Welcome to BankersOnline. I am glad that you found my webinar helpful. With respect to your questions:
1. The timeframes begin based on the date the transaction settles to the account. Although a preauthorization may temporarily hold funds in the account, the electronic funds transfer error does not actually occur when the funds are debited. In your example with a hotel, VISA/MC rules prohibit the charging of the account until after the guest checks out so there can be a significant delay between authorization and posting. Sometimes the merchant realizes that the transaction is fraudulent and never settles. The bank wouldn't want to provide provisional credit, have the authorization hold drop off, the customer spend the money, and never actually have an error to investigate.
The next portion of your first question references the 60-day timeframe to notify the bank of an electronic funds transfer error. Read 1005.11(b)(i) carefully. The 60 day clock starts ticking "after the institution sends the periodic statement...on which the alleged error is first reflected." If the hotel charge posts on January 30th, but my statements cut the 27th of each month, then the 60 days would not start ticking until February 27th.
With respect to provisional credit in your example, the provisional credit would be due February 12th.
2. The key to this situation is the semantics. If the merchant issues a refund and I determine that no error occurred and revoke provisional credit, 1005.11(d) will require that I honor overdrafts for five business days. However, since the merchant issued a refund, this leads me to conclude that an error did occur so I finalize the provisional credit and notify the customer that they received a "duplicate credit" which I am debiting.
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