We have a customer who signed up for a Premier Movie Pass for $119.90 and authorized them to debit her account. On 4/26/05 she cancelled that authorization with them and on 4/28/05 the item hit her account. Her first statement after these dates was 5/15/05. She complained to one of our tellers in July and was told that the 60 days window to dispute something on her statement had passed and she would have to deal directly with the company. She called the Banking Division today, 7/25/05, and alleges that she notified us on 5/6/05 about the debit. We have no record of that contact. The Banking Division said they would contact the Attorney General about deceptive trade practices of Premier Movie Pass.

Did we do anything wrong in this situation?

It would depend on what day in July she notified the teller.

Even if they notified you past the 60 day statement date, you still have to investigate. What you are not required to do is provide provisional credit or resolve it within Reg E timeframes.

Obviously we need to have more training on Reg E, because I don't think we handled it in the correct manner. The customer does not remember who at the branch she talked to, but she does have a copy of an image of the check. It was an electronic check. Therefore it is my assumption that it falls under the protection of Reg E - is that correct?

Also, since she has proof that she contacted us prior to July (the image) and we did nothing until she contacted us again in July (again no formal complaint papers were completed) she contacted the Banking Division. Our President has spoken with the Banking Division and we credited the customer the $119.90 back and took the loss.

Is there any harm done in this situation - other than not following the proper procedures for Reg E Error Resolution?

Our customer is now happy (she has her money back) and the Banking Division is happy (because we refunded the customers money).

Harm - Reg. E requirements were not met, an employee may have spoken incorrectly, you may have given back funds that were not necessary. (The last is obviously a discretionary item as you are free to make full reimbursements.) The first two points do need to be addressed with a referral to the correct person/position a key element in both.

So, it was a physical item and not an ACH or Debit Card transaction? Reg E wouldn't (I don't think anyway) cover this transaction and the 60 day 'window' that applies to ACH's (through NACHA) doesn't apply to a physical item.

But I don't think you should take the loss though either. She did authorize the transaction. And from the sound of it, she didn't issue a stop payment either. So, again, in my opinion, revocation of the transaction didn't happen. In my opinion, she should deal directly with the merchant to recover funds. However, since customer service seems to have been botched a little, you might want to 'eat it' to keep a customer.

See John's article about this... Unauthorized Drafts

I could be wrong about it being a paper draft but since you said that you had a copy of a check, I'm assuming so.

So if they have a year to make a claim on under the UCC, how do they go about this? Thank you for all the help too!

They have a year to make a claim but you don't necessarily have to pay out on it. How? I'm sure you have an affidavit for forgery on checks that were lost and forged, correct? It's much the same way. You might want to tweak the form for an unauthorized paper draft though. (Since it's not technically a forgery).

Thinking more on your case, I would think you wouldn't have to pay out on this claim. Your customer did authorize them and now they are experiencing 'buyers remorse'. They need to deal with the merchant, imo.

It appears that there was a paper item issued, and that it was authorized. For the item to have hit the customer's account on 4/28, it would have to have been created before the revocation of the authorization. Assuming the dates are correct and that your customer agrees that an authorization was made, you have every right to tell your customer, "Sorry."

More importantly in the long run is getting your staff to understand the difference between paper and electronic transactions and when Regulation E applies and does not.

doesn't sound like a case of buyers remorse, as the customer states she cancelled 2 days prior to the item hitting her account. No where does it indicate on what date the customer first granted authorization, and there is generally a cancellation option with vendors of this nature. I don't know that we have sufficient informaiton to make a true determination.

I don't know when she first authorized them, all I know is she said she told them to cancel the authorization on 4/26 and it hit her account on 4/28. The check is dated 4/26. Since we have already credited her account, I doubt we will take it back - but maybe we shouldn't have jumped right in and gave her the money. However, because she called our state Banking Division and claimed a complaint against us and they contacted us, we reacted quicker than we maybe should have.

I agree John that we need to have staff training, obviously they do not understand the Reg E Error Resolution procedures or the general complaint procedures. The President and I have already decided on immediate training.

Is there any other action we should take at this time? I have also heard that we were liable due to UCC rules because it was a "check" in essence and we paid it without a signature. Is this true?

You always have the option of bouncing one of these items based on lack of signature. The trick is catching them before your midnight deadline. Whether or not you'd be liable for missing one of these babies will depend on whether you exercised ordinary care. That doesn't always mean you have to check all signatures.

I think that if the draft is dated on the 26th and your customer says the revocation was also on the 26th, you have a pretty strong case that the draft was created and submitted before the customer pulled out the rug.

We have had so many of these situations that it is annoying (sad but annoying). What is interesting with most of these drafts is the copy will have a toll free number on it and you can ask to listen to the customers voice recording; giving all of their information over the phone (basically writing a check). They again have buyers remorse and contact the company to cancel the item, but they do not wish to contact the bank and pay the stop payment fee (go figure). Rarely have we refunded money in these cases.

Good luck!

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will have a toll free number on it and you can ask to listen to the customers voice recording; giving all of their information over the phone

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MB - not to say what you are saying is incorrect, but there have been numerous cases where the tape recording was either doctored or very misleading, giving unscrupulous companies grounds for issuing the checks. Of course, there are many companies that are above board doing this as well.

I agree, but it seems like it is gettng harder and harder to weed out the good from the bad. (Luckily) I have only had one situation where the company used bogus information. I find when I talk with the customer and let them know what I have heard, they suddenly "recall" the conversation.

As always, we have to sift through the story to find out what really happened.....

Sorry, that was me; forgot to check that I was logged in...

MB- I've had a situation similar to that as well. I had a toll free number to listen to the authorization. What was really sad in this case was my customer was elderly and the CSR of the 'company' spoke really fast and twisted words around. The 'company' was very good at what they were doing. So, although I had authorization of the transaction, I couldn't conscientiously refuse the claim because it truly was heartbreaking to hear an elderly person get taken advantage of.
These entities and the banks that allow them to do business really hack me off!

I agree 100% SC! It is very frustrating, again, particularly when the customer is elderly and these companies are preying on that vulnerability. I actually "threatened" (I was nice!) to close an elderly customers account if she didn't stop giving her information out over the phone then saying these transactions weren't hers (obviously we have issues here..),but she was lonely and the telmarketers were always so "nice."

I don't have the solution but I try to talk about this topic as much as possible to anyone who will listen. At times it is an uphill battle.

Plus just because they are elderly doesn't make them dumb, you can get scammed falling for that "I am so old" routine.

In regards to Premier Movie Pass, they are an outright scam. The same criminals running this "company" are the same ones running the Net4ever, Consumer Rewards Network, Premier Benefits and many more "front" companies. They aslo use various web sites to make them appear legit, and various address which are nothing more than mail boxes. One example should suffice. Many people beleive that Premier Benefits/Premier Movie Pass is located in California, but the address is nothing more that a UPS mail box #361 which they say is a suite # to again make them appeare legit. Many of the call centers they use are located in India; hence, many beleive they are an over seas group. They are not, only the call centers are located there. If you have fallen victim of this scam contact your bank and change your account number ( because once they get you they continue to debit your account, sometimes different companies which is the same one just with a different DBA) and contact your local police, FBI, the US Postal Inspection Service, and file complaints with the FTC.