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Reg E & Raising POS Transaction Limits

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Our Reg E disclosure states that the limit for point of sale transactions is $500 per business day, however, we have officers that want to increase the limit for some customers. I am concerned about discrimination issues since the limit would not be the same for all customers. It would appear there could be other operational issues as well if there were unauthorized transactions or stolen cards. Are my concerns valid?

Most banks allow various limits for customers depending on the customer's average balance, debit card use, how long the account has been open, etc. Do you not want me to use my debit card to purchase items over $500? Sure, this is discrimination. Anytime you treat people differently it is discrimination, but that doesn't make it illegal. There are no fair "deposit" laws, only fair "lending" laws. However, this decision should not be based on the customer's race, sex, marital status, religion, etc. (protected classes). To do so is poor customer service and can lead to civil liability issues.

You are correct to be concerned about unauthorized transactions. If you raise the limit on a customer and his card is stolen and used without authorization, the bank's liability is going to be much higher than if the bank capped the limit at $500 per day. Thus, this is a business decision. As I said earlier, most banks allow "good" customers to have higher limits. I believe you can find out more by searching the Operations or eBanking forums.

First published on 3/26/07

First published on 03/26/2007

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