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Reg E Claim Requires Bank Form

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Question: 
It has been my experience that most financial institutions request a consumer sign a specific form (vendor developed; card processing developed; or internally developed) - what I would consider "industry standard." I have a client who was cited by the FDIC (who said "all" regulatory agencies are citing this as an issue) for "requiring the use of a particular form." Regulation E allows for requiring disputes be put in writing and signed, providing the investigation is not delayed if a written form is not received. The bank's process includes beginning the investigation upon notification (oral or written) and follows up with getting a specific form signed (card processor developed). Has anyone else heard of regulators citing for "required use of a specific form"? If the card processor requires disputes be submitted on their form, how can the bank complete the investigation process without "requiring" the use of a specific form?
Answer: 

In my discussion with an attorney at the CFPB a form may be requested. But if that form has a chilling effect on the consumer and could dissuade them from continuing on with the claim, it could be viewed as a Reg E and/or UDAAP violation. Imagine a form 6 pages long, one with legal citations and citing criminal offenses for erroneous information – those are to be avoided. The FRB recently expanded on the USAA enforcement action where it essentially threatened to terminate a customer relationship if a claim was false or erroneous. That could impact banking, investments, retirement and insurance products as well as other services they offer.

The best practice is to get the information for your desired form during the initial call. Remember that a written confirmation of the claim could be as simple as a restatement of identifying the accountholder, the account in question, and why they feel there was an error. That is all that is needed for a claim.

First published on 09/12/2021

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