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#2267263 - 03/07/22 09:22 PM Is this Reg E or Merchant Dispute?
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,055
In the mountains
I was given a Non-Reg E merchant dispute scenario to review and I'm not sure I agree.

It said - - Any non-Reg E dispute requires the customer to try to contact the merchant first before they can dispute the charge. The date the customer tried to resolve the error and the person they spoke with should be documented on the second page of the Cardholder Statement of Dispute. The date of contact must be after the date of the charge. For example, if the customer said they cancelled on a date prior to the date of the charge, they must contact the merchant again after the transaction post date and try to resolve. If this attempt to resolve with the merchant is not noted on the dispute, we cannot file the dispute with Visa. This is a Visa requirement. The cardholder must try to resolve first in all non-Reg E disputes.

If a consumer cancels a recurring debit card transaction with the merchant, and the merchant charges the consumer again, wouldn't that now be an unauthorized transaction and subject to Reg E error resolution since authorization was revoked? Does Visa rules really require the consumer to contact the merchant again a second time about the revoked authorization before it can be sent for chargeback through the Visa dispute system?
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#2267268 - 03/07/22 09:41 PM Re: Is this Reg E or Merchant Dispute? Likes to Comply
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,275
Illinois
First the Bank needs to stop using "Reg E" and "Merchant "dispute" as antonyms. I can't put graphics in an HTML based post, but if I could, I would use a Ven diagram.

Reg E breaks claims in to "Reg E Electronic Funds transfer errors as defined in 1005.11(a)" and "Non-Reg E errors"
Visa breaks claims into "Fraud" and "Merchant Disputes".

Fraud and Electronic Funds Transfer Errors would both be inside the overlapping part of VISA Fraud claims and Reg E Errors. However, there are some claims that VISA defines as a "merchant dispute" that are also electronic funds transfer errors under 1005.11(a).

For example, if I am charged the wrong amount, Reg E considers that an incorrect EFT and Visa considers it a merchant dispute.
If I cancel a recurring charge, Reg E considers any changes after cancellation as an unauthorized EFT because I revoked the authorization. Visa considers that a merchant dispute.

The Visa chargeback process is one method of investigating Reg E error claims. However, Reg E doesn't care whether you have chargeback rights or whether you can recover funds from the merchant via the chargeback process. Reg E decides who is liable for an error between the bank and the customer. Visa decides who is liable between the bank and the merchant. You cannot deny a Reg E claim because the customer doesn't jump through Visa chargeback hoops. If you don't have what you need to file a chargeback, you either reimburse the customer or contact the merchant directly to try and obtain more information about the authorization to see if you can obtain information that would lead you to conclude that no error occurred.

Have you looked at the CFPB REG E FAQs? Unauthorized FAQ #9 makes it clear that you cannot require the cardholder contact the merchant as a condition of investigating a claim.
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