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Reg E Fraud Claim Time Frame

Question: 
Our policy is to request that customers submit their Reg E fraud claims in writing for signature based transactions on check cards. If the customer does not submit their claim in writing within ten days of being asked to do so, what is the time frame we must adhere to once the written claim is received? If the affidavit is received after the tenth day, does credit need to be issued within 24 hours of receiving that claim or do we have until day 90 to issue provisional credit?
Answer: 

Answer by David Dickinson: First, you cannot require written notice. Section 205.11(b)(1) states, in part, "A financial institution shall comply with the requirements of this section with respect to any oral or written notice of error . . . ". You can ask them to put it in writing, but you cannot require it. If the customer does not put the claim in writing within ten business days of the oral notification, you do not need to comply with Section 205.11, but you must still comply with Section 205.6. What this means is you do not need to provide provisional credit and you do not need to comply with the 45/90 day credit requirement. However, you must still resolve the issue promptly and provide final credit.

Answer: 

Answer by John Burnett: David and I sometimes disagree, and this is one of those times. When I read section 205.11 of Regulation E, I see that a written confirmation of a consumer's error claim is mentioned twice. The first mention is in 205.11(b)(2), where it says that a financial institution can require a consumer to confirm in writing an oral claim and to do so within ten business days of the oral notice. It doesn't say there what happens if the consumer fails to follow through with a written confirmation. Comment 1 to 205.11(b)(2) says that a financial institution doesn't have to provide provisional credit if a misdirected written notice takes longer than ten business days to get to the proper place in the financial institution.

The second place in the regulation that the written confirmation is mentioned is in 205.11(c)(2)(i), where it says that a financial institution doesn't have to provide provisional credit if the "institution requires but does not receive written confirmation within 10 business days of an oral notice of error; ..." David and I discussed his answer at length and he stands by it. I, however, believe that the specific mention that the provisional credit need not be given limits the effect of the consumer's failure to confirm in writing to the provisional credit. What does all that mean? I think that you must continue with and complete your investigation under the requirements of 205.11 if an oral claim is made within the 60-day limit even if you've asked for and have not received a written confirmation. David and I agree, however, that regardless of when an unauthorized EFT claim is made, whether it be before 60 days, after 60 days or in 2015, the liability limits of 205.6 have to be applied.

Links to the portions of the regulation cited above: Section 205.6Section 205.11Official Staff Interpretations

First published on BankersOnline.com 2/16/09

First published on 02/16/2009

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