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Provisional Credit Predicament

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Do we have to offer provisional credit within 10 days in situations where the card holder says in one claim they know nothing about it and in the next letter they say they cancelled the service? We inquired with the service provider and they insist the card holder has the equipment, the service, etc. and just needs to return everything. If we charge this back we will surely lose and the card holder will be long gone with our credit and we will not be able to reclaim it. Is there no provision in Reg E to account for participation in a transaction?

There is no allowance in Reg E to delay a credit. The time frames are stated clearly that if you do not complete your investigation within the first 10 business days (excluding new account exceptions which allows 20) you will pay the provisional credit if you want to continue the investigation period. If you have a confirmation from the merchant that the transfer was approved, you may be able to close your investigation at that point and deny the claim. It depends on what you have done in your investigation and the information you have so far. Remember that satisfaction of the products or services purchased is not a condition of a Reg E based claim. Reg E cares if the transfer was authorized. If the consumer was told the merchant would make a refund to the consumer's account because of the dissatisfaction, if that doesn't happen as scheduled it may be a new Reg E claim.

First published on 11/19/07

First published on 11/19/2007

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