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Reg E and Visa's Zero Liability Rule

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We have a customer who was contacted by a company offering a $5,000 loan. Our customer was interested and paid a loan processing fee of $275.99 using their debit card . Our customer was then contacted by the company needing an additional $151.99 in order to pay the taxes on the loan which was also paid by their debit card. When the loan of $5,000.00 never showed up, our customer contacted the company inquiring on the loan and was told that an additional $463.00 was needed to continue the loan process due to the customers low score. The customer has now filed an EFT dispute with the bank. All the fees were processed through Western Union. Visa is claiming that there are no charge back rights and that the customer has to work with the merchant for the funds. This seems to be a classic loan scam. What is the banks liability with the customer in reference to Reg E and Visa's zero liability rule?

Visa has a chargeback code (53) for defective merchandise or for a product not as described. Buyer's remorse does not qualify under code 53, just as under Reg E it would not. The consumer fell for a scam - not once or twice but three times! The bank simply executed the orders provided by the consumer. There is no claim against the bank.

First published on 01/15/2017

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