Skip to content
BOL Conferences
Learn More - Click Here!

Thread Options
#64996 - 03/03/03 09:11 PM Reg E-Timely Notice Not Given
Rosie27 Offline
New Poster
Rosie27
Joined: Jan 2003
Posts: 19
I'm looking for some help if any of you have had this experience. Our bank has situations where we are notified of unathorized transactions with a Visa check card possibly 6 mos. after the transaction first appeared on our periodic statement. Because Visa will only accept chargebacks up to 120 days old, they have been charging back the most recent 60 days vs. the first 60 days, so we have a chance to recover the funds we must reimburse the consumer. (I just discovered this, and they say it has passed exams & audits.) (I am referring to Reg E, Sec. 205.6(b)(3))This presents 2 issues to me:

Are we in violation of Reg E by resolving the last 60 days, instead of the first 60 days on the statements?


Is there a statute of limitations the the consumer must meet in reporting errors? Reg E does not state anything as such, but can a customer come back 5 years after the fact and claim a loss?

Thanks for your help.

Return to Top
Operations Compliance
#64997 - 03/03/03 09:17 PM Re: Reg E-Timely Notice Not Given
BrendaC Offline
Power Poster
BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
See Reg E http://www.bankersonline.com/regs/205/205-11.html

(b) Notice of error from consumer--(1) Timing; contents. A financial institution shall comply with the requirements of this section with respect to any oral or written notice of error from the consumer that:
(i) Is received by the institution no later than 60 days after the institution sends the periodic statement or provides the passbook documentation, required by Sec. 205.9, on which the alleged error is first reflected...

You timeframes for reporting errors should be included in your EFT Disclosure (and in your abbreviated error resolution if you use one). Look at the error resolution section.
_________________________
Life without Jesus is like an unsharpened pencil - it has no point.

Return to Top
#64998 - 03/03/03 10:31 PM Re: Reg E-Timely Notice Not Given
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
There are two sections of Regulation E at work here. Brenda has correctly cited §205.11 for error resolution. The customer has to notify you within 60 days of the statement on which the alleged error first appears in order for the customer to be covered by the protections of §205.11. So, if the customer comes in five months after the string of errors begins, you don't have to apply §205.11 to whatever you do to work with the customer.

Then there is §205.6(b)(3), which deals with limits on customer liability. The customer is entitled to relief for any unauthorized transaction (UT) that occurs from the first such UT until 60 days after the statement showing that first UT is made available (subject to the $50/$500 rule if an accepted access devise was involved). After that 60th day, the customer is liable for any further UTs until he notifies you.

That part of the liability rules sort of parallels what happens if there were unauthorized checks paid on the account.

The parallel ends there, though. Where the UCC has a one-year limit on maker's signature, for example, there is no equivalent provision in Reg. E. If the customer comes back, in theory, 5 years later, he can still enter a claim for those UTs occurring before the end of the 60 days following the first statement showing the first such UT.

_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#64999 - 03/03/03 11:08 PM Re: Reg E-Timely Notice Not Given
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
To rephrase what John said, the customer has more liability for the transactions happening after that 60 days because you could likely have stopped them. But that doesn't mean they have increased liability for the transactions between day 1 and day 60. Basically, you will be looking at a claim the same as if it had been placed a week after the UT happened with any exceptions for special VISA rules.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#65000 - 03/04/03 06:26 PM Re: Reg E-Timely Notice Not Given
Rosie27 Offline
New Poster
Rosie27
Joined: Jan 2003
Posts: 19
Do you agree that we should not be handling the claims by resolving the most recent 60 days because that method helps us recover our money from Visa? Or, would regulators be particular about which 60 days we reimburse, even though the reg. directs us to reimburse the first 60 days? (it was written before Visa check loss recoveries and chargebacks.)

Return to Top
#65001 - 03/05/03 06:54 PM Re: Reg E-Timely Notice Not Given
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
If the dollars are the same, and you keep track (to prevent paying the same customer later for the first 60 days), I see nothing odious about the practice. If you can find a legitimate way to recover some of your losses, go for it!
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top

Moderator:  Andy_Z, John Burnett