had the card at the POS, and our credit was reversed. Based on that experience, they decided to not send the "final" letter until they got closer to the 45 day window. That seems out of step with 1005.11(c)'s 3 day notification time.

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#1819369 - 05/31/13 08:28 PM Re: Reg E dispute resolution Gigi03
Gigi03 Offline
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Brian, to clarify... there wasn't a direct refund to the customer in my example. Just a reversal of the credit to the bank through a ledger adjustment settlement acct.

Thanks for the help!

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#1819382 - 05/31/13 08:44 PM Re: Reg E dispute resolution Gigi03
BrianC Offline
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Ok...to help you understand VISA/MasterCard's chargeback process.

When the bank files a chargeback, it receives provisional credit from the merchant. The merchant has 45 days from the date of the chargeback to provide representment docuements. Your staff should not be closing their investigation if they do not have enough information to complete their investigation. In your example, it is appropriate to wait for documentation from the merchant. (Suppose you provide final credit upon receipt of credit from your processor only to find out a month later that the merchant provided a copy of a sales receipt containing your customer's signature. Now you have no way to reverse the credit even though you have determined that the transaction was legit.)
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#1819389 - 05/31/13 08:56 PM Re: Reg E dispute resolution Gigi03
Gigi03 Offline
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So, if I'm understanding you correctly, there is a distinction made by the processor when they provide the credit....either it is closed/final or provisional pending the outcome....right? If we receive a notice of no chargeback rights, however, that should be final unless we have additional information that may challenge the vendor. Otherwise, once that notification is received the final resolution letter should be sent to the customer within 3 business days.

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#1819390 - 05/31/13 09:10 PM Re: Reg E dispute resolution Gigi03
BrianC Offline
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Correct, receiving credit from the processor does not = case closed.

If you have no chargeback rights you have 3 choices:

1. Close the investigation and notify the customer within 3 business days.
2. Keep the investigation open and attempt to contact the merchant directly to obtain information about the transaction.
3. Keep the investigation open and file a retreival request with VISA/MasterCard to compel the merchant to produce documentation regarding the authorization (i.e. copy of the sales receipt.)
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#1819391 - 05/31/13 09:13 PM Re: Reg E dispute resolution Gigi03
Gigi03 Offline
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Again, thanks for the assistance.

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#1919461 - 05/01/14 07:11 PM Re: Reg E dispute resolution Gigi03
Compliance504 Offline
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OK, Brian...I need some help understanding this process.....In reviewing Reg E claims, I note that we do close investigations very timely after receiving notice that we have no chargeback rights....however, most of the other cases are kept open the full 90 days (when it meets the 90 day time requirement)...it appears on the processor report that the processor closed the case maybe a week earlier....but this report wasn't printed until close to the 90th day....

Am I understanding correctly that we can keep a claim open while we are waiting for chargeback information from the processor....all the way up until they close the case....provided it does not exceed the 90 day timeframe?

I want to make sure that I understand when cases need to be closed.....

Also, do you know why we would be waiting to print the report if the report states closed a week earlier? I don't know if maybe there is some type of batch process for printing these reports....

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#1919485 - 05/01/14 08:17 PM Re: Reg E dispute resolution Gigi03
BrianC Offline
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You can keep a claim open up to the 90 days while waiting to hear from your processor on a merchant's response (or lack of merchant's response).

As for when your processor reports are printed, this would be an internal procedure based on the workflow of the dispute resolution team.
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#1919494 - 05/01/14 08:34 PM Re: Reg E dispute resolution Gigi03
Compliance504 Offline
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As always, Brian...Thanks so much.......

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#2046221 - 10/26/15 08:30 PM Re: Reg E dispute resolution Gigi03
chansingh Offline
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Can a financial institution require a customer to try to resolve a non-fraud dispute with the merchant before filing a claim/dispute.
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#2046224 - 10/26/15 08:33 PM Re: Reg E dispute resolution Gigi03
Skittles Online
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If the transaction is covered under Regulation E - no, you cannot require this.
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#2046428 - 10/27/15 05:43 PM Re: Reg E dispute resolution Gigi03
David Dickinson Offline
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Your card customer = your problem.

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#2118496 - 02/16/17 05:29 PM Re: Reg E dispute resolution BrianC
APRIL FLOYD Offline
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Brian,

If you receive chargeback, do you have to send final letter or can you wait til closer to the 90 days to make sure they don't reverse chargeback?

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#2118527 - 02/16/17 06:28 PM Re: Reg E dispute resolution Gigi03
BrianC Offline
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A merchant has 45 days after a chargeback is processed to provide representment documents. I would not consider my investigation closed until I have obtained all of the potential documents that could aid in my investigation. Many posters on BOL have closed investigation as soon as they receive credit from their card processors only to find out a month later that the charge was authorized and they could not revoke final credit.

PS, welcome to BOL.
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#2118760 - 02/17/17 07:08 PM Re: Reg E dispute resolution Gigi03
David Dickinson Offline
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Brian: First, let me acknowledge that you "da man" when it comes to Reg E. However, I'd like to play devil's advocate about your last post. Reg E says you are to investigate promptly and correct errors with 1 business day after deterring that an error occurred. I know you know this, but here's the citation:

A financial institution shall investigate promptly and, except as otherwise provided in this paragraph, shall determine whether an error occurred within 10 business days of receiving a notice of error. The institution shall report the results to the consumer within three business days after completing its investigation. The institution shall correct the error within one business day after determining that an error occurred. [§1005.11(c)(1)]

and §1005.11(c)(2):
If the financial institution is unable to complete its investigation within 10 business days, the institution may take up to 45 days from receipt of a notice of error to investigate and determine whether an error occurred, provided the institution does the following:

Corrects the error, if any, within one business day after determining that an error occurred; and,

Reports the results to the consumer within three business days after completing its investigation (including, if applicable, notice that a provisional credit has been made final).


I've seen regulatory scrutiny (and agree) that a bank can't just leave the investigation open for the maximum time limit (45 or 90 days) just in case. How do you balance this regulatory requirement and the "let's leave it open in case they revoke credit" (which may be prudent) issue?

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#2118801 - 02/17/17 08:48 PM Re: Reg E dispute resolution Gigi03
BrianC Offline
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Really what is at issue here is, "When is the investigation completed?" When an institution files a chargeback, it does receive a credit from its card processor. However, receiving credit from the card processor does not provide me with information to determine whether or not an EFT error occurred. Since VISA/MasterCard operating rules allow a merchant up to 45 days from the chargeback date to provide information to respond to a chargeback I do not considered my investigation complete when there is still information of which I may avail myself. To avoid regulatory scrutiny, I recommend documenting the chargeback processes and timeframes into my investigation procedures. These should include monitoring of daily reports my card processor provides which will advise me when the merchant timeframe for responding has past. If the merchant does not respond with any information then I will conclude that an error did occur and finalize the provisional credit within one business day of that time elapsing and notify the cardholder within three business days that their provisional credit is final.

For some claims, I do not have chargeback rights (PIN-based, card present signature based, Verified by VISA/Mastercard SecureCode, etc.) If I cannot use the chargeback process to investigate, then I have to either decide to pay the claim and close the investigation immediately since I am not taking any steps to investigate, or try alternatives to filing chargebacks such as requesting copies of video from other banks/merchants, reviewing common purchase patterns and geography of transactions, etc. I cannot twiddle my thumbs doing nothing.

Examiners that do not understand the chargeback process may accuse an institution of improperly delaying the completion of an investigation. My response to that would be, "Yes, I'm waiting. The regulation permits me this timeframe. VISA/MasterCard permit their merchant time to produce documentation. My investigation is not complete until I receive the information I need to make a determination whether or not an error occurred." I would support my position citing the staff interpretations to 1005.11(c) relating to errors involving POS.

3. POS transfers. When a consumer alleges an error involving a transfer to a merchant via a POS terminal, the institution must verify the information previously transmitted when executing the transfer. For example, the financial institution may request a copy of the sales receipt to verify that the amount of the transfer correctly corresponds to the amount of the consumer's purchase.

"I'm sorry, Mr. Examiner. I requested a copy of the receipt just like the interpretations suggest, and I am not closing my investigation until either I receive it and can make a decision based on the information, or the time the merchant has to produce it passes."
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#2118841 - 02/18/17 12:22 AM Re: Reg E dispute resolution Gigi03
MBTCompliance Offline
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Well done!

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#2118890 - 02/20/17 05:17 PM Re: Reg E dispute resolution Gigi03
David Dickinson Offline
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Quote:
If I cannot use the chargeback process to investigate, then I have to either decide to pay the claim and close the investigation immediately since I am not taking any steps to investigate, or try alternatives to filing chargebacks such as requesting copies of video from other banks/merchants, reviewing common purchase patterns and geography of transactions, etc. I cannot twiddle my thumbs doing nothing.

Thanks Brian. This quote is the perfect answer.

We run into a lot of banks that simply aren't taking any steps to investigate, but want to keep it open "just in case". That was my point.

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#2120995 - 03/08/17 02:14 PM Re: Reg E dispute resolution Gigi03
Soccer Offline
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So let me ask this:
We have given provisional to a customer who revoked an auto debit correctly, we have received credit from the processor however we believe they are going to pull it back. Am I correct that once the 90 days arrives we have to make the provisional final even if we have a feeling that the credit will be pulled back, and the charge back will become the bank's loss?
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#2121003 - 03/08/17 02:31 PM Re: Reg E dispute resolution Gigi03
John Burnett Offline
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Correct, on all points.
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#2121038 - 03/08/17 03:57 PM Re: Reg E dispute resolution Gigi03
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Thanks John!
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#2128144 - 04/26/17 09:27 PM Re: Reg E dispute resolution Gigi03
Brandon.D Offline
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I first want to disclose that I understand the regulations requirements of investigating promptly and I also agree that if a financial institution is not going to continue investigating a claim, that the financial institution should not wait the full 45 days to complete the investigation.

The regulation requires provisional credit if the investigation is going to take longer then 10 days. If provisional credit has been provided, what consumer harm has been created by waiting to the 45th day to finalize the claim?

This question has been brought up and I am trying to provide a reasonable answer other than, we must consider the claim complete if no further investigation is going to be completed because the law requires it. I believe there are scenarios where consumer harm could be created by waiting to complete the investigation, such as when you do not provide provisional credit because the customer did not provide the error notice in writing. In the specific scenario where the investigation has taken 20 days and provisional credit was provided on the 10th day, what consumer harm is there by waiting until the 45th day?

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#2128273 - 04/27/17 06:26 PM Re: Reg E dispute resolution Gigi03
David Dickinson Offline
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What hard is there to wait? If you give me provisional credit and tell me it's provisional, I have to wonder if you'll take the money back. Therefore, I may not spend it because it's not 100% mine. I'm waiting for a final answer. If you wait until the maximum time (45/90 days) even though there's no ongoing investigation, my wait is increased beyond what is necessary.

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