Reg E Claim - Am I Figuring This Correctly?

Posted By: Bankwoman1

Reg E Claim - Am I Figuring This Correctly? - 02/01/21 04:21 PM

Customer noticed a charge on his account when looking at his online banking in mid December. The charge was on December 10th for $22.95. He told the bank, he didn't think anything of it and assumed it would be the only charge, so he didn't notify the bank. Fast forward to today, he is now noticing that he had charges on:

December 28th - $12.99
January 9th - $19.99
January 28th - $3.00
January 30th - $34.95

His statement cycle is the 10th of the month. So, the first charge on December 10th is on his December 10th statement. He notified us on February 1st. So, he is within 60 days of the statement the first charge appeared on. However, he knew about that first charge in mid December and did not notify us until February 1st. Is it correct to say that he is responsible for the first charge of $22.95 (since he didn't notify us in a timely manner) but we are responsible for the remaining charges since they fall within the 60 day window of the first statement being sent out? Or are we responsible for refunding all charges?

I get so confused as to when we can apply the 2 day notice and the 60 day notice.

Thanks for any help!
Posted By: BrianC

Re: Reg E Claim - Am I Figuring This Correctly? - 02/01/21 04:45 PM

Remember that Reg E counts forward in time, not backwards. Generally the bank is liable for the early charges and the customer responsible for the later charges if they do not notify the bank timely of the loss or theft of the access device.

I think you are going to like Reg E in this instance.

1005.6(b)(1) The customer is liable for the first $50.00 of transactions that occur within 2 business days of them learning of the loss or theft of the access device. So that timeframe would be between December 10th and two business days after the customer noticed the charge of $22.95. (Since this amount is less than $50.00, the customer is liable for this charge.)

1005.6(b)(2) says that the customer's liability increases to $500 for any charges that occur after the 2nd business day the learned of the loss or theft, up to 60 days from December 10th (Which would be February 9th). There is less than $500 in charges between mid-December and January 30th so the customer is responsible for all of those as well.

1005.6(b)(3) doesn't apply since we did not reach that timeframe.
Posted By: rlcarey

Re: Reg E Claim - Am I Figuring This Correctly? - 02/01/21 04:54 PM

That does however assume this involves an access device.
Posted By: BrianC

Re: Reg E Claim - Am I Figuring This Correctly? - 02/01/21 05:03 PM

Good point, Randy. If no access device is involved, the we can only apply 1005.(b)(3) in which case the bank is responsible for all the charges since none occurred more than 60 days after December 10th.
Posted By: Bankwoman1

Re: Reg E Claim - Am I Figuring This Correctly? - 02/01/21 05:05 PM

All charges involved a debit card.

I appreciate your explanation Brian as it is much better than my way of thinking! This will definitely be printed out and hung on my wall for future reference!!

Thanks to both of you!
Posted By: BrianC

Re: Reg E Claim - Am I Figuring This Correctly? - 02/01/21 05:11 PM

Also note, that I did not invoke Zero Liability protections because the customer failed to promptly notify the bank of the fraudulent charges.
Posted By: John Burnett

Re: Reg E Claim - Am I Figuring This Correctly? - 02/03/21 03:40 PM

The rules in section 1005.6 are based on customer responsibility to notify the bank when the customer is aware (or should be aware) that something is wrong. There are two incidents that trigger that responsibility -- the consumer's realizing that their access device is missing (lost or stolen), and receipt and review of a statement that includes a transaction the consumer believes they did not authorize. Realizing that an access device is missing triggers a two-business-day alert limit in which to contact the bank and avoid liability for unauthorized transactions occurring before contacting the bank (with a $50 upward limit on liability). Why? Because a timely notice to the bank can stop further unauthorized transactions with the access device.

The other deadline is based on a responsibility to review one's bank statement. The consumer is allowed a VERY generous 60 days to do that. Again, the reason for the deadline is that a responsible consumer who notifies the bank of unauthorized EFTs on their statement can prevent more unauthorized transactions. If the consumer misses that 60-day deadline, any further unauthorized transactions are the consumer's responsibility,.

That's why section 1005.6 protects the consumer from loss for the earliest transactions.