Reg E Dispute Question

Customer goes to a website and authorizes a purchase; however, he gets a response from the website it did not go through.

So, the customer makes a second attempt, and gets a response that it did not go through either.

Customer then files a dispute because two charges are debited from his account.

Merchant refunds only one of the charges.

Would the Bank be liable for refunding the second charge or not?

Since the cardholder authorized the charge and was charged the correct amount, Reg E does not apply. File a chargeback for "merchandise not received/services not rendered" based on the customer's claim and then see how/if the merchant responds. You do not have to take a loss in this instance, but you are obligated by your contract with V/MC to assist the cardholder in resolving the claim.

Also since Reg E does not apply, you can require that the cardholder attempt to contact the merchant first to resolve the claim prior to proceeding with the chargeback process.

Brian, I have been looking at the card rules and can't find the answer to this add-on question. If we pursue a product not received or other non-fraud dispute, are we allowed to pass the cost of the disputing to our member? I have had several situations this year where the merchant response to the dispute is that the "order was placed" by our member, even if it is a product not received dispute. That response seems to satisfy the the powers that be in the dispute system, so I have to go to pre-arb to get any shipping information (if there is any) or resolution to the dispute. I have also had more merchant disputes this year where the member does not receive any shipping or tracking information (I'm assuming this is because I am processing more disputes from purchases made on FaceBook and other social networking sites).

There are no powers that be in the chargeback and representment process. You file a claim via the chargeback, the merchant then can represent. Visa/MC do not evaluate representment documents. The merchant is hoping that you drop the claim regardless of the quality of the documentation provided so they don't have to accept financial liability which is why you have the prearbitration bow in your quiver. If they know their representment documentation is garbage, they won't proceed to arbitration because they know they'll lose.

Chargeback and prearbitration fees are the cost of doing business for the issuer. You are more than compensated via interchange fees you receive when your customers use their cards. In the MC Rights and Responsibilities section of the Chargeback Guide it notes that you must credit the full amount of the chargeback to your customer.

"When an issuer has billed a transaction to its cardholder's account for payment and then chooses to exercise a chargeback right, the issuer must credit the cardholder's account for the amount of the chargeback."

Perfect - thank you Brian! I believed the answer was that is was part of doing business, but our "merchant" disputes increased by quite a bit this year, and I was asked by others if this is a "fee" that the member was responsible for.

I appreciate your response.