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Bogus Reg E Claim

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Question: 
A customer is claiming unauthorized debits to her account. She said she just realized this, but she claims the first occurance was in May. The $200 ACH debits occured every two weeks for several months. The debits were payments on a bill she owes. She said she authorized $50 a month. I realize I only have to reimburse for the debits occuring 60 days after the statement cycle in which the error occured. So far, I am not having much luck with the third party on getting proof our customer authorized the $200. It is too late to return the ACH entries as unauthorized. Our customer has benefited from these ACH debits in that her outstanding debt to this company has been reduced. Can we deny that claim based on the fact that she has benefited?
Answer: 

NACHA rules only allow you to return as unauthorized those transfers that have settlement dates that are under 60 days old, and only if your customer has given you a WSUPP or the equivalent, so the older debits can't be reversed using ACH transactions. They are, however, still covered by the Originator/ODFI warranty of authorization, so you might be able to collect older transactions directly with the ODFI/Originator, if you want to go through the hassle.

If your customer is actually receiving credit toward a debt with the transfers, Reg E's definitions will exclude any claim for unauthorized transfer because the consumer receives a benefit from the transfers. Your customer has apparently acknowledged that the funds are being credited to that other obligation. I think you have grounds for dismissing her claim for failure of authorization. She does appear to have a claim under Section 205.11 for incorrect amount, however.

First published on BankersOnline.com 2/16/09

First published on 02/16/2009

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