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Debit Card Dispute-Right to Take Credit Back

A customer has fraud on their card and the fraudulent charge is under a certain amount. When we have a smaller disputed transaction, we usually just take the loss for the item, write it off and send a letter of finalization. To my understanding, once a final letter has been sent, credit CANNOT be reversed per Reg E. I have had instances where we have written fraud items off, sent a letter, but the merchant refunds this item directly to the customers debit card giving them a second credit. Does the bank have the right to take their credit back? Do we not have the right because a final letter was sent?

Answer by Brian Crow: This is considered a case of "unjust enrichment." The customer is not entitled to profit from the dispute. When the credit is reversed, do not state that the provisional or final credit is being revoked as this would be a violation. Instead, simply inform the customer that you are reversing a duplicate credit to the account.


Answer by Andy Zavonia: You aren't reversing your Reg E credit per se. And Brian is right on in that the customer isn't supposed to benefit while everyone else takes a loss. You have the right to collect this back.

First published on 8/15/11

First published on 08/15/2011

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