Customer is claiming that her agreement with the merchant was for a reoccuring payment to post to her account on a certain date. The merchant posted it 7 days prior, causing her account to become overdrawn.

She filed a REG E claim.

My understanding is that this would not be a REG E error because she authorized the transaction and the posting date is a private contract between her and the merchant. I looked at the REG and can't find verbiage to support this position.

Is my thought process correct?

I would believe this would fit as an incorrect EFT and would qualify as an error. If the amount was wrong, that would be an error. I don't know why a difference in timing would also not be an error.

I believe you should investigate.

That sounds logical. Our REG E dept credited her account, then chargeded it off. I think it would have been better to issue provisional credit, then wait till the true posting date (7 days later) and then reverse the PC (with the appropriate letters and 5 days warning etc).

The second Billing Error under Regulation E reads:

205.11(a)II - An incorrect electronic fund transfer to or from the consumer's account.

There are many elements to a transaction which can be incorrect including:
1) Amount
2) Merchant information (name, location, etc.)
3) Date

The transaction must be, and can only be, posted as agreed to by the consumer. The merchant is not allowed to modify that agreement in any way. The date of the transaction is incorrect based on the information you have been provided. The claim qualifies under Billing Error criteria. What you did is exactly what I would have recommended - good job!

David & Andy- Thank you so much for your response!! I am doing a review of our claims to see where we can "Tighten the belt". It really helps when I can quote the REG for training purposes.

I will make a note that assersion of error includes wrong posting date.

I always thought of it like a post dated check, if you write it and sign it...its negotiable if no one notices it.

NACHA rules have a similar provision. An ACH item can be unauthorized if never authorized, if authorized for a different amount, or submitted earlier than agreed.

does she have any proof, the charge came out early?

It was only $9.95...so they did not do much research on that end. I agree she should have shown a contract or something to show they posted early.

Actually, proof is not required. The claim as stated is enough to assert a Billing Error. She doesn't even have to tell you what the true date is, only that what posted to the account posted early. There are only 3 elements to assertion:
1) Identify the consumer/account
2) Identify the transaction
3) Identify the type of error being asserted

The investigation you then initiate would require you to discover some evidence that reasonably disproves the consumer's claim. Only then could you require proof, or else you could close your investigation and use what you did uncover to make your decision.

I'm sorry I thought that was assumed. I was referring to the investigation portion of the claim.

are you serious? then i am going to protest every charge that comes out from now on as presented early. I think you are stretching the REG a lot to allow that kind of manipulation. Visa will not allow you a chargeback without proof.

You and I are both thinking about the Chargeback and how to recover funds or deny the claim. Mr. Grodsky is referring to filing of the actual claim. We both know we have to take the claim no matter what documenation the customer may or may not have to support their claim.

There are two issues here. First is the one about this topic. This type of dispute has no Chargeback right. The consumer is not disputing the validity of the transaction, just the earlier date it posted. The Issuer has the ability to adjust the transaction without involving the merchant since the merchant is due payment anyway. This could qualify as a Compliance right but why bother?

The second is the issue you raise regarding proof and, to answer your question, I am quite serious. You have every right to dispute any and every transaction on your debit card account. That is a liability the bank takes on in issuing a debit card and too many banks don't recognize this. However, depending on what you assert depends on how much work the bank has to do to either prove or disprove your assertion. Chargeback rights are unrelated as CAWorkingGirl points out - that is a possible course of action for the bank but not the only one in performing a reasonable investigation.

On point, nowhere in Regulation E (or Z for that matter) will you find any requirement that the consumer has to provide proof to assert a claim. You cannot deny a claim because the consumer lacks proof, period. There is no other interpretation because there is no requirement in the regulation for any proof. This applies to any Billing Error, not just the type being discussed here.

After a reasonable investigation has been done, you may request proof if it relates to the investigation. For example, if the merchant disputes the validity of the claim, you could ask for proof to show the true transaction date, heck you could even ask for a signed document with the true date. However, you could not deny the claim if a document with the true date lacks a signature because the evidence of a signature has nothing to do with the asserted Billing Error.

What constitutes a "reasonable investigation" is another matter entirely and changes from Billing Error to Billing Error. Also remember that far fewer dispute types qualify for a Reg E Billing Error status than do for Reg Z Billing Error status.

On your Chargeback issue, Visa and MasterCard require very little if anything nowadays in the way of documentary evidence for any of their Chargeback rights. They do require their applicable dispute forms, but rarely do they require proof to initiate a 1st Chargeback.

I see your point about the Reg issue, so the bank just puts the item in suspense and then posts it at the appropriate date, no biggie.

As for the Visa not requiring documentation, I don't believe that is correct. You only get one chargeback now and if you don't have your documentation right you lose. Sure you can then pursue arbitration or compliance but as you already have a flawed case it may not be worth the cost. Granted Visa has streamlined the process considerably with the ROL system and allowed for less documentation in some cases.

I can't post information directly from the manual since people who are not authorized to view Visa proprietary information may view this thread. However, this is some general information from the Visa USA rule book on which dispute rules require documentation (I'm ignoring Visa Int'l for the sake of space but they are pretty similiar):

Dispute rules that can involve a consumer claim: 14
Of those, the consumer dispute rules that require a dispute form: 8
(Note - the rules actually state that the dispute form or consumer letter may contain the required information but in all instances, the dispute form is required anyway)
Of those, the consumer dispute rules that require additional consumer documentation to support the claim: 4

Also, under Visa rules, Visa does not look at stage-by-stage documentation presentation the way that MasterCard does. Visa has been getting more technical as of late, but they continue to review dispute cases in their entirety should they reach the Arbitration stage (that "reasonableness" factor that we all love).

Under Reg E and Z Billing Error rules, you are not prohibited from asking for the required information/documentation at the start of the dispute (Reg Z Claim or Defense is an entirely different beast so I'm not addressing it here). However, you cannot deny the claim because you don't get it before conducting a reasonable investigation. Once you do something reasonable, such as performing a Chargeback and getting a Representment, you can then ask for it within the allowable 45 or 90 days. Should you then not get it, you can render a judgement before your final resolution date based on the facts you have.

The whole point I'm trying to make is if you are requiring information in writing from the consumer for a 1st Chargeback that is also a Billing Error and you don't get it, what are you going to do? Write it off? Why do that when you don't have to have the information in writing? Instead, get the required information some other way - phone, email, smoke signal - and put it on the dispute resolution form and alleviate yourself of the debit through a chargeback.

I see what you are saying, we don't require physical proof all the time because the dispute form takes care of it and the additional documents aren't required. Ok, we are on the same page.

That sounds the most logical to me. I mean I am guessing that you as the Bank can assume through account history when the transaction would be posting. Everyone is happy - the customer - she gets use of the funds, the Bank - you're not going to be out anything, and the merchant - they will get the money when it's due.

Everyone's happy? The customer may be satisfied that the immediate problem is solved, but will the customer deal with that business again, knowing what happened? The business is happy, and why not? It got the use of funds earlier than it contracted for. The one party that should truly be unhappy is your bank, since it had to advance the funds to the merchant early, and didn't ultimately collect from its customer until the day the transaction should have posted.