We have a customer who has filed a Reg E claim with us for the following situation. She has an agreement with a collection agency to pay $50 bi-weekly. The payment is set up with her debit card. The collection company took $50 last week and another $50 this week. The customer has contacted us to file a Reg E claim. She did talk to the collection agency and they stated that they could not issue a credit for the amount taken this week, but they did agree to only take $50 one time in September. Our customer refuses to accept this, she wants her money back now. From my understanding of Reg E, this would be a valid claim as it is " An incorrect electronic fund transfer to or from the consumer's account". Our procedure is to close the customers card and re-issue a new card when we have a claim. Our customer does not want us to close the card either.

What are our options on this claim? Since it is a valid claim, are we on the hook for the $50? It seems to me that the collection agency has agreed to only take one payment in September to offset this, but the customer refuses to accept this offer. We state we have to close her card and she refuses this also. We could do a charge back - but do we still need to give provisional credit in the meantime? I just feel like the bank is going to end up on the short end of this deal.

Thanks!

I would just cut them a check for their account balance plus the $50 and be done with them. Then process a return and see if you can get your $50 back, if you think it is worth the trouble.

Thanks Randy, but unfortunately I don't think that will happen. Are we correct in believing this is a valid Reg E claim? I told our eBranch to go ahead and investigate the best they could and provide the provisional credit. In the end we can still do a return and try to get some of our money back.

A double payment or in this case, a payment sooner than agreed does fall under error resolution, as an incorrect EFT like you mentioned.

The decision to close the card should be the bank's decision, not the customer's.

Let me correct something in the original post. The debit card - pull yours out now and look at it - most probably, very likely, and has about a 99.9% chance of saying that card is the property of the bank. The consumer doesn't get an option of losing it and should consider that the bank has no obligation to reissue. Also, the collection agency just doesn't want to give back $50. I'll bet they absolutely can do it.

The customer has a valid claim based on the above description. The collection agency should be forced to refund the bank. DO NOT close your claim until that is settled unless your Reg E period expires. You pay the consumer, and take the credit when it comes back and your investigation is still open. You issue a new card and tell the consumer that a recurring claim may result in no new card being issued.

In the case of an early payment, my approach has always been to credit the customer the amount of the dispute and then debit the account for the same amount on the correct day (and rebating any fees or crediting lost interest that the early withdrawal caused.)

I'm just going to echo what Andy has already said - your customer doesn't get the option to keep the card open. It is property of the Bank. Close the card and follow your normal dispute procedures. If this angers your customer and (s)he leaves the bank, if may well be a blessing in disguise.

Thank you all for your responses! As always, you are all a huge help and I appreciate the feedback.