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Change in Reg E error resolution time frame?

Our bank is getting ready to change from ATM cards to VISA check cards and are working on disclosures/apps. We were told that under Reg E error resolution, POS transactions now only have 10 days instead of 20 along with foreign transactions and new accts. Is this correct? When did it change? We have lots of statements with 20 days on them, is that a major problem?

Answer by Andy Zavoina:
This spreadsheet tool may help. Your disclosures should identify the customers liability which could be under both "E" and "VISA", depending on the transactions "path". The templates in Reg. E do not provide for the debit card limitations which can be as low as zero. But don't eliminate text that this liability exists.

1998 saw some major changes effective April 1, 1999. Here is an excerpt from an article I wrote for ComplianceAction back around that time.

Under the old rule, POS claims automatically had 20 days to be investigated and there was no need to provide provisional credit before that. Claims could then take as long as 90 calendar days to be completed. Under the current (new) rules, all claims investigations will be completed within 10 business days or a provisional credit will be required. There is one exception to this, the New Account Rule.

The New Account Rule provides that if an electronic fund transfer which is claimed to be in error, occurs within the first 30 days of the initial deposit, the institution has 20 days to investigate the claim or to pay a provisional credit. If the credit is made, the institution may take up to 90 days to complete its investigation.

Institutions also have up to 90 days to investigate POS claims and foreign-initiated debit card claims. Do not be confused by the term “debit card”. The meaning here did not change and is not exclusive to true debit cards. Whether your institution issues debit cards or ATM cards, either combined or separated by function, they fall into this definition. The term debit card was in the text before these changes were made and true debit cards, as we know them today, became so popular. “Foreign-initiated” also has a significant meaning. Do not confuse this with a “foreign transaction”, defined as one not on your banks system and possibly subject to a surcharge. This means a transaction not initiated within a state. “State” is defined in the regulation to include any state, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico or and political subdivision of these.


Answer by John Burnett:
If you are putting your error resolution notice on your monthly statements, you can use the short form, which doesn't mention any time limits. I recommend this highly.

However, you will still need to make sure your initial disclosures refer to the 10 day rule and 90 day rule. These might have to be consigned to the scrap heap in order to start disclosing correctly. Do make sure you refer to the Visa lower liability limits when you revise these disclosures.

First published on 9/2/03

First published on 09/02/2003

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