Thread Options
#2258564 - 08/23/21 08:53 PM Debit Card Dispute Abuse
Michelle Offline
Junior Member
Joined: Oct 2017
Posts: 46
Good afternoon,
We have an influx of members who, we feel, are abusing the dispute process. They fund their accounts with a small amount of money, perform debit card transactions and then dispute all of the transactions as unauthorized. We provide provisional credit, the member takes the money and when the lose the dispute, we are at a loss.

We are looking for a way to cap the number of transactions a member can dispute to mitigate our losses. I have reviewed Reg E several times and do not see where this is mentioned. Any thoughts on your end?

Thank you,
Michelle

Return to Top
Deposits and Payments
#2258566 - 08/23/21 09:15 PM Re: Debit Card Dispute Abuse Michelle
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 5,976
Illinois
Quote
We are looking for a way to cap the number of transactions a member can dispute to mitigate our losses.

You cancel their card and don't issue a replacement. As long as you keep issuing cards, you own the Reg E risk.
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
www.tcaregs.com

Return to Top
#2258572 - 08/24/21 11:31 AM Re: Debit Card Dispute Abuse Michelle
Michelle Offline
Junior Member
Joined: Oct 2017
Posts: 46
We are canceling the card when they dispute but are issuing a new one because we are not able to prove that they are abusing the process until they call us two or three times.

Thanks for the information.

Return to Top
#2258574 - 08/24/21 12:31 PM Re: Debit Card Dispute Abuse Michelle
burkemi Online
Gold Star
Joined: Nov 2013
Posts: 463
Remember, your bank owns the card, not your customer. You are under no obligation to reissue a card. Depending on the amount of the transactions, you may consider ending the banking relationship with your customer altogether.
_________________________
I reject your reality and replace it with my own.

Return to Top
#2258576 - 08/24/21 12:52 PM Re: Debit Card Dispute Abuse Michelle
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,294
Pulling people out of the ditc...
They fund their accounts with a small amount of money, perform debit card transactions and then dispute all of the transactions as unauthorized.

that right there says what to do. when you get disputes, look to see how recently it was opened and funded, and don't reissue. no need to contribute to their continued taking advantage of you
_________________________
Providing alternative truths since the invention of time

Return to Top
#2259325 - 09/07/21 08:10 PM Re: Debit Card Dispute Abuse Michelle
Brightside3277 Offline
Member
Joined: Aug 2012
Posts: 82
Oklahoma
Question on cancelling the debit card when we feel there may be abuse. Is there a requirement that we must state that we can cancel their debit card at any time? We have a customer who has repeatedly disputed transactions as unauthorized, and is now saying that we cannot take their debit card from them. I don't see where we spell this out in our EFT Disclosure.
_________________________
Keep calm, and let the compliance officer handle it....

Return to Top
#2259327 - 09/07/21 08:20 PM Re: Debit Card Dispute Abuse Michelle
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 5,976
Illinois
A debit card is a feature of an account that you can choose or not choose to extend to a customer. Going through my wallet, the back of most of my cards says, "This card is the property of XYZ Bank and must be surrendered upon demand." The commentary to 1005.8(b) also is helpful:

2. Changes not requiring notice. The following changes do not require disclosure:

i. Closing some of an institution's ATMs;

ii. Cancellation of an access device.

My kids tell me I can't withold their allowance if they don't clean their rooms. That doesn't make it so.
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
www.tcaregs.com

Return to Top
#2259328 - 09/07/21 08:30 PM Re: Debit Card Dispute Abuse Michelle
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,958
Galveston, TX
Or just close the entire account relationship - that is allowed with no questions asked also. I would not spend another minute on this soon to be ex-customer.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2259331 - 09/07/21 09:15 PM Re: Debit Card Dispute Abuse Michelle
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 5,976
Illinois
Since Michelle used the term, "member" I assume this question comes from a credit union. Unlike banks, a credit union can't just cut a member loose, it requires a vote of all members to do it. However, you can limit services to encourage the member to find another place to obtain services. I've seen many credit unions limit challenging members to only savings or share accounts.
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
www.tcaregs.com

Return to Top

Moderator:  John Burnett