Reg E Claim- Reversing Provisional Credit Issue

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Question:

We have a Reg E claim where the client is claiming seven transactions (the total amount disputed $5800.00). The provisional credit was issued on May 9th, 2011. On May 23rd, 2011, the merchant issued a credit directly to the client's account for two of the transactions disputed (five out of seven transactions still continuing under investigation). The amount credited $3700.00 is more than a half of the total amount of the claim. At this moment the credit is duplicate for these two trans. as per Reg E the final date for the investigation should be on July 22, 2011. Can we partially reverse the provisional credit issue (for the amount of merchant issued a credit prior to reach the final date of the investigation)?

Answer:

Rather than reversing the provisional credit and being subject to the Reg E requirement of honoring items that could potentially overdraw the account up to $3700.00 for five business days, inform the customer that you have concluded your investigation on two of the seven transactions and have found in the customer's favor. Also inform the customer that you are reversing the duplicate credit. You may continue your investigation on the remaining five transactions up until the due date. This play on semantics (reversing a duplicate credit vs. revoking provisional credit) is also useful if the merchant credits the customer after you have finalized you investigation. The customer does not get to make a profit in this case.

First published on BankersOnline.com 6/27/11