Long story short:

Member files dispute of charge, we give them provisional credit.

We determine charge is valid, we reverse provisional credit. BUT: member no longer has funds to cover reversal.

Here's my question:

Member DOES have funds in a different account. Member is only signer on account 1 and account 2.

My employer says we can take funds from this different account (account 2). I say we have to take funds from original account (account 1), even if it overdraws the account.

Thoughts?

Overdraw account #1 and then review your account agreement and applicable state law to determine if you have right of setoff against account #2. "Only signer" does not tell me the ownership of each account. For example, if I have two corporations that I own and I am the only signer on each, you can't offset liabilities of one corporation against another.