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#885953 - 01/11/08 02:56 PM Which disputed EFTs do you reimburse?
Bailey. Offline
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There seems to be interpretive differences here in the office, so I'd like to reach out to you folks.

Regarding Reg E and timely notification - consider this scenario.

Customer has a monthly AOL debit of 29.99:

Transaction 1 - 1/15/07 on statement - 1/30/07
Transaction 2 - 2/15/07 on statement - 2/30/07
Transaction 3 - 3/15/07 on statement - 3/30/07
Transaction 4 - 4/15/07 on statement - 4/30/07
Transaction 5 - 5/15/07 on statement - 5/30/07

Customer signs dispute form 6/1/07, stating authorization to AOL was revoked on 12/31/06.

Which transactions do you reimburse the customer? The liability linchpin here in the office hinges here:

Sec. 205.6(b) Limitations on amount of liability.
(3) Periodic statement; timely notice not given. A consumer must report an unauthorized electronic fund transfer that appears on a periodic statement within 60 days of the financial institution's transmittal of the statement to avoid liability for subsequent transfers. If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period.

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#886423 - 01/11/08 07:12 PM Re: Which disputed EFTs do you reimburse? Bailey.
rlcarey Online
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The first and second ones.
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#886447 - 01/11/08 07:22 PM Re: Which disputed EFTs do you reimburse? rlcarey
Bailey. Offline
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Will you explain your reasoning? I want to be able to sound intelligent when I go back!

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#886464 - 01/11/08 07:33 PM Re: Which disputed EFTs do you reimburse? Bailey.
rlcarey Online
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Those are the ones that happened in the first 60 days and since they didn't notify you, they are liable for the rest:

"If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period. "

Depending on the timing of the statement and transactions, it might include the third one also.
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#886479 - 01/11/08 07:48 PM Re: Which disputed EFTs do you reimburse? rlcarey
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I believe that since you could have prevented the 3, 4, and 5th debits, the customer is on the hook for those. Had the customer notified you within 60 days of the occurrence of the first error, your bank could have rejected the last 3. That's my best stab at this one, it's been a while since I've had to deal with Reg E.
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#886494 - 01/11/08 08:00 PM Re: Which disputed EFTs do you reimburse? GuitarDude
Bailey. Offline
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Here's where I need clarification. (And I thank you both for answering.)

Technically, had the customer reported the first unauthorized debit, all the rest could've been rejected.

In addition, the customer DID NOT report within 60 days of statement for transactions 1, 2 or 3. So why would any of those be reimbursable?

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#886542 - 01/11/08 08:29 PM Re: Which disputed EFTs do you reimburse? Bailey.
GuitarDude Offline
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I believe it again goes back to the fact that the bank could have prevented subsequent transfers if the customer had notified the bank within 60 days of the first error.

In the text that you and rlcarey quoted, it states ..."the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution." To me, this means that the close of the 60 days occurred on 3/31/07, which is the 61st day after the first statement cutoff that originally showed the error (1/30/07). Whether your statement is sent on 3/30 or 3/31 could have bearing on whether that transaction is reimbursable or if the customer can be made liable.

Incidentally, there is no 2/30/07!
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#886571 - 01/11/08 08:45 PM Re: Which disputed EFTs do you reimburse? GuitarDude
Bailey. Offline
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Originally Posted By: Newcastle
Incidentally, there is no 2/30/07!


Thanks for picking out the crucial part of the scenario.
I was trying to make a hypothetical easy to work with!

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#886692 - 01/11/08 09:51 PM Re: Which disputed EFTs do you reimburse? Bailey.
MN Banker Offline
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Actually, the first three would be reimburseable because they all occurred within 60 days of the first statement date. The customer would not be liable for anything that happened before 3/31/07 (60 days from 1/30/07)

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#886952 - 01/14/08 12:37 PM Re: Which disputed EFTs do you reimburse? MN Banker
John Burnett Offline
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MN is, of course, correct. The 60 days is counted from the statement availability date, not the transaction date.
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#886962 - 01/14/08 01:43 PM Re: Which disputed EFTs do you reimburse? John Burnett
Bailey. Offline
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OK. Let me throw one more hitch into this -

Does it matter how long these debits went on before the customer reported them? Let's say the customer has been on a European Dirt Bike circuit for the past 2 years, and his statements have been collecting dust on the other side of the mail slot. He comes home shocked that AOL didn't cancel his subscription, and so he goes to the bank to dispute them.

Would the first 3 transactions still be reimbursable, no matter how long the debits continued before the customer reported them unauthorized?

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#886995 - 01/14/08 02:52 PM Re: Which disputed EFTs do you reimburse? Bailey.
John Burnett Offline
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Yes, they would still be reimbursable. Regulation E doesn't include anything like the one-year cutoff of claims that's found in the UCC (for unauthorized checks).
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#887000 - 01/14/08 02:59 PM Re: Which disputed EFTs do you reimburse? John Burnett
Bailey. Offline
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Thanks everyone!

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#887696 - 01/15/08 04:08 PM Re: Which disputed EFTs do you reimburse? Bailey.
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There is one hitch in the claims. From 205.6(b)(3)2 (OSC):


Transfers not involving access device.
The first two tiers of liability do not apply to unauthorized transfers from a consumer's account made without an access device. If, however, the consumer fails to report such unauthorized transfers within 60 calendar days of the financial institution's transmittal of the periodic statement, the consumer may be liable for any transfers occurring after the close of the 60 days and before notice is given to the institution. For example, a consumer's account is electronically debited for $200 without the consumer's authorization and by means other than the consumer's access device. If the consumer notifies the institution within 60 days of the transmittal of the periodic statement that shows the unauthorized transfer, the consumer has no liability. However, if in addition to the $200, the consumer's account is debited for a $400 unauthorized transfer on the 61st day and the consumer fails to notify the institution of the first unauthorized transfer until the 62nd day, the consumer may be liable for the full $400.
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#887717 - 01/15/08 04:26 PM Re: Which disputed EFTs do you reimburse? Andy_Z
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Andy - I'm confused, how is that different than the answer given? The first three were within the 60 day limit, so they (the customer) are not liable for those. The other two were after the 60 day limit, so the customer IS liable for those two.

In the citation above, $200 was debited before the 60th day and $400 on the 61st day - so the customer is liable for the $400 but not the $200.

Aren't these saying the same thing, or have I completely lost it?

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#887724 - 01/15/08 04:37 PM Re: Which disputed EFTs do you reimburse? MN Banker
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There are different themes in the above discussion. John was commenting on the UCC cutoff and the fact that there isn't one in Reg E. I didn't want the reader to get the wrong impression.
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#887740 - 01/15/08 04:59 PM Re: Which disputed EFTs do you reimburse? Andy_Z
Bailey. Offline
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OK now I'm REALLY confused. In my hypothetical, the customer reported within 60 days of the last debit in the string, but did NOT report within 60 days of the first. Are you saying, Andy, that this changes what is reimbursable? Given that each month is an even 30 days long (for ease of argument), which transactions would the customer be reimbursed and why?

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#888539 - 01/16/08 04:36 PM Re: Which disputed EFTs do you reimburse? Bailey.
John Burnett Offline
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I'll try to say it a different way.

Under Regulation E, when there is a "string" of EFTs that are demonstrated to be unauthorized and cover a period of time, the consumer is liable for any of those unauthorized EFTs (UEFTs) that occurred after the end of the 60 day period that is counted from the date on which a statement was made available that showed the first such UEFT. If an accepted access device was used to complete the UEFTs (lost or stolen access device), the consumer MAY be liable for some of the UEFTs that occurred after the consumer became aware of the loss or theft of the access device and before the end of that 60-day period. If the consumer never became aware of the loss or theft of the access device, there's no consumer liability for UEFTs before the end of the 60-day period.

Now, the piece that you ask about: Once the 60 day period has ended, the consumer remains entitled to reimbursement for the UEFTs occurring before the end of the 60-day period (subject to the access device rules), regardless of how long the consumer waits to wake up and make the claim. The consumer's claim is the same, and affects the same UEFTs, whether she makes the claim on day 61 or two years later.
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