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#761793 - 06/26/07 10:32 PM Reg E: Temporary Holds on Check Cards
Jan94 Offline
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Joined: Mar 2001
Posts: 828
USA
When a customer uses their check card, the bank places a temporary hold on the funds for up to 24 hours before it posts to their account. They would like to increase the time they are holding the funds against the DDA to give the merchant enough time to settle the transaction. It appears that Visa regs does address this but is there also a maximum time period in Reg E that provides what is the longest period of time a bank can hold funds against the customer's DDA for check card transactions? I've not found anything that specifically address this in Reg E or the commentary. Could this be a state law issue? It also doesn't appear this would be a change in terms under Reg E as long as our agreement addresses limitations. Thank you for your help.

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#761813 - 06/26/07 10:41 PM Re: Reg E: Temporary Holds on Check Cards Jan94
rlcarey Online
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rlcarey
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Galveston, TX
I think you are going to run into Reg. CC issues. Many retailers run preauthorization for amounts much greater than the actual charges that comes through. Are you planning on bouncing checks because of these preauthorizations?
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#762036 - 06/27/07 02:09 PM Re: Reg E: Temporary Holds on Check Cards rlcarey
X O Offline
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X O
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the maelstrom
I don't know where to send you for the info Halito, but we have a 3 day window that the auth stays marked up. Our system is set up to recognize the clearing so it will automatically come off if the item posts within those 3 days..
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#762080 - 06/27/07 02:34 PM Re: Reg E: Temporary Holds on Check Cards X O
Jan94 Offline
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Joined: Mar 2001
Posts: 828
USA
Yes, it appears that this is covered in the Visa rules. We do disclose the conditions for preauthorization and inform the customer that their funds may be held due to the preauthorization and that we would not be responsible for items not paid due to the preauthorization. We have some examples of what other banks do and it appears the longest I have seen is 5 days. The bank thought that this would be covered under Reg E and we have not found anything that addresses how long the bank can have these type "holds". We're thinking that the bank may be really asking about a possible Reg E dispute that could arise if the customer thought a item had processed and then had another item post during this hold period, so we're going back to verify that.

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#762820 - 06/27/07 08:49 PM Re: Reg E: Temporary Holds on Check Cards Jan94
John Burnett Offline
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John Burnett
Joined: Oct 2000
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Cape Cod
Originally Posted By: Halito
The bank thought that this would be covered under Reg E and we have not found anything that addresses how long the bank can have these type "holds". We're thinking that the bank may be really asking about a possible Reg E dispute that could arise if the customer thought a item had processed and then had another item post during this hold period, so we're going back to verify that.


Regulation E doesn't even recognize that debit card holds exist. So you won't find any help there. The holds you describe are also not Regulation CC holds. The hassles that some banks have had in this area are centered on holds that are placed that greatly exceed an actual transaction (some merchants send an authorization request based totally on guesswork, like the gas station that sends a $75 fold for debit at the pump -- come to think about it, that may not be so outlandish these days!). Also bothersome are use of debit cards for car rentals (some agencies refuse debit for the front end but accept it when the dollar amount is finalized), and hotel rooms (some hotels do the same thing as car rental agencies).
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