Under Reg Z or TILA is there anything that says that the term "Provisional Credit" cannot be used when providing a credit card temporary credit for a transaction that was authorized but being disputed? For example: If I made a purchase using my credit card online. I never received the item I purchased. I called my credit card company who refunded the funds temporarily, while the merchant is being contacted. The note on my credit card online is "Provisional Credit". Is there a regulation or rule that specifically says the term provisional credit is not allowed?

Thank you so very much for your time.

Nobody knows? I don't feel so alone now.

To my knowledge there is nothing under Reg Z that prohibits using the term. The only potential concern I can think of would be UDAP but that would be reaching beyond just calling it provisional credit.

T-accountingly speaking, wouldn't an increase in a loan account be called a "provisional debit"?

Since there is no requirement to provisionally "credit" a credit card account during a dispute, like there is in Regulation E, I don't see it as a problem. I would count myself lucky. The only regulatory requirement the creditor has during the dispute process is the prohibition on trying to collect the disputed amount until it is resolved.

VISA/Mastercard require that an account be credited when the bank files a chargeback on a cardholder's behalf (debit or credit) and VISA specifically requires provisional credit with five business days of initial notice. The use of the term "provisional credit" may be to comply with your card brand requirements rather than a regulatory requirement.

Also crediting the account during the investigation often helps to ensure that we are not accruing interest on the disputed amount or including the disputed amount in minimum payment calculations under Reg Z requirements. I'll join the chorus of blessing the use of provisional credit on a credit card dispute although I like Richard's point.

Because I learned this the hard way, it's worth mentioning that while you can't accrue interest on the disputed amount during the claim or after if it's approved, do not forget about insurance. That also may not accrue and while it is usually a very small amount, there is no de minimus and you could find yourself sending customers checks for $.10.

Thank you all for your input. I'm fighting this with our external auditors. I told him to "show me where it says we can't"

Thanks again!

The amount in question would reduce the balance, and would therefore be a credit to the loan account (credits reduce assets).