If a customer submits a Reg E Error dispute (not involving stolen/lost access device) way after the 60 day time limit after the statement was received (on which the first error occurred), I realize the bank still has to investigate. I realize that the consumer can't be held liable for those initial unauthorized trxs, but can be held liable for the unauthorized trxs that occurred after that 60 day timeframe if the bank can show they could have prevented those if notice had been timely. However, I have other questions. We were recently told that if the customer's dispute comes in AFTER that 60-day timeframe, that:

o provisional credit doesn't have to be provided, and
o the normal time deadlines by which a bank has to conclude its investigation don't pertain

So essentially, late notice by the customer takes the bank off the hook for provisional credit. Bank still has to investigate and conclude and make the customer whole where warranted, but provisional credit and timelines don't pertain. Is this accurate? Any help you can provide is appreciated.

That is correct. The commentary to 1005.11 explains that the provisional credit and time frame provisions don't apply when notice of an error is received later than 60 days from when the periodic statement was sent. However, and as you pointed out, the liability of 1005.6 still applies meaning that you would still need to refund a customer their money for late disputes - you just don't have to follow the time frame rules or give provisional credit.

From the commentary to 1005.11:
"7. Effect of late notice. An institution is not required to comply with the requirements of this section for any notice of error from the consumer that is received by the institution later than 60 days from the date on which the periodic statement first reflecting the error is sent. Where the consumer's assertion of error involves an unauthorized EFT, however, the institution must comply with § 1005.6 before it may impose any liability on the consumer."

Can anyone speak to fees/interest/etc, to make the customer whole when the notice of error is late?

I just listened in on a class that suggested a customer still should be made whole, including fees and interest, even when a notice is late from the time the transaction occurred to 60 days following the statement.

I read the section of Reg E to say liability SHALL NOT EXCEED the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution.

1005.6 Liability of consumer for unauthorized transfers.
(3) Periodic statement; timely notice not given. A consumer must report an unauthorized electronic fund transfer that appears on a periodic statement within 60 days of the financial institution's transmittal of the statement to avoid liability for subsequent transfers. If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period. When an access device is involved in the unauthorized transfer, the consumer may be liable for other amounts set forth in paragraphs (b)(1) or (b)(2) of this section, as applicable.

My institution doesn't calculate fees/interest at all when a notice of error is late.

I think you've asking for trouble. The point of Reg E is to make it like it never happened when the customer has an authorized transaction. §1005.11(c)(2)(i) requires you to provide principal and interest at the time of provisional credit (but not fees). Fees are required to be refunded, as well, if the consumer is found to be correct (unauthorized).

If the financial institution determines an error occurred, within either the 10-day or 45-day period, it must correct the error… including, where applicable, the crediting of interest and the refunding of any fees imposed by the institution. In a combined credit/EFT transaction, for example, the institution must refund any finance charges incurred as a result of the error. The institution need not refund fees that would have been imposed whether or not the error occurred. [Staff Interpretations to §1005.11(c)#6]

§1005.6 doesn't require provisional credit, so the information on interest and fees is not relevant. Why? Because they have $50, $500 or unlimited liability.

If the consumer notifies the financial institution within two business days after learning of the loss or theft of the access device, the consumer's liability shall not exceed the lesser of $50 or the amount of unauthorized transfers that occur before notice to the financial institution. [§1005.6(b)(1)]

For example, I may not have opened my mail for 3 months but I didn't realize my debit card was missing. I finally go to use it (3 months since the last time I use it) and realize it's gone. I immediately contacted you and report it stolen. I have notified you within 2 business days of "learning of the loss or theft of the access device." My liability shall not exceed $50. Whether that's interest, fees, or the principal of unauthorized transactions doesn't really matter. You need to calculate what I would have had in my account had these unauthorized transaction not occurred and then you can withhold $50 (kind of like a deductible on insurance).

A consumer must report an unauthorized electronic fund transfer that appears on a periodic statement within 60 days of the financial institution's transmittal of the statement to avoid liability for subsequent transfers. If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period. When an access device is involved in the unauthorized transfer, the consumer may be liable for other amounts. [§1005.6(b)(3)]
In this case, I have unlimited liability for anything that occurs AFTER 60 days from when the first statement showing the first error) was sent. However, you need to make me "whole" on anything that occurred before that cut-off time.

If there is no access device involved:
If… the consumer fails to report such unauthorized transfers within 60 calendar days of the financial institution's transmittal of the periodic statement, the consumer may be liable for any transfers occurring after the close of the 60 days and before notice is given to the institution. [Staff Interpretations to §1005.6(b)(3) #2]
Again, the consumer is liable for transactions after 60 days, but you've got to make them whole for things before that time.