I would assume that Reg E is only meant to be applicable where an actual debit has been posted to the customer's account and funds have been removed (or a credited). But what happens when a customer has on-line banking and sees a memo posted item and they come in to dispute it and we let them sign an affidavit stating that and the authorization never materilizes into an actual withdrawal from their account? It just disappears. Do we still have to follow the Reg E requirements for "No error" and notify the customer in writing? Or does Reg E not apply in this case even though we have an affidavit from the customer?

Until the funds actually post against a client's ledger balance, the transaction is not disputable. A transaction can come off of a clients available balance temporarily, but until the Merchant settles there system and sends the item through, it may never come off of the ledger balance.

We will accept the claim at the authorization stage (as a majority of the outstanding auths will post) and will follow up a few times within the initial 10 day Reg E period. If the transaction does not post by the 10th day, we send a letter to the customer advising the transaction did not post and the claim has been closed, but customer should continue to review their account statements and if the transaction posts at a later date to refile the claim.

I thought it should probably fall into the No Error category myself. If the customer notified us, it looks like it would require some type of closing response. I hate this Reg! There's so many variables and is so confusing!