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Can FIs Write Off Small Dollar Amounts?

Is it acceptable for FIs to write off small dollar amounts?

Answer by Brian Crow: If the question relates to Reg E claims, a bank may choose to write off small dollar amounts to comply with the regulation instead of incurring additional time and expense of an investigation.


Answer by Andy Zavoina: In the case of a Reg E claim, Section 1005.11 tells us "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 Section 1005.11." So if you opt to skip the investigation you have to pay based on the claim and this may mean there is zero liability for the consumer.

In the case of a loan, a residual low-balance may be charged off as it isn't cost effective to try and collect a $3 balance other than sending a notice, as an example. I do not recommend these accounts being reported to a credit bureau as a charge off, however. The bank made the choice to abort collection activity

First published on 7/01/13

First published on 07/01/2013

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