I am having trouble finding what I'm looking for so I will just post a new question. For Debit Card disputes (Mastercard) is there any clear language out there other than Reg. E on disputes that are not fraud related? It seems like sometimes people just don't want to pay the charge so they dispute it.

MasterCard provides more dispute reasons to its cardholders than Reg E does, and as an issuer of MasterCard, you are bound to assist the cardholder in these instances.

Reg E will apply to unauthorized withdrawals, duplicate postings, incorrect amounts, and a promised refund or credit that the merchant does not post to the cardholder's account.

MasterCard also covers non-fraud, non-Reg E senarios such as Merchandise not Received, Merchandise not as Decribed (I ordered a red widgit but received a blue one), Cancelled Recurring Payments, Paid by other means (cardholder paid in cash but debit card was charged also.).

Your card processor should have a list of MasterCard chargeback codes that may assist you in knowing what options you and your cardholder has. "Buyer's remorse" is not covered by Reg E or MasterCard so in that type of situation, the cardholder is out of luck. Train your staff that accepts disputes to solicit as detailed of a cardholder letter as possible to aid you in knowing what chargeback code(s) is/are applicable to your siutation.

If you get stuck, feel free to post specific situtations here and I'll be happy to provide any guidance I can.

This specific situation is a customer who ordered DirecTV and cancelled DirecTV all in the course of one day. They were charged two times for "deposits" but when they cancelled they were told that the debits would not go through. When one settled and they called back they were told that because of a prior "back bill" one charge would stand. When the call was escalated to a supervisor, she apologized for not communicating clearly the first time but said the charge would not be refunded.

I agree that this senario puts you in a difficult position. On the one hand the dispute could possibly be covered by Reg E because the merchant promised a refund and then did not provide one. However, if the cardholder benefitted from the transaction because their debt to DirecTV has been satisfied, then they cannot claim damages.

The question to ask your cardholder is, "Did you owe them the money?" If the say yes, then deny the Reg E claim and let them take it up with DirecTV. However, if they say, "No" then ask them to put their claim in writing stating that they had cancelled and were promised a refund which has not been delivered. Have them include as much detail as possible (i.e. who they spoke to, when the call was made, etc." This suggestion is from MasterCard's Chargeback Guide:

"The card acceptor issued a credit but withheld funds without proper disclosure, or reduced the amount of the credit without the cardholder’s permission."

You can use Chargeback code 4860 "Credit Not Processed". However, you cannot file the chargeback for 30 calender days from the date your cardholder claims they cancelled, and you still have to provide the provisional credit within 10 business days under Reg E.

Once you file the chargeback, the merchant has 45 days to respond with proof as to why the charge should stand. If your customer actually owed the money, they should provide some proof of the prior debt.

Even if the merchant takes the full 45 days, at worst you will be at day 75 in your investigation and still within you timeframe to revoke the provisional credit and deny the claim. I acknowledge that this process is not fair to the bank, but Reg E and MasterCard rules are written to protect the cardholders, not us.

I would like to tack on to this question. I have a VISA dispute, but the non-fraud reasons to dispute are similar to what is described here. Customer wants to dispute 2 payments made to a website builder because he does not feel the website has drawn the volume he expected. I have checked out the builder's site and do not find any "promises" of expected traffic upon launch of the developed site. The website developer has not promised any credit, so I don't think I have any Reg E or VISA non-fraud reason to file a dispute. Am I correct?

For Reg E, the transaction was authorized and the customer received benefit. Therefore, I don't see a valid error/claim. I will let someone else speak to the VISA side of things...

Definitely no Reg E, as Adam points out, In order to satisfy the VISA requirements to file a chargeback for "Services not as described", the burden of proof is on the customer to specify what was promised vs. what was delivered. Additionally, VISA rules require that any dispute contain a description of the cardholder's efforts to resolve the claim with the merchant and the merchant's response. If the cardholder cannot provide all of this information to your satisfaction, you have no obligation under VISA rules to take this any further.

Thank you so much Adam and Brian!

If I can get the cardholder to stop yelling at us (they spent 1/2 an hour yelling at our member service rep) when I asked her if he had contacted the merchant), I will ask for more details. At this point, he was alternating between it's "not his responsibility to provide us with information" and that he "will not pay this merchant no matter what":-)

Brian - am I contractually obligated to give provisional credit on a non-Reg E/non-fraud dispute (we are VISA)?

You must provide provisional credit if you conclude there is sufficient evidence to proceed with a chargeback. Without this evidence, you can deny the claim outright. See VISA rule below.

1.11.1.1 Attempt to Settle Before initiating a Dispute, the Issuer must attempt to honor the Transaction. If the attempt fails and the Issuer has already billed the Transaction to the Cardholder, the Issuer must credit the Cardholder for the disputed amount. The Issuer must not be reimbursed twice for the same Transaction. A Cardholder must not be credited twice as a result of both a Dispute and a Credit processed by a Merchant.

Thank you very much Brian:-)

If we are a Mastercard issuer, and the customer has a Mastercard (not reg e) dispute - I read above that we are bound to assist the customer in these instances. We have set a threshold with our provider of $30 - in other words, unless a dispute is $30 or more, we do not open a case, rather, we make credit final immediately and take the loss - regardless if it is a reg e or Mastercard dispute.

If we wanted to move away from giving any type of credit on Mastercard disputes, would we have to open a case with our provider regardless of transaction amount? Provided we get the customer to gather appropriate documentation.

Thanks!

I am not aware of any de-minimum limits on your requirement to assist a customer under your contract with Mastercard.

You likely set that dollar threshold based on your costs with your vendor. That is not the consumers issue. Brian is our resident expert, but I'm not aware of a de-minimis and it would sound too much like UDAAP, a large amount or lot of small amounts qualifies as a problem. You made a business decision with your cutoff. Take them in-house, pay the vendor, pay the consumer immediately while tracking them and deciding to keep or close the account based on profitability, or keep it as is.

Question related to Brians first response. CREC and PBOM would not be covered by Reg E?

I don't know what those acrroyms stand for.

You are not the only one. And are they really referring to an 11 year old post?

Sorry, CREC is Cancelled Recurring and PBOM is Paid by other means. They are the codes used by Mastercard.

To Randy's point, that post is 11 years old. The CFPB FAQs have changed a lot in the Reg E space about what is and is not considered authorized.

In the case of cancelled recurring, althtough I gave my debit card to a third party to initate recurring transfers, anything that they do after I revoke that authorization is considered unauthorized under 1005.11(a)(i).

Similarly, although I gave my debit card number to a third party to hold a reservation, if I did not actually authorize a charge to my card because I paid using another means, then that transaction also would be considered incorrect under 1005.11(a)(ii).

The CFPB FAQs note that just because I give my card number to a third party, if I do so under false pretenses, the CFPB considers that to be an access device obtained through robbery or fraud and Reg E will cover these circumstances where 11 years ago we could have concluded otherwise.

Hello all. I hope this is an easy clarification, but I am still a bit confused (still a relative newby to the compliance officer role). Regulation E section 1005.2(m) defines an Unauthorized Electronic Funds Transfer as "an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit." Under 1005.2(m)(1) an electronic funds transfer initiated "[b]y a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by the person are no longer authorized" is excluded from the definition of an Unauthorized Electronic Funds Transfer.

Here is my scenario...a customer gives debit card information to a merchant for a 1 year subscription and authorizes that merchant to charge that card/account. After 1 year the customer is shocked to see more charges and calls the merchant and tells them they did not renew their subscription and they should not have been charged. The merchant agrees to refund their money and never does. They then get charged again. After the final charge they finally notify the bank. They initially authorized the transfer and received some form of benefit. They then specifically told the merchant to stop, the merchant did not and kept charging, and the customer certainly did not receive a benefit...however, they never told the bank. Is the bank still on the hook for the provisional credit and must process this as an Unauthorized Electronic Funds Transfer? Or does the bank just need to stop future transactions now that they have been notified?