Reg E Disputes under a certain threshold

Reg E disputes have increased significantly for us in recent years. As a bank, can we say that any disputes under a certain dollar threshold (Like $50), we will automatically recredit the customer (the bank take the loss by writing these off) and not dispute them? Not treat them as a Reg E Dispute? No notices, no timeframes to follow? (Hope this makes sense!)

Most banks have set such a threshold for some time now. The dollar amount of that threshold is really up to you. Banks weigh what it costs to process a return and just automatically refund any claim under that amount.

Thanks, but if we have that threshold set, I just want to be clear, we do not consider them a dispute? We don't have to keep them in a log, we don't have to send the letters of notification etc.? We simply immediately credit the customer and are done with the process?

If a consumer notifies you of an error, it's still a Reg E dispute. You just have different investigation procedures for small claims. You still must correct the error in one business day and then notify your customer within three business days as required by 1005.11(c).

Ok, thank you for clarifying.

One more question: When counting the 10 business days, do you count the day the dispute was received? Example if customer notifies the bank on February 1, 2023 of their dispute, is the 10 days 2/1, 2/2, 2/3, 2/6, 2/7, 2/8, 2/9, 2/10, 2/13, 2/14 or do you start counting 2/2, 2/3, 2/6, 2/7, 2/8, 2/9, 210, 2/13, 2/14, 2/15?

The day the dispute is received is Day 0.

Thank you Brian!

One other thing to consider if you are thinking about setting up a de minimis error claim procedure as described above -- You may want to keep some record of which customers have made such claims and how often. It is simply amazing how quickly customers can figure out a bank is using a de minimis claim procedure, and those who want to take dishonest advantage will do so. Those customers should be early candidates for a banking relationship termination.

Just to clarify on this topic from February, if we decide to set this threshold and automatically credit the customer, notification can be orally, correct?

As 1005.11(c)(1) does not specifically say the notice must be in writing, you can provide it orally. Per the commentary: "1. Notice to consumer. Unless otherwise indicated in this section, the financial institution may provide the required notices to the consumer either orally or in writing.".

That said, you will need to make sure you have a sufficient way to document the oral notification, or your auditors/examiners will assume it didn't happen (which is why some banks just send a written notice).

And just to provide a citation for the response Brian gave above (about how Reg E still applies even if you don't want to investigate), see comment 4 to 1005.11(c) as follows: "4. Correction without investigation. A financial institution may make, without investigation, a final correction to a consumer's account in the amount or manner alleged by the consumer to be in error, but must comply with all other applicable requirements of § 1005.11."

Most banks that rubber stamp and pay claims under a de minimis amount keep a spreadsheet or other form of searchable record of such claims to be able to catch customers who might figure things out and try to game the system, getting bogus refunds for transactions they actually completed themselves.