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Are These "Errors" Under Reg. E

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Question: 
Under Reg E, must a bank record every time a customer has a problem with an ATM or Debit card, ACH, ATM machine, computer or telephone transaction? We outsource our card processing and anytime there is a dispute, we have the customer (or non-customer if they used our ATM and encountered a problem) indicate in writing what the dispute involves. At that point, we fax the dispute to our card processor and they research the transaction. This sometimes takes up to 120 days. We do not credit until we have heard back from the card processor. Is this not past the time frame allowed under Reg E? If a customer is having trouble getting a preauthorization on a debit card transaction, we never get the customer to put it in writing to us. Should we?
Answer: 

Having the customer document the error is your choice. I suggest that you have them document any type of theft or unauthorized errors.

You must resolve errors within 10 days. If you can't, you can extend the time frame to 90 days (maximum), but you must give the consumer a provisional credit while you investigate. Refer to Section 205.11(c) of Regulation E: (I'm quoting the regulation in italics and added some Visa/MasterCard info in non-italics.

Ten-day period. A financial institution shall investigate promptly and, except as otherwise provided in this paragraph, shall determine whether an error occurred within 10 business days (5 if Visa POS transaction) of receiving a notice of error. The institution shall report the results to the consumer within three business days after completing its investigation. The institution shall correct the error within one business day after determining that an error occurred.

Forty-five day period. If the financial institution is unable to complete its investigation within 10 business days (5 if Visa POS transaction), the institution may take up to 45 days (90 if POS transaction) from receipt of a notice of error to investigate and determine whether an error occurred, provided the institution does the following:

a. Provisionally credits the consumer’s account in the amount of the alleged error (including interest where applicable) within 10 business days (5 if Visa POS transaction) of receiving the error notice. If the financial institution has a reasonable basis for believing that an unauthorized electronic fund transfer has occurred and the institution has [provided appropriate initial disclosure], the institution may withhold a maximum of $50 ($0 if Visa/Mastercard POS) from the amount credited. An institution need not provisionally credit the consumer’s account if the institution requires but does not receive written confirmation within 10 business days of an oral notice of error.

b. Informs the consumer, within two business days after the provisional crediting, of the amount and date of the provisional crediting and gives the consumer full use of the funds during the investigation;

c. Corrects the error, if any, within one business day after determining that an error occurred; and

d. Reports the results to the consumer within three business days after completing its investigation (including, if applicable, notice that a provisional credit has been made final).


First published on BankersOnline.com 8/16/04

First published on 08/16/2004

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