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#2262405 - 11/11/21 05:14 PM Debit Card Dispute and Reg E
Michelle Offline
Junior Member
Joined: Oct 2017
Posts: 48
Good afternoon,
Need clarification, please. When members file disputes for billing items which fall within Reg E, we often times need to request additional documents. However, they are not always provided. When they are not provided, we have cancelled the dispute because we do not have sufficient information to conduct our investigation.

We recently received advise that our process violates Reg E and we cannot cancel the investigation for this reason. Which party is correct?

Thank you,
Michelle

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#2262406 - 11/11/21 06:11 PM Re: Debit Card Dispute and Reg E Michelle
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,365
Illinois
Reg E 1005.11(b) only requires that the member provide their name, enough information to identify their account number, and why they believe an error exists including dates and dollar amounts of transactions. You cannot deny a claim because a member does not or cannot provide additional documentation that may be needed to file a chargeback.

The Visa/Mastercard chargeback process is one method for investigation a Reg E claim, but the lack of chargeback rights does not give you reason to deny a claim. You must consider other options such as contacting the merchant directly, reviewing information on the merchant's website (such as contract info) or just paying the claim. The CFPB makes this very clear in their recent Reg E FAQs

6. Can a financial institution require a consumer to file a police report or other documentation as a condition of initiating an error resolution investigation?
No. A financial institution must begin its investigation promptly upon receipt of an oral or written notice of error and may not delay initiating or completing an investigation pending receipt of information from the consumer. See Comments 11(b)(1)-2 and 11(c)-2. In the past, Bureau examiners found that one or more financial institutions failed to initiate and complete reasonable error resolution investigations pending the receipt of additional information required by the institution. These examples can be found in the Bureau’s Summer 2020 edition of Supervisory Highlights and Fall 2014 edition of Supervisory Highlights . The Bureau cited similar violations in 2019-BCFP-0001.
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#2262408 - 11/11/21 07:00 PM Re: Debit Card Dispute and Reg E Michelle
Michelle Offline
Junior Member
Joined: Oct 2017
Posts: 48
Thank you for the information. Appreciate the quick response.

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#2262466 - 11/12/21 11:25 PM Re: Debit Card Dispute and Reg E Michelle
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,546
On the Net
The question sends shivers down my spine. Why? Because the reality is what you really need to do now is figure out how many times this has happened. With retention requirements of 2 years you should be reconsidering all instances of this over that period of time after immediately changing this practice.

The EFTA is clear that it is your responsibility to prove your consumer did the transaction, authorized it or benefitted from it after as Brian noted they provide the most basic of information. That is all they must do. Then you take over.

Let's assume the bank president's mom files a claim because there is a $3,000 charge she doesn't recall making. The bank requests info from whomever and it isn't received. Would you deny that claim for lack of a reply from whomever?
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My opinions are not necessarily my employers.
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#2262467 - 11/12/21 11:28 PM Re: Debit Card Dispute and Reg E Michelle
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,546
On the Net
I might add that UDAP/UDAAP may be the penalty of choice from a regulator. I would also review any complaints letters from a consumer after denial. Then I'd ask, if a consumer complained after that denial of a claim, would the bank have logged it as a complaint?
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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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