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#2198913 - 11/21/18 07:43 PM
Reg E Provisional Credit Reversal timeframe
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Joined: May 2017
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Is there a timeframe for reversing provisional credit on a Reg E item that the merchant has refunded the customer?
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#2199260 - 11/28/18 03:25 PM
Re: Reg E Provisional Credit Reversal timeframe
Felica
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The bank has the option to provide an advance notice and then take back the PC, or take back the PC and cover 3rd party items that would have paid without a fee, as David noted. (I never provided advance notice as I wouldn't trust that the funds would be there.)
Here is a twist many don't consider, because in compliance we live in a technical world. If you formally deny the claim and revoke the PC, you'd technically have to honor those 3rd party items for 5 days or provide advance notice and then pull the money. But if you state that during the investigation, it was found to be valid and the PC is now permanent, but that a duplicate credit was made by the merchant, the bank actually/technically reverses that double credit with a debit. There is no monitoring of accounts required, no OD fee reimbursements, etc. It technically makes the claim cleaner in my opinion.
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#2199263 - 11/28/18 03:29 PM
Re: Reg E Provisional Credit Reversal timeframe
Andy_Z
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But if you state that during the investigation, it was found to be valid and the PC is now permanent, but that a duplicate credit was made by the merchant, the bank actually/technically reverses that double credit with a debit. There is no monitoring of accounts required, no OD fee reimbursements, etc. It technically makes the claim cleaner in my opinion. I agree with Andy on this approach. Said another way, you make the provisional credit final but take out the duplicate refund. This makes things much easier from a Regulation E perspective and provides a cleaner paper trail for auditors and examiners.
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Adam Witmer, CRCM All statements are my opinion, not those of my employer, and should not be taken as legal advice. www.compliancecohort.com
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#2199354 - 11/29/18 02:09 PM
Re: Reg E Provisional Credit Reversal timeframe
Adam Witmer
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Joined: Nov 2013
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But if you state that during the investigation, it was found to be valid and the PC is now permanent, but that a duplicate credit was made by the merchant, the bank actually/technically reverses that double credit with a debit. There is no monitoring of accounts required, no OD fee reimbursements, etc. It technically makes the claim cleaner in my opinion. I agree with Andy on this approach. Said another way, you make the provisional credit final but take out the duplicate refund. This makes things much easier from a Regulation E perspective and provides a cleaner paper trail for auditors and examiners. Just throwing my 2 cents in here as well. I very much agree with Andy and Adam, but I'll take it 1 step further. Really, it comes down to crossing T's, dotting I's, and technicalities, but once you have finalized provisional credit you cannot take that provisional credit back. So instead, you debit the amount of the "unjust enrichment" of the merchant refund. Scenario (based solely on technicality and wording): You've finalized a $100 fraudulent dispute. After the fact, the merchant then refunds the customer $100. Same amount, so it's all in wording. You take back the refund, not the credit you provided. Scenario 2 (why that technicality is important): You've finalized a $100 fraudulent dispute. After the fact, the merchant then refunds the customer $95 due to some arbitrary fee. Here, you still must take the amount of the refund, which means you're still out $5.
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#2199510 - 11/30/18 04:22 PM
Re: Reg E Provisional Credit Reversal timeframe
Felica
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Note also that Andy's approach can outlast the 90-day investigation period. So, for example, if you provided final credit (or made final a provisional credit) because you were running up against the 90-day deadline for completion of your investigation, and the merchant finally gets around to refunding the amount in question on day 110, you can still recoup that merchant credit under the unjust enrichment approach.
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#2200094 - 12/07/18 03:00 PM
Re: Reg E Provisional Credit Reversal timeframe
Felica
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Joined: Aug 2017
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I'd like to tag a question to this post: If it is determined an error did not occur and provisional credit is reversed. What is our requirement to send out the final letter? I understand it to be within 3 business days of completing the investigation and when provisional credit is reversed it can be concluded that the investigation is complete, I have a colleague who disagrees with this view.
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#2200106 - 12/07/18 04:17 PM
Re: Reg E Provisional Credit Reversal timeframe
Felica
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I'm not sure I fully understand your question, but to clarify, there isn't technically a "final letter" in the rule. You are required to report the results of your investigation to the consumer within three business days after completing your investigation. These results could either include a statement that the provisional credit is final, or a statement that you are revoking the provisional credit. The statement that the provisional credit is final can be an oral statement or a written letter (my recommendation) while the statement for revoking provisional credit must be a "written explanation."
"(1) Written explanation. The institution's report of the results of its investigation shall include a written explanation of the institution's findings and shall note the consumer's right to request the documents that the institution relied on in making its determination. Upon request, the institution shall promptly provide copies of the documents."
I'm not sure what your colleague disagrees with, but you shouldn't reverse the provisional credit if your investigation isn't complete.
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Adam Witmer, CRCM All statements are my opinion, not those of my employer, and should not be taken as legal advice. www.compliancecohort.com
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