I know the record retention requirement for Reg. E is 2 years, but do you have to actually keep a copy of the customer letters that the bank sends for error resolution disputes? If the letters should be retained, are there any other means to get around keeping the actual letters?

Most banks just scan them into a document retention system.

General form letters wouldn't be an issue in my opinion so long as you can say what was sent, when. But sometimes you also need to show timing. If we had a dispute and were requesting information from the customer, but getting no response, we'd send a certified letter. When we made a decision based on the best info available it was often in our favor, not the consumers. But had they provided us with more info, we may have gone down another path. To substantiate our decision was had the receipts which often showed that the letters were refused. This, we felt, supported our position and we would keep these. They too could be scanned but the original was nice to have. It depends too on what capabilities you have.