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#2240472 - 07/31/20 03:42 PM Reg E Dispute Denial- Honoring items after denial
M&M Offline
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Joined: Nov 2003
Posts: 527
Midwest
The reg requires that when we deny a dispute and remove provisional credit, that we honor checks, drafts or similar instruments payable to third parties and preauthorized transfers for 5 days thereafter. What about debit card transactions? My inclination is to treat them the same, but I wanted to get feedback on this before I respond to my business line... TIA!

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eBanking / Technology
#2240487 - 07/31/20 05:12 PM Re: Reg E Dispute Denial- Honoring items after denial M&M
BrianC Offline
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Joined: Nov 2004
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Illinois
The purpose of honoring checks and preauthorized debits for five business days is to avoid bouncing items that I thought I had the money to do and initiated prior to the revocation of the provisional credit.

You don't have to let me go to Starbucks for a one-time ATM/debit card transaction or walk up to the teller line to withdrawal all the money.
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#2240730 - 08/06/20 03:54 PM Re: Reg E Dispute Denial- Honoring items after denial M&M
Andy_Z Online
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Brian is spot on. In your site M&M you noted "third parties" and that is a key as well as "checks, drafts or similar instruments" which are typically commitments made prior to your revocation of the PC.

Optionally you can avoid all this and notify them in advance. I've always been of the opinion that an "iffy" consumer would pull the funds in advance of that, but there are banks using the pre-notice. I assume it hasn't been an issue.
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#2241024 - 08/13/20 07:41 PM Re: Reg E Dispute Denial- Honoring items after denial M&M
banker-12 Offline
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Joined: May 2007
Posts: 1,180
Do we have to honor checks when we debit only part of the provisional credit? The merchant only gives partial credit to the customer; so the remaining amount is determined not to be an error. I think we still do since we are taking some of the provisional credit back but I just want to be certain.

Thanks,

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#2241030 - 08/13/20 08:16 PM Re: Reg E Dispute Denial- Honoring items after denial M&M
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,014
Illinois
In that instance you honor checks and preauthorized debits for the amount of the partial revocation.

I'm curious how the merchant issuing a refund automatically leads you to conclude that no error occurred.

For example, my card number is compromised and the merchant uses the stolen card information to ship merchandise to a mule they contacted online (e.g. romance scam where the mule is told to receive merchandise on behalf of their online love with instructions to reship the merchandise elsewhere.) Somewhere along the line, the mule figures out they are being scammed and returns the merchandise. The merchant refunds your customer's card less a restocking fee since they are not aware the transaction was fraud.

In this above example, your customer did not authorize the charge and still received a partial refund from the merchant. Under Reg E, an error did occur since the charge was unauthorized and the customer would be entitled to full reimbursement.
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#2241034 - 08/13/20 09:16 PM Re: Reg E Dispute Denial- Honoring items after denial M&M
banker-12 Offline
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Joined: May 2007
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The merchant is a department store. We are thinking customer purchased several items and one or more but not all of them were returned. Customer does not receive the credit for those item(s) so files a dispute. The merchant gives credit only for the returned items. customer kept the other items; therefore, no error for that amount.

It seems like that is what happened.

Thank you

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#2241035 - 08/13/20 09:29 PM Re: Reg E Dispute Denial- Honoring items after denial M&M
banker-12 Offline
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Joined: May 2007
Posts: 1,180
We don't have that many that are "no errors" and take back the provisional credit. We were discussing on how to honor the checks and preauthorized debits up to the amount we debit. How do others do it? is it a setup in your core system to allow these items to automatically post for five business days when account is overdrawn? is it a manual process by reviewing the account every day?

Thanks

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