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#940446 - 04/11/08 02:53 PM Disputes that trigger a LOC transfer
M&M Offline
Gold Star
Joined: Nov 2003
Posts: 496
Midwest
Scenario: An unauthorized EFT overdraws a customer's account, and we transfer funds from an overdraft protection plan to cover the overdrawn amount. This typically will not be the exact amount of the dispute, usually more based on the structure of the program. The disputed amount is almost always different than what was transferred.

Question: When we work the dispute, to make the customer whole, do we put the funds back into the DDA or do we apply it to the overdraft protection LOC?

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eBanking / Technology
#940470 - 04/11/08 03:01 PM Re: Disputes that trigger a LOC transfer [Re: M&M]
Village Man Offline
Junior Member
Joined: Sep 2005
Posts: 36
Credit should go back to the account that orignally was charged with the disputed transaction. Also, if the unauthorized transaction caused a LOC loan to be posted, with interest I assume, you will have to make that transaction with interest whole again too.

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#940486 - 04/11/08 03:08 PM Re: Disputes that trigger a LOC transfer [Re: Village Man]
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 38,448
Cape Cod
A rule of thumb is to restore the customer to the position he or she would be in but for the unauthorized EFT. If the customer lost interest in the deposit account, restore it. If the customer incurred bank fees (minimum balance, overdraft, OD transfer) that would not have been imposed but for the unauthorized EFT, refund them. If the customer incurred interest charges in an overdraft line of credit based on a transfer that would not have been made but for the unauthorized EFT, refund it.

If the customer lost interest in a savings account because funds were transferred from that account to cover an overdraft caused by the unauthorized EFT, restore that interest.

Some banks have gone so far as to reimburse their customer for fees imposed by third parties -- a bad check fee incurred when the customer's check bounced to the grocery store, if the fee would not have been imposed had the unauthorized EFT not occurred. Reimbursement of third-party fees is not required by the regulation, however.
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