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#22900 - 07/08/02 07:08 PM VISA Check Card vs. Reg. E
complyguy Offline
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complyguy
Joined: May 2001
Posts: 494
PA
OK, I confess to posting this question because I can no longer tell which end is up regarding the VISA rules and Reg. E. Scenario: Our customer makes purchase with VISA check card, then decides s/he is disatisfied with the product or service. The transaction is not a preauthorized transfer (subject to stop payment), nor is it an unauthorized transaction (subject to the error resolution procedures).

VISA says the merchant has no liability provided they got a PIN or valid signature. Is there something that we are obligated to do in this case? If the customer had paid with a check, a stop payment would be the solution. However, with VISA check card payments, the item posts within the 3 days that we could hold the customer to for a preauthorized transfer (which this isn't).

Please feel free to point out anything that I am overlooking, especially the obvious.

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#22901 - 07/08/02 07:20 PM Re: VISA Check Card vs. Reg. E
Andy_Z Offline
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Reg. E is not like Reg. Z. The purpose here isn't achieving a satisfaction level with the goods and services purchased. While you have no need to question a stop payment on a check, that isn't always the answer either. Or the correct one anyway.

If the transaction was authorized, Reg. E isn't an issue. The customer needs to take it up with the merchant.
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#22902 - 07/08/02 07:22 PM Re: VISA Check Card vs. Reg. E
Princess Romeo Offline

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I am not aware of any rememdy for dissatisfaction with a product or service when paying by an electronic method. If your customer had used a CREDIT card, then Reg Z (226.12) allows the customer to assert a claim.

However, when using a "Debit" Card, the customer is in about the same position as they would be if they had paid by cash, or if they had paid by check and the check had already been paid. The only rememdy, that I am aware of, is if the transaction had actually been unauthorized.
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#22903 - 07/08/02 07:29 PM Re: VISA Check Card vs. Reg. E
John Burnett Offline
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For whatever it's worth, we have in bold in our Reg. E. disclosures, among other things:
  • You can not place stop payments on individual transactions completed using your XXXX MoneyCard.
  • If you give someone else permission to use your Card one or more times, all future use of your Card by that person will be considered authorized by you until you contact XXXX to revoke that authorization.
  • Dissatisfaction with the quality or quantity of goods or services that you have paid for electronically does not necessarily qualify a transaction for reimbursement. You should treat these purchases as if you are spending cash.
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#22904 - 07/08/02 10:55 PM Re: VISA Check Card vs. Reg. E
Buddy the Elf Offline
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Buddy the Elf
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first lily pad on the right
There is a Visa rule that allows for quality of merchanise disputes. Reason Code 53, Not as Described. It says "goods or services received were (i) not the same as described on the transaction receipt or other documentation presented to the cardholder at the time of the purchase or (ii) for a mail/phone order transaction, not the same as the merchant's verbal description AND the cardholder attempted to return the merchandise to the merchant, attempted to cancel the services, or attempted to resolve th eservices dispute with the merchant. There is also another dispute code 56, for defective merchandise.

I would suggest talking with whoever handles your Visa Check Card disputes because it sounds like you may be able to do something.

Leslie C.
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#22905 - 07/09/02 12:50 PM Re: VISA Check Card vs. Reg. E
John Burnett Offline
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The chargeback codes permitted by Visa are certainly available for debit card transactions. Essentially, Visa is looking at the transaction as a card transaction, and doesn't really care whether it's debit or credit.

The key difference here, as mentioned earlier in the string, is that Regulation Z often requires the issuing bank to enter the dispute between the merchant and the cardholder (see 226.12(c)). There is no comparable requirement in Regulation E with regard to debit card transactions.

In my experience, this key difference is often a matter of considerable misunderstanding, both among bank personnel themselves, and between banks and their debit card customers.
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#22906 - 07/31/02 02:57 PM Re: VISA Check Card vs. Reg. E and Unauthorized Transacations
run4fun Offline
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Posts: 98
I have a question on a related matter. I'm being told that VISA Check Card rules require the customer to try to resolve any disputed and any unauthorized transactions on their own before the bank and it's debit card servicer can/will start their investigation. I've just learned that unless the card is lost or stolen, even for unauthorized debits, the customer is to call the merchant -- even if they've never heard of the company -- to try to resolve the issue. If the customer isn't successful in working directly with the merchant, then they should call or write the bank to give notice of the error.

I don't understand how VISA can establish "rules" that are not in agreement with Reg E error resolution procedures. I'm now having to answer a letter from our regulator about our procedures and am stumped.

I'm not really sure if I'm asking a question or simply venting my frustration. At any rate, thanks in advance.

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#22907 - 07/31/02 03:06 PM Re: VISA Check Card vs. Reg. E and Unauthorized Transacations
Andy_Z Offline
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Their rules can be more customer friendly, but not less. You can't make the customer do more under the VISA rules than Reg. E would require.

It sounds as though your procedure is being questioned. Verify the source of the procedure and find the VISA rules requiring this to see what excatly is said, to which transactions this applies, etc.
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#22908 - 07/31/02 08:12 PM Re: VISA Check Card vs. Reg. E and Unauthorized Transacations
prj Offline
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prj
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Chaska, MN
Kruckle -
One of our FI's was written up (BIG TIME) for a Reg E violation because they folowed VISA rules, and instructed the customer to try to work it out with the merchant prior to doing a chargeback request. I contacted VISA on behalf of our FI, and was told that VISA assumes that the customer has already tried to resolve the situation with the merchant prior to contacting the bank. In the real world, we all know that this is not the case, but that's what VISA says.
The second your customer comes into your bank and asserts an error, the Reg E clock starts ticking, and your required to determine if an error occurred...Aren't consumer protection regulations fun?!?
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#22909 - 07/31/02 09:05 PM Re: VISA Check Card vs. Reg. E and Unauthorized Transacations
John Burnett Offline
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But don't forget that Reg. E 205.11 does not include as an error a dispute with a merchant concerning quality or quantity of goods.

The term error means:
(i) An unauthorized electronic fund transfer;
(ii) An incorrect electronic fund transfer to or from the consumer's account;
(iii) The omission of an electronic fund transfer from a periodic statement;
(iv) A computational or bookkeeping error made by the financial institution relating to an electronic fund transfer;
(v) The consumer's receipt of an incorrect amount of money from an electronic terminal;
(vi) An electronic fund transfer not identified in accordance with Secs. 205.9 or 205.10(a); or
(vii) The consumer's request for documentation required by Secs. 205.9 or 205.10(a) or for additional information or clarification concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under paragraphs (a)(1) (i) through (vi) of this section.


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#22910 - 11/23/04 06:43 PM Re: VISA Check Card vs. Reg. E
Anonymous
Unregistered

Cardholders have chargeback rights available to them. As the issuer you are obligated to file chargebacks on behalf of your cardholders provided the customer made an attempt to resolve the issue with the merchant first. Check out Chargeback Reason Code 53-"Not as Described or Defective Merchandise."

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#22911 - 11/23/04 07:29 PM Re: VISA Check Card vs. Reg. E
Anonymous
Unregistered

Visa issuers as members should be very familiar with the entire program and product. First read Visa's U.S.A. Operating Regulation Books, Vol. I - General Rules, Vol II. -Dispute Resolution Rules as well as the Visa By-Laws. When complete there are 4 International Manuals to read.

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#22912 - 10/12/05 09:43 PM Re: VISA Check Card vs. Reg. E
Anonymous
Unregistered

After reading the posts above, I'm a little confused on this issue. I know of a bank that had in their procedure to have the customer contact the merchant first before starting the error resolution process with the bank. They got a violation cited for it. Today, I get a fax from our VISA debit card servicer on a dispute we sent in saying "there is no mention of whether or not your customer attempted to resolve the dispute with the merchant and the results of that attempt." How can this servicer request this information that is evidently not in line with Reg E? Or can they under Visa rules? What are WE supposed to do?

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#22913 - 10/12/05 09:56 PM Re: VISA Check Card vs. Reg. E
rainman Offline
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Maybe the examiner was wrong. (That never happens, right? ) Look at John's post above. If the merchant dispute relates to the goods or services provided, rather than the EFT transaction itself (i.e. wrong amount, unauthorized, duplicate, etc.), then it's not a Reg E issue.
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#22914 - 10/12/05 10:01 PM Re: VISA Check Card vs. Reg. E
Anonymous
Unregistered

My issue started with the Kruckle post above. Nothing to do with goods or services provided. Customer said they paid by check and told company to not auto charge their card, but company automatically charged their VISA debit card anyway.

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#22915 - 10/12/05 11:49 PM Re: VISA Check Card vs. Reg. E
rlcarey Offline
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I bet you $100 they didn't charge their debt card - they converted the check.
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#22916 - 10/13/05 02:57 AM Re: VISA Check Card vs. Reg. E
David Dickinson Offline
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Quote:

I know of a bank that had in their procedure to have the customer contact the merchant first before starting the error resolution process with the bank. They got a violation cited for it.



Read 205.11(b). The bank must begin it's investigation upon receiving a notice. You can't make them contact the merchant. You can ask the customer if they have done this, but you can't require it. It's your problem.

Quote:

Today, I get a fax from our VISA debit card servicer on a dispute we sent in saying "there is no mention of whether or not your customer attempted to resolve the dispute with the merchant and the results of that attempt." How can this servicer request this information that is evidently not in line with Reg E?



They don't have to play by the Reg E rules as you are not a "consumer". You have to play by the rules. IOW, you can't make the customer contact the merchant, but they can refuse to reimburse you unless this happens.

Bottom line: cost of doing business. Personally, I think this stinks (that they put rules on you that you can't enforce), but some card service providers are doing just what you describe.
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#22917 - 10/17/05 05:50 AM Re: VISA Check Card vs. Reg. E
Andy_Z Offline
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Visa rules separate from Reg. E may require a merchant dispute. But this effects Visa rules only and chargeback rules. The lowest common denominator of Reg. E, however, doesn't allow for this. You can ask and explain that they may get refunded faster this way. But that your investigation has begun and that they should let you know what the merchant says so that you are not also requesting a refund the customer already got.
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#22918 - 10/17/05 08:31 PM Re: VISA Check Card vs. Reg. E
grmasterb Offline
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grmasterb
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Indiana
When using a Visa check card, do which rules you follow depend on how the card is used? If it's used for a POS transaction (PIN used), Reg E. If it's used like a credit card (signature), Visa rules apply. Am I right or wrong?

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#22919 - 10/18/05 01:01 AM Re: VISA Check Card vs. Reg. E
John Burnett Offline
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Regulation E rules apply to both scenarios. The Visa rules are added on top of Regulation E for a signature-based purchase transaction.
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#22920 - 09/01/06 02:18 PM Re: VISA Check Card vs. Reg. E
Yada...Yada...Yada... Offline
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The way I read the above is that Reg E offers no help to customers regarding the receipt of defective merchandise, but VISA rules allow chargebacks in this scenario? I hope this isn't a stupid question, but but how is this accomplished? I've always told our bookkeepers in this scenario that it's between the customer and the merchant...but now I'm second guessing myself.
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#22921 - 09/01/06 02:21 PM Re: VISA Check Card vs. Reg. E
XODUS Offline
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Your interpretation is correct. In the event of a non face-to-face transaction Visa provides protection for defective merchandise via Chargeback REason Code 53 (not as described or defective merchandise). you will need to be able to describe the defectiveness of the merchandise in your paperwork so it will involve some questioning but it is doable.

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