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#2145949 - 09/13/17 04:54 PM Reg E Dispute on Mail Order Item
Oscar Offline
Junior Member

Registered: 08/23/17
Posts: 44
Bank I am working with has a customer that disputed the amount they were charged for something they ordered online. Basically, they did a trial offer (just pay shipping and handling for first one) and didn't read the terms and conditions stating that they would be charged a recurring fee if they didn't cancel within a certain amount of time. They are disputing the recurring fee they were charged. The merchant was able to provide proof that they disclosed the recurring fee in their terms and conditions that the customer had to read before proceeding with the order and the customer went ahead with the order and did not cancel. I know this happens all the time.

My question is concerning provisional credit. The Bank sent a letter (within 10 business days of customer contact) stating to the customer that they would not be providing provisional credit because this type of dispute did not have rights under the federal regulation. Can they do that? I would think they would have to provide provisional credit and then reverse it when they received the response from the merchant. Please advise?

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#2145952 - 09/13/17 05:10 PM Re: Reg E Dispute on Mail Order Item [Re: Oscar]
BrianC Offline

Power Poster

Registered: 11/26/04
Posts: 4319
Loc: Illinois
It depends on when the bank concluded its investigation. The customer asserted that a transaction was an unauthorized EFT. If the bank concluded that the customer authorized the original purchase and failed to cancel subsequent purchases, then it could conclude that no error occurred and denied the Reg E claim. They would still be required to provide notification to the consumer that the bank would provide copies of the documentation it relied on to deny the claim.

I would often deny a claim prior to 10 business days if I could visit the website where the purchase was initiated and verify the terms and conditions. (I would also not bother to waste the time and money on filing a chargeback since I had enough information to deny the claim.)

Since I do not know what documentation the bank relied on to deny the claim prior to the 10th business day, I cannot confirm whether or not its action was proper.
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#2145956 - 09/13/17 05:27 PM Re: Reg E Dispute on Mail Order Item [Re: Oscar]
Oscar Offline
Junior Member

Registered: 08/23/17
Posts: 44
Thank you, Brian. They did not actually deny the claim until later after they had received the information from the merchant. They then sent a follow up letter denying the claim. The initial letter just stated that they would not provide provisional credit and no statement about providing copies of documentation.

Does this change things? Or do I need to ask how the Bank determined that they did not need to provide provisional credit?

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#2145961 - 09/13/17 05:36 PM Re: Reg E Dispute on Mail Order Item [Re: Oscar]
BrianC Offline

Power Poster

Registered: 11/26/04
Posts: 4319
Loc: Illinois
Based on the verbiage of your original post, "...this type of dispute did not have rights..." they may have concluded that the sequence of events did not meet the definition of an unauthorized EFT under 1005.2(m).

"“Unauthorized electronic fund transfer” means an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit."

If the bank concluded that the customer did, in fact, receive benefit from the transaction since they received the [facial cream, colon cleanser, muscle booster, appetite inhibitor, etc.] then they would have immediately informed the consumer that the transaction was not a covered EFT error subject to Reg E requirements. The bank may have then voluntarily elected to pursue the claim under VISA/MasterCard chargeback rules separate from the Reg E provisions.

All of this is blind speculation on my part. The only way you can confirm whether or not the Bank violated Reg E is to ask them and have them explain their process for resolving this claim.
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
www.tcaregs.com

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#2145973 - 09/13/17 06:12 PM Re: Reg E Dispute on Mail Order Item [Re: Oscar]
Oscar Offline
Junior Member

Registered: 08/23/17
Posts: 44
Thank you, Brian.

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