We have instances where we receive a notice of unauthorized use, under Reg E. We give the prov. credit. We investigate and there is no error on the part of the bank. However, in view of the type of error/circumstances/ we decide to not reverse the prov. credit. For example, lets say parents' teenager snags the ATM card and makes a couple withdrawal unknown and withour parents' permission. We don't want to play hardball. We work with parents, and the prov. credit stays. Typically we will issue a new ATM, etc. The typical written notice letters don't account for this decision. How are you handling these? Examiner expected that we send a letter. We are not sure what to say.

Just that the provisional credit has been made permanent. No reason has to be provided for such an action.

The regulation doesn't anticipate this sort of melded response, so I can see a regulator expecting a written notice when you're saying that you determined that no error took place, but you're nonetheless not going to reverse the provisional credit.

Yes, but the example given is an unauthorized transaction:

For example, lets say parents' teenager snags the ATM card and makes a couple withdrawal unknown and withour parents' permission.

I think they might need to reassess what they mean by an "error".

I read both of your responses. I like the idea of sending a letter saying the provisional credit stands. We will not agree to the fact that there was a bank error. It was not. However, we need to provide some kind of written hand off to the customer in order to close the file. What about something to the effect that 'Reference is made to your claim, our investigation and our subsequent conversation.

Please accept this letter as confirmation that the provisional credit has been made permanent".

We will not agree to the fact that there was a bank error.

I don't understand this statement. What does the customer claiming that there was an unauthorized transaction on the account have to do with bank error? This is not monopoly There is nothing about the situation you included in your original post that would not require the bank to give them provisional and then final credit.

The customer originally claimed there was an error on the checking account statement as there was unauthorized use of the ATM card. My post wasn't clear. Only after our investigation did we learn that the customers kid took the card and used it. We were correct in giving provisional credit as we all agree. I just want to close the file and we need a letter. We are a community bank and we don't always play hard ball with customers. We know there are sometimes extenuating circumstances. I just need language in the final letter confirming that the provisional credit stands.

I believe what RLCarey is saying, is that an unauthorized transaction (or "error" as you refer to it) does not mean "bank error" aka you in no way have to say it was the bank's fault.

Just tell them that you determined an error occurred and the provisional credit is final if that's the route you want to go. I'm not sure why you think you have to say or not say it was a "bank error" that was the "bank's fault."

btw - the very first definition of an "error" in the regulation is: (i) an unauthorized electronic fund transfer.

From the facts given, it sounds like you do have an error (although not an error that is the fault of the bank or "bank error" as you seem to focus on above, but an "error" as defined in the reg, nonetheless).

Sounds great. Not choosing my words well this week, I guess. I will consider this matter closed.