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#2242505 - 09/16/20 02:27 PM Another Reg E Claim Question
Bankwoman1 Offline
Platinum Poster
Joined: Dec 2015
Posts: 613
Midwest
Curious as to how we should proceed with this claim. We received a letter from a customer yesterday that stated she saw an offer on TV for a total body gym product for 2 payments of $29.94 + shipping. She called the number and placed the order (she never gave us an actual name for the company). She made the purchase on 9-7-2020. The first payment of $29.94 came out of her account on Wednesday 9-9-2020. The name of the business the charge came thru from is of a face shield company. Because of this she has written us a letter wanting to dispute the charge - because it is not a name referring to a total body gym workout. I'm not even sure she knows the actual name of the company she ordered from. I'm wondering if this is even a Reg E claim. She was charged the first payment of $29.94 which is what was stated in the TV ad and on the phone. She hasn't received the product yet, however, I feel like it hasn't been that long since she ordered and she could still receive it. Should we just assume she is not going to receive it and continue as a Reg E claim? Do we start the process of a charge back? I feel like she is worried because of the name the charge came thru as but I'm wondering if there isn't some buyers remorse also? This is just throwing me for a loop.....

Any help would be appreciated!

Thanks!

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eBanking / Technology
#2242530 - 09/16/20 05:58 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 5,538
Illinois
1. Did the customer authorize the charge? Yes
2. Was the customer charged the correct amount? Yes

Not an electronic funds transfer error - No Reg E coverage.

Under VISA/MC rules, you do not start the chargeback process until:
1. 15 - 30 days after the promised delivery date of the merchandise and it still hasn't been received (depending on which card brand you use)
2. The customer contacts the merchant and attempts to resolve the dispute unsuccessfully.
3. The customer documents items 1 & 2 including the merchant's response or lack of response to item 2 in a dispute letter.
4. You are satisfied that the customer has met all of VISA/MC chargeback documentation requirements.
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#2242533 - 09/16/20 06:07 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
Bankwoman1 Offline
Platinum Poster
Joined: Dec 2015
Posts: 613
Midwest
Thank you so much Brian! I didn't think it would fall under a Reg E claim but always question myself. This information helps a lot!

Thanks again!

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#2242535 - 09/16/20 06:14 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 38,662
Cape Cod
The customer's claim could meet the requirement for 1005.11(a)(1)(vi) -- An electronic fund transfer not identified in accordance with § 1005.9 or § 1005.10(a)...

Without knowing what the customer thinks the name of the seller should be, you can't tell whether the facts fit the criteria for that error claim type.
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#2242658 - 09/17/20 09:42 PM Re: Another Reg E Claim Question [Re: BrianC]
Compliance NABW Offline
Diamond Poster
Joined: Oct 2015
Posts: 1,350
Brian, I have another response in the P2P thread, but I am wondering if "incorrect amount" is the only meaning for incorrect EFT. I know this has traditionally been the case, but wth Cash-App, Zelle, etc., I am wondering if sending to the wrong person is an Error.

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#2242659 - 09/17/20 09:59 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 5,538
Illinois
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:

Amount
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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#2242675 - 09/18/20 12:22 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
FlyGuy Offline
Junior Member
Joined: Aug 2016
Posts: 27
I appreciate the dialogue here. I work with Bankwoman1 and posed this question to her as I was getting too focused on 1005.11. After further review and reading a bit more on 1005.11, 1005.9, and 1005.10 I think I have a better understanding. The claim was originally submitted as a charge back, but I questioned if it could be a Reg E.

We appreciate the dialogue!

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#2242710 - 09/18/20 03:33 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
Compliance NABW Offline
Diamond Poster
Joined: Oct 2015
Posts: 1,350
I agree with you BrianC, but another example of an incorrect eft is customer pays $17.99 for an item and a $179.90 charge appears. I'm wondering if a similar argument can be used with the person/number sent to. I basically have concluded the same as you though.

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#2242721 - 09/18/20 04:39 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 5,538
Illinois
If the customer keys the wrong amount into P2P or bill payment, then the bank simply followed the customer's instructions and there is no Reg E coverage.

If I authorize a $17.99 payment to a merchant and the merchant fat fingers their credit card terminal and charges me $179.90, then I have a Reg E error to investigate.
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#2242763 - 09/18/20 10:15 PM Re: Another Reg E Claim Question [Re: Bankwoman1]
Andy Z Offline
New Poster
Joined: Feb 2013
Posts: 14
The bank it not penalized for carrying out the consumers instructions. While what I term as aggravated ignorance doesn't increase a consumers liability like writing a PIN on their card, sending funds "accidently" to the wrong party or in the wrong amount is on the consumer as the bank followed their direct orders. Those are claims that can be decisioned quickly.

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Moderated by:  Andy_Z