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Customer & Merchant Debit Card Dispute

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Are there any examples of debit card dispute errors that would guide us on what type of disputes the banks must file or not file? One of our biggest dispute areas is when a customer goes online and signs up for a 14 day free trial product. All of these websites have terms and conditions that state if you don't cancel before the end of the trial period, you will be charged the full amount for the product and they ship your next order. Then the customer disputes the larger charge as unauthorized and most of the time keeps the product that was mailed to him/her. Are the banks responsible for even taking this type of dispute? Seems like the customer has entered an agreement with the merchant and this should not be of any interest to the bank.

Under Regulation E, your bank has to process the error claim if it is timely filed, and make a decision concerning the authorization. If, based on the information available to you, you believe that the customer authorized the transaction, you can deny the error claim, reverse any provisional credit and notify the customer, all as required by Section 205.11.

If you believe that the customer revoked the authorization by cancelling the order or membership before the end of the trial period, or that the merchant's display of the terms and conditions doesn't clearly reveal that the customer will be charged for goods or services if the customer doesn't act before a deadline, you should decide in the customer's favor and provide the requested credit. If the consumer provided a written claim or statement, you can then use Visa or MasterCard procedures to attempt to obtain credit for the transaction from the merchant.

First published on 9/07/09

First published on 09/07/2009

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