A consumer states that a refund was issued by a merchant but it was not received on the account, is this a Reg E dispute or a merchant dispute?

Reg E 1005.11(a)(iii) identifies the "omission" of an electronic funds transfer" as a covered error. The customer made a claim that they should have received a credit, and didn't so this is a claim you must investigate under Reg E rules.

That being said, your investigation will be limited to reviewing your ACH/debit card transaction files. If you do not locate a credit that you failed to process to the customer's account, then you use that as your evidence to deny the Reg E claim.

As a Visa/MC issuer, you also have a contractual obligation to assist your cardholder. Once the Reg E claim is denied, you must also attempt to file a "Credit Not Processed" chargeback on their behalf (if they have jumped through all the hoops for contacting the merchant, documenting the results of the merchant contact, etc.) Since we are operating outside of Reg E at this point, we can require additional documentation prior to filing a chargeback.

Would a letter like the following be sufficient -

We received your debit card/merchant claim on XX/XX/XXXX. This transaction(s) is not considered an error under the Electronic Fund Transfer Act because: We have investigated your claim and have found that a debit card credit from {insert merchant name} to your account was never received by the Bank; so there was no failure on our part to credit your account.

However, we will attempt to assist you in resolving the issue with the merchant through the VISA chargeback process. Resolution under this process could take up to 180 days from the transaction(s) date. The process is subject to VISA rules and regulations. In order to aid us in this resolution, please provide us with a copy of the following:

• Proof of credit, such as a receipt or confirmation provided to you by the merchant

If the merchant agrees your claim is valid and/or an error has occurred, and issues a credit, we will credit your account for the transaction(s) and will notify you of this in writing. If the merchant determines that the transaction(s) is valid and/or no error has occurred and is not issuing a credit, then we will provide you with a copy of the information that we have regarding this decision.

In the meantime, we recommend that you also continue to try to contact the merchant in an attempt to resolve the issue.

It is sufficient, but in my opinion - it's too much.

We received your debit card/merchant claim on XX/XX/XXXX in the amount of $X.XX. This transaction(s) is not considered an error under the Electronic Fund Transfer Act because: We have investigated your claim and have found that a debit card credit from {insert merchant name} to your account was never received by the Bank; so there was no failure on our part to credit your account. We are unable to reimburse you for this dispute at this time; however, we will attempt to assist you in resolving your issue. the issue with the merchant through the VISA chargeback process. Resolution under this process could take up to 180 days from the transaction(s) date. The process is subject to VISA rules and regulations. In order to aid us in this resolution, please provide us with a copy of the following by xx/xx/xxxx:

• Proof of credit, such as a receipt or confirmation provided to you by the merchant

Failure to provide the requested documentation may result in an inability to recover your funds. If the merchant agrees your claim is valid and/or an error has occurred, and issues a credit, we will credit your account for the transaction(s) and will notify you of this in writing. If the merchant determines that the transaction(s) is valid and/or no error has occurred and is not issuing a credit, then we will provide you with a copy of the information that we have regarding this decision.

In the meantime, we recommend that you also continue to try to contact the merchant in an attempt to resolve the issue.


Just as a reminder - a letter of this template should not be used for any dispute in which Reg E applies, since you cannot require the additional documentation as a parameter of investigating a Reg E claim.