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#2251949 - 04/07/21 04:16 PM
Reg. E - Dispute: Prov Credit Final, then Reversed
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Platinum Poster
Joined: Aug 2016
Posts: 540
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Customer files dispute with bank 8-24-20 for an unauthorized online purchase (believes card # was stolen), bank gives provisional credit within 10 business days. Bank sends dispute to our core processor to investigate, investigation is completed and notice is sent to customer 9-10-20 indicating provisional credit is now final. At the time, bank is unaware that merchant issued a refund on 9-8-20. Then on 9-11-20, bank sends another letter indicating the provisional credit has been reversed, as a result of the merchant issuing a refund. Can the bank really do this (after sending notice to the customer saying provisional credit is final)?
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#2251953 - 04/07/21 04:54 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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You reverse the merchant credit and not the Reg E credit. Since you stepped into the merchant's shoes - the credit now belongs to the bank.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2251984 - 04/07/21 07:44 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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Joined: Oct 2000
Posts: 40,086
Cape Cod
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You cannot reverse your credit to the customer after you have made it final. Final is final.
Some would argue that you can't unilaterally take the merchant's credit to the consumer's account. Common sense suggests you can, though.
Some banks have added language in their deposit contracts that would provide for recovery by the bank from the extra credit provided by the merchant.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2252518 - 04/16/21 07:58 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
John Burnett
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Platinum Poster
Joined: Aug 2016
Posts: 540
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Is there a specific regulatory citation within Reg. E that states that once provisional credit is made final, it can't be reversed? Thanks!
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#2252521 - 04/16/21 08:27 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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Someone does not understand the word "final" or something?
Sorry could not help it. No - not if someone is looking for something in black and white in the regulation.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2252522 - 04/16/21 08:28 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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Power Poster
Joined: Nov 2004
Posts: 6,694
Illinois
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1005.11(c)(2)(iv) (iv) Reports the results to the consumer within three business days after completing its investigation (including, if applicable, notice that a provisional credit has been made final).
Oxford Dictionary:
Complete: 1. finish making or doing. 2. make (something) whole or perfect.
Final: 1. coming at the end
There is no other way to interpret this part of the Reg. When provisional credit is final, your investigation is ended. You cannot reopen an investigation that is ended.
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Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria! www.tcaregs.com
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#2252524 - 04/16/21 08:31 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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Power Poster
Joined: Nov 2004
Posts: 6,694
Illinois
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Randy, my wife used to be a teacher. A lot of kids asked for extra credit after the "final" exam. Yeah, that ship sailed several weeks earlier in the semester.
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Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria! www.tcaregs.com
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#2252527 - 04/16/21 08:42 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
BrianC
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Platinum Poster
Joined: Aug 2016
Posts: 540
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Thanks BrianC. This is helpful!!
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#2252909 - 04/23/21 08:45 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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Joined: Oct 2000
Posts: 27,748
On the Net
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The key problem here is that when you finalize a claim, it's done. The "provisional credit" no longer exists because it is a final credit now. So the consumer gets a deposit, and the bank takes that amount from the consumer. There is no authorization to take money from a customers account just because the bank wants it. There is an allowance to debit provisionally credited funds, but those no longer exist. So the bank is not taking provisional finds, it's taking the consumer's money.
"Oh that's unjust enrichment!" It might be, but that is a civil court matter and to get those funds that way, the bank needs to go thru the court.
The bank can appeal to the consumer and some might say, yes, it's the bank's money please take it. And some will laugh as they hang up the phone.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#2270056 - 05/04/22 07:48 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
madukes
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Platinum Poster
Joined: Aug 2016
Posts: 540
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We follow the practice of Reversing the "merchant credit". In these situations, should our notification to the customer still indicate:
The institution will honor checks, drafts, or similar instruments payable to third parties and preauthorized transfers from the consumer's account (without charge to the consumer as a result of an overdraft) for five business days after the notification. The institution shall honor items as specified in the notice, but need honor only items that it would have paid if the provisionally credited funds had not been debited.
The above is required when reversing provisional credit, but should it also be stated when a merchant credit is be reversed? Thanks.
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#2270130 - 05/05/22 09:57 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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Member
Joined: Oct 2013
Posts: 60
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Is your core processor initiating those "your provisional credit is now final" letters? We had something similar and had to eat two large disputes because of in. We then had a lovely chat with our processor to ensure that letters no longer go to customers. If it was an internal error (y'all sent the letter without verifying that a credit had already come in to the customer account) then I think from a customer service perspective I would just let that go. You made the provisional credit final after the merchant credit came in, so that implies that you were making it final even with the knowledge that the merchant credit came in.
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#2271648 - 06/14/22 08:17 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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Member
Joined: Jan 2018
Posts: 51
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Okay, so what about the inverse? If a case is investigated and the FINAL determination is to deny and reverse the provisional credit, is that it? What if a customer comes forward with additional information (because of course they will) that might have caused the claim to fall the other way? Do we reopen the investigation?
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#2271650 - 06/14/22 08:41 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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1005.11(e) Reassertion of error. A financial institution that has fully complied with the error resolution requirements has no further responsibilities under this section should the consumer later reassert the same error, except in the case of an error asserted by the consumer following receipt of information provided under paragraph (a)(1)(vii) of this section. Official Interpretation 11(e) Reassertion of Error
1. Withdrawal of error; right to reassert. The financial institution has no further error resolution responsibilities if the consumer voluntarily withdraws the notice alleging an error. A consumer who has withdrawn an allegation of error has the right to reassert the allegation unless the financial institution had already complied with all of the error resolution requirements before the allegation was withdrawn. The consumer must do so, however, within the original 60-day period.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2271691 - 06/15/22 04:01 PM
Re: Reg. E - Dispute: Prov Credit Final, then Reversed
TeamComply
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Gold Star
Joined: Aug 2014
Posts: 394
TX
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Randy's right but it is difficult when the member is in front of you yelling that you need to revisit the dispute. We don't have many of these situations, but just enough to give me a stomachache whenever I revoke credit. I rarely get DNA evidence back from the merchant, so I do usually try to take in what the altered circumstances are and review whether it would have changed the decision. I'm human, so I make mistakes, and customers are rarely wordy when it comes to the original statements on the dispute - "I did not authorize this transaction" is the most common reason written on the form.
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