We have a customer who submitted an unauthorized debit card claim for approximately 150 charges dating back to July 2021. To make this short, I will just say, the claim was not investigated using Reg E timelines it was done using the network timelines and chargeback rules. That is another story. My question is this - we ended up giving the customer a credit of $2436.00 and she was notified that it was final. Since then, she has received $1700.00 of these charges back from the merchant. I know since we made the provisional credit final, we have no right to debit the funds, however, I was wondering if we can ask her to return the funds? We don't want to get into any kind of trouble, Reg E wise, by doing this, but we thought if we asked her and she agreed in writing to return the funds, that we could at least get part of our credit back.

Thoughts?

The card network rules state that you are contractually obligated to prevent unjust enrichment through the chargeback process. Since you cannot revoke final credit, your approach of contacting the customer to advise them of the duplicate credit and obtain consent to debit the account for the duplicate credits to comply with your contractual obligations as a card issuer is appropriate.

On the Reg E front. Was the notice of error timely according to 1005.11(b)? If the notice was late, the timeframes of 1005.11(c) would not apply.

Thanks Brian. Her notice to us was not timely. The first charge appeared on her July 3 statement and she notified us on January 31, 2022. However, for whatever reason, we submitted this claim to our chargeback processor who apparently followed card network rules and not Reg E rules. I am trying to explain this as it was explained to me. Our processor also provides notification of credits to the customer. So she was notified she was receiving these credits and that they were final.

I'm not sure why it was handled in this fashion, as we should have investigated this claim in house and followed Reg E, but for some reason we did not. Our eBranch manager is now trying to clean this whole investigation up and figure out exactly what happened. To say the least, it has been a headache for him.

We are glad to hear that it is appropriate for us to contact the customer though. An extra $1700.00 is a lot to receive as a duplicate credit.

Again, I really appreciate your help!

Bankwoman - I'm guessing I know who your processor is. Their letters are terrible, and often inaccurate. We've found we have more success with doing the letters ourselves and NOT using the letters they create. For us, the processor indicates that a letter is available. I'll look at it, but will send my own. If they are sending out directly, that seems an even bigger mess. While this won't help you in this situation, it might going forward.

Thanks TaraSue! We are actually aware of how terrible their letters are. We were looking at using their claim investigation for our Reg E claims, then we discovered that we were not crazy about the way they handled claims, so we wanted to back out and go back to our normal way of doing things. Well, we can't go backwards now and have to wait until they get their basic program up and running a few months from now. I don't even know if that makes sense or not - basically we signed up for the program and then I got involved with compliance and didn't like what I saw but they wouldn't let us go backwards. Anyway - we aren't supposed to be submitting claims to them, we are supposed to be handling them in house, but for some reason this claim was handled differently.

Thanks for your response - and I agree! We definitely want to handle our letters and investigations ourselves!

We're looking to back out as well, but can't do so until next contract renewal. It has been a nightmare and I'm spending more time on claims than I ever did. We're a small local bank and it is honestly easier to do everything ourselves. Good luck to you!

On the original question, Reg E prevents you from debiting back anything other than a provisional credit. As you noted, it was finalized so it is no longer provisional. This is a new concept to a lot of bankers who know if there was a credit, there should be a debit. But undue enrichment is a court matter and not a Reg E cure.

Nothing prohibits you from asking for it back. If you wanted those funds you could also go to court and claim undue enrichment as none of the rules here are intended to allow consumers to profit from the process. Taking customers to court is a rarely used tactic, however.