Reg E Dispute

Customer states that four ACH debits to the same merchant are unauthorized and signs the WSUD. The same day we are notified by the customer we contact the merchant and receive information verifying the name, email address, IP address and other info for the account holder. We are confident that the account holder did authorize the transactions but are unsure of the best way to proceed. Is it better to give provisional credit and return the ACHs and hope they don't represent, and risk possibly taking a loss, or to simply notify the customer that their claim is being denied and allowing them to request copies of the documentation we used to make the determination? If we do deny the claim to we have to go through the process of issuing a provisional credit and immediately debiting it, or can we just skip to the denial? Any help is appreciated.

If you are within your 60 days under NACHA rules, why bother investigating. Unlike VISA/MC rules an originator cannot represent an ACH transaction. Return them, credit the account and close your investigation. If you suspect your customer is not being truthful, then decide whether or not you want to retain the account.

Amen to Brian. ACH rules prohibit an Originator from re-initiating a debt that's been returned as unauthorized. Send them back, if you are still within the 60-day extended return window. Watch out for future debits if the four that got sent back appear to be recurring entries. Keep in mind that someone else might have been using the customer's computer to order from the Originator. Then decide whether you want to retain the account.

Thank you both!

The same day we are notified by the customer we contact the merchant and receive information verifying the name, email address, IP address and other info for the account holder.

Many banks waste too much time trying to contact merchants, etc. trying to determine whether or not an ACH was authorized. It's a total waste of time by the banks.

You might want to review this document:

https://www.nacha.org/news/ach-operation...esponsibilities

Instead, the ACH Network is set up to empower consumers to dispute transactions that they believe were not validly authorized, and to give effect to consumer rights under Regulation E. RDFIs must accept Written Statements of Unauthorized Debit from their consumers, must credit the consumer’s account in the amount of the unauthorized debit, and may return the debit to the ODFI that warranted the validity of the authorization in the first place.

It's a one, two, three step and the bank is out of the middle with no wasted time.

So do we even have to give provisional credit and wait the 45 days and all of the other Reg E stuff or do we just notify the customer immediately that their credit is final and move on?

Provisional credit is only provided if you cannot complete your investigation within 10 business days and need to take up to 45 days. An ACH investigation should take about 10 business minutes...Return R10, credit account, close investigation, notify consumer. The End.

Thank you so much!

The only thing I would add to the exchange with the customer is a caveat that, although the bank is crediting his account and returning the debits, that only reverses the payment(s) and puts the matter back on the Originator, which may or may not try to collect in another way on any claim it has against the consumer.