Sure sending it to the wrong person is an error, but it has to be the bank making the error for Reg E to apply.
1. Hey bank, send $500 to John Doe. - Bank send $500 to John Doe - Not a Reg E error even if I meant to send the money to John Smith.
2. Hey Bank - Send $500 to John Doe. - Bank sends $500 to John Smith - Reg E error. See the difference?
In this example the customer made a purchase at a merchant, and I'm going to disagree a bit with John's approach here and show you why from the regulation and commentary.
To qualify as "unidentified" I have to be missing information required in 1005.9 or 1005.10(a). Lets look at those two sections and see what's required to identify a transaction:
1005.9(b)(1) Transaction Information:
Date of credit or debit
Type of Transfer and Type of Account
Terminal location if initiated by the consumer
Name of the third party to whom the funds were transferred
For the third party name the commentary says, "1. Name of owner or operator of terminal. Examples of an owner or operator of a terminal are a financial institution or a retail merchant."
1005.10(a) requires that we either contact the customer (affirmatively or negatively) about a preauthorized transaction or provide a phone number from them to call which we generally will do on a periodic statement.
The name of the retail merchant is driven by how their credit card terminal is programmed. For example, many gas stations have well known oil company names, but are owned by a franchise. So I buy gas at Shell or BP, but my receipt and periodic statement say "DRE LLC" Why, because the franchise owner created an LLC for their business and that's how the credit card terminal is programmed. It's not a Reg E error that my statement didn't say Shell or BP Same as above, it's not a Reg E error that the name of the merchant doesn't match what the customer thinks it should. The customer authorized the charge and was charged the correct amount and the bank provided all of the required information noted above from 1005.9(b) on their periodic statement.
For preauthorized transactions, the customer could assert an error if we say we will call them when we received preauthorized debit and failed to do so. (Which no bank in their right mind does, we all provide the phone number for the customer to call us.)
In my opinion, a customer claiming an error because the merchant name on their statement doesn't reflect where they thought the made a purchase does not meet the definition of an error under 1005.11(a)(1)vi) provided that we have all the required information on the periodic statement (1005.9) and provide a phone number on the periodic statement for the customer to call to verify that preauthorized transfers have posited (1005.10(a)).
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