Am I correct that we can Deny a Reg. E error claim on the basis of 'No Error?' Basically, we think the consumer is having buyers remorse.

Rationale: Claim covers POS debit card present (no PIN) transactions at one merchant going back 3 months.

Investigation of Bank records indicates this customer has had regular transactions in similar amounts at this particular merchant going back 3 years. No other transactions are being claimed, customer has card. Account review indicated significant increase in spending, deminishing balances - again customer is not claiming any other transactions are unauthorised. Also, card is used regularly by customer - claimed transactions are also regular. Would seem someone would have to have been taking customer card and returning daily or have skimmed and only used for low $ at one of her regular merchants...


What do we have to have to support denial on basis of 'NO Error'

If we can not prove this and negligence is not a reason for increased liability how do we assess this?

From what I understand of Reg. E we do not have to provisionally credit for the transactions that were not reported within 60 days, but we may still have to pay them? So if we cannot support a denial based on lack of error we have no option but to pay all the claims?

One more Question! If we deny based on No Error; the notice has to be sent within 10 days (not planning provisional) and tell consumer they have right to review documents relied on; I assume it must provide reason for denial too. Is that all the notice must include?

Having to pay for transactions beyond 60 days is not common since it depends on factors that come under 205.6 (fraudulent use). What you disclose in your card agreement and whether or not the claim falls under the requirements of 205.6 is something you should determine before going any further with your investigation.

In any event, an unauthorized transaction can occur in other ways than what you described. Does this person have a spouse/child/friend who could have had access to the card, used it, then put it back? If the person used the card without permission, it's unauthorized. Did the cardholder make a transaction at the store that day but not the one that posted to the account (clerk made an error in which card was charged during a busy day)?

The investigation you've done up to this point is a great start, but to base your case solely on that information is very shaky and IMO does not qualify as a reasonable investigation since you have other quickly accessible avenues to obtain more information (sales draft request from the merchant). I'd ask the cardholder the above question about other persons. If she refuses to answer, then you can use her refusal in conjunction with what you have discovered to conclude that you will deny the claim. If she states no one had access, then I'd recommend requesting the sales receipt and reviewing it for validity.

If within 10 days you determine there is no error, the letter must state:
1) You have concluded no error has occurred
2) A description of how you concluded there is no error (This does not have to be a step-by-step explanation. Using this example, you could explain that upon reviewing the account history, the transaction information, the delay in contact, and the cardholder's unwillingness to provide essential details, you have concluded there is no error.
3) No provisional credit will be issued (Some people consider this statement optional. My opinion is that it's one sentence and completely removes any doubt that there will be any credit)

As David noted, do a complete investigation. Then make your call. Yes, you can deny the claim because there is no evidence of an error. There are no right or wrong reasons, per se, to deny a claim. Look at the merits of the claim and make a decision based on the facts. There is no black and white answer to all claims. Some are subjective. So long as you aren't pushing it all the time you should be judged as reasonable in your claims resolutions.