Reg E Question. A customer contacts the bank because they notice a ACH charge that has been taken out of their account.

Who is responsible for looking back to see when the charges first started? Do we just dispute the sole transaction that the customer is asking about, or do we preform a lookback FOR the customer? Say we uncover that it has been taken out for 2 years and the customer just finally notices it. I know from a Reg E standpoint, they are not liable for ACH entries that happen 60 days after the 1st statement showing the initial ACH.

Similar question on if it was something that posts to their account via a debit card. Who is the one that needs to perform the lookback to see if any other debits have taken place?

Does the regulation spell this out? I suppose good customer service would say, we should look at all their account statements and work with the customer to find out everything. I was asked this question, and I don't know the answer? We do issue Visa debit cards...perhaps there is something in those rules? It is a hard situation given all workload that is placed on the department that handles dispute. I also realize that this type of situation is just a cost of doing business.

Just wondering if anyone could give me their thoughts.

Thanks!

It is totally up to the consumer to inform the bank which transactions they believe were unauthorized. Your obligation is to investigate those specific transactions and nothing else.

We are a very small shop, so I don't get many ACH transactions that are unauthorized/fraudulent. The majority of our ACH disputes are "debited before authorized" or "different amount than authorized." If they are stating the transaction is unauthorized, we investigate fully because the account number may need to be changed. I don't know of any regulatory mandate that states we have to, it's just to protect the member and the institution.

With debit cards, I perform the look-back as part of the investigation also. It really wouldn't be a full investigation to me if I didn't look back. We are Visa and I am not aware of any Visa rule that states that we are required to perform a look-back.

Randy is correct that Reg E does not require a lookback. It simply says investigate the claim based on the notice of error and determine whether an error occurred. For my clients, I generally recommend trying to ascertain when the transactions began if they are recurring for three reasons:

1. If we find when the transactions began, the customer may have the "Aha moment" of remembering when they authorized the charge, or I may gather information that leads me to conclude that no error occurred. For example, a recurring charge from Amazon Prime. I review prior statements and note that the charges started exactly 30 days after an Amazon purchase shortly before Christmas. My investigation may conclude that the customer ordered a product from Amazon, and they took the 30-day free trial from Amazon Prime to get the free shipping and never cancelled.

2. If the transactions are fraudulent, the bad guys tend to start with small transactions to see if the customer notices, and then get more bold as time passes. For example, I had a case of elder abuse where a grandchild would take the card without permission, use it and then put it back. I had a claim of $8,000 over the course of a couple of recent months. I noticed that one of the unauthorized charges was a recurring Verizon wireless charge. Turned out the grandkid's first fraud was to set up a phone plan at $19.95 / month two years prior. That was the first unauthorized charge as it turned out. I gave the customer $9.85 (The first statement plus 60 days less $50 and denied everything else.

3. If I just work the transactions the customer claims now and give them their money back. I'm stuck with a closed claim on the recent transactions and a new open claim for earlier transactions if the customer happens to go back on their own sees the earlier charges and then comes in to make a second claim. Then I end up paying them again since I can't reopen the closed claim on the recent transactions.

Randy's right. No regulatory requirement to lookback, but operationally it can save you a lot of money if you do.

Thank you for the input.
Just one follow-up question to BrianC's response. In the #2 example, where the grandkid stole the cards and had been using it for 2 years. In our case we issue VISA cards, which means $0 liability. So Reg E goes out the window and the customer needs to be made whole for ALL the funds that they were frauded, correct? Meaning we are out $8,000.00, to reimburse the customer for any of those transactions that posted, since the beginning (Less any that we are able to get back through the VISA dispute process. The $50 liability goes out the window.

Thanks,

Visa's zero liability does have exceptions for gross negligence and delayed reporting.

Exactly. I'm not providing Zero Liability in example #2. This is from Visa's Zero Liability website.

If you experience unauthorized transactions, notify your financial institution immediately. Replacement funds are provided on a provisional basis and may be withheld, delayed, limited, or rescinded by your issuer based on gross negligence or fraud, a delay in reporting unauthorized use, an investigation and verification of a claim, and account standing and history.