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Reg E Investigation Process- Pending Transaction

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Question: 
When a customer reports an error or unauthorized card transaction on their account before it is actually posted (pending transaction) are we obligated under Reg E to begin the investigation process with regard to provisional credit within 10 days? We see that only about 40-50 percent of these pending claims actually post.
Answer: 

Reg E does not consider the transaction an error until it actually posts to the account so your customer notification and provisional credit timeframes do not begin until it does.

From a purely customer service perspective you can either require that the customer watch the account themselves and contact you when/if the transaction posts, or monitor the account yourself and begin your investigation once you see that it posts.

Editor's note: One of our BOL users sent us a note saying that an OCC Examiner in Charge had told her that the OCC's position is that the ten-business-day period and the investigation must start when the consumer notifies the bank of the claim and provides information satisfying the requirements of Section 1005.11(b)(1) as to timing and content of the notice. According to her report, the EIC said a bank should not wait for the pending transaction to post to begin the process. We are not aware of any official position on this question by the CFPB, the agency responsible for issuing and interpreting regulations under the Electronic Fund Transfer Act.

First published on BankersOnline.com 4/9/12. Editor's note added 4/11/12.

First published on 04/09/2012

Last updated on 04/11/2012

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