...
- Unauthorized electronic funds transfer (EFT)
- Incorrect electronic funds transfer (EFT)
- Incorrect amount of money received from an electronic terminal (ATM)
No Error Occurred Occurred Resolution
If the investigation concludes that no error occurred, the bank must provide the customer with the results of the investigation including a written explanation of the findings and a disclosure advising of the customer’s right to request copies of the documents used in the investigation.
The bank must also debit the customer’s account to retrieve the provisional credit.
...
Provisional credit is a temporary credit applied to the customer’s account while the claim is investigated. A provisional credit must be granted within ten 10 business days if an investigation cannot be completed within that time, provided the customer has returned written confirmation or submitted the dispute online. If a dispute is submitted on a new account (the disputed transaction falls within the first 30 days of the account's first deposit), the provisional credit timeframe is increased to 20 business days.
Banks have 10 business days to complete the investigation. If the investigation cannot be completed within that timeframe, the bank must provide provisional credit.
The 10-business-day timeframe can be extended to 20 business days if the error occurred within 30 days after the first deposit into the account. This allows more time to issue the provisional credit or complete the investigation.
Investigation
For card-based disputes, the timeframe to complete the investigation depends on several factors:
- New accounts - 90 days
- International transactions - 90 days
- POS debit transactions - 90 days
- Domestic ATM transactions - 45 days
The investigation can be extended to 45 calendar days from the error notice receive date if the bank:
- Provided a provisional credit and any interest charges
- Advises the customer of the provisional credit (date and amount) within 2 business days of crediting the account
- Allows the customer to use the provisional credit funds during the investigation
The investigation can be extended to 90 calendar days from the error notice receive date if the disputed transaction:
...
...
Other Reg E protections
Overdraft protection – Reg E prohibits banks from charging ATM or transaction fees that overdraw the account.
...
Documentation Requirements
- Situations may exist where a customer provides written notice within 10 days, but the bank needs additional documentation in support of an unauthorized electronic transfer, such as affidavits of forgery, notarized statements, police reports, etc. The bank may request, but may not REQUIRE such documentation, and the bank cannot delay the investigation based on nonreceipt or the customer's reluctance or refusal to provide additional documentation and must still provide the provisional credit if the investigation period extends beyond 10 days.
- Regulation E also does not allow a bank to require a customer to visit a branch to sign notarized documents, even if the bank does not charge for notary services.
- Requiring a customer to provide documents other than the written confirmation of error or requiring that documents be notarized is thought to be burdensome and unreasonable for customers and unlikely to provide any real assistance to the bank's investigation and resolution process.
...
Timeframes
Completing the Investigation
For card-based disputes, the timeframe to complete the investigation depends on several factors:
- New accounts - 90 days
- International transactions - 90 days
- POS debit transactions - 90 days
- Domestic ATM transactions - 45 days
The investigation can be extended to 45 calendar days from the error notice receive date if the bank:
- Provided a provisional credit and any interest charges
- Advises the customer of the provisional credit (date and amount) within 2 business days of crediting the account
- Allows the customer to use the provisional credit funds during the investigation
The investigation can be extended to 90 calendar days from the error notice receive date if the disputed transaction:
- Wasn’t initiated within a state
- Resulted from a point-of-sale debit card transaction
- Occurred within 30 calendar days after the first deposit into the account
Fraud cases: The bank cannot require nor delay the investigation for police reports or documentation confirming forgery. The bank must provide provisional credit if the investigation exceeds 10 business days.
A bank must complete its investigation of an error within 10 business days of receiving a notice of error, but it may extend this period to 45 days if certain conditions are met.
The 10-business-day limit applies even if a bank received an oral notice and required the customer to provide written notice. Although Regulation E allows a bank to forego provisional credit when written notice is requested but not received within 10 days, the bank must begin the investigation promptly and cannot delay it until it receives written confirmation.
In certain circumstances, the 10-day period can be extended to 20 days, and the 45-day period can be extended to 90 days
10 Days After Notice
Unless a bank is permitted a longer time period to investigate an error, the bank has 10 business days after receiving notice from the customer to investigate if an error occurred.
However, if the alleged error involves an electronic fund transfer to or from the account within 30 days after the first deposit into the account, the investigation period is extended to 20 business days instead of 10.
45 Days After Notice
If the bank is unable to complete its investigation within 10 business days, it may extend the period to 45 calendar days from receipt of the notice, provided that the institution takes all of the following actions:
- Provisionally credits the customer’s account for the full amount of the alleged error plus interest, if any
- Informs the customer of the amount and date of the provisional crediting within 2 business days of the crediting
- Allows the customer full use of the provisional funds during the investigation
If the error involved an electronic fund transfer that was not initiated within a state, resulted from a point-of-sale debit card transaction, or occurred within 30 calendar days after the first deposit into the account, the bank can take up to 90 calendar days, provided that the conditions discussed above for extending the time period to 45 calendar days for other transactions are satisfied.
...
Common Issues
Failure to Initiate Investigation
The failure to start an investigation has been “repeatedly identified” by examiners. Your practices cannot discourage consumers from notifying you of an error. You must begin an investigation promptly, even after an oral notice.
You cannot require anything additional, such as a written dispute, notarized documents, affidavits, police reports, or in-person visits, or require the consumer to contact the merchant.
Charging Fees
While there were no instances noted of directly charging consumers for error resolution, it was noted that some charges may indirectly violate this prohibition, such as charges for general customer contact. For example, if there is a charge for telephone contact, as is sometimes found on certain prepaid card programs, that charge should not apply if a customer is calling to report an error.
Provisional Credit
The biggest issues noted were not providing the provisional credit in a timely manner or not including interest, as applicable.
Denying Claims for an Invalid Reason
Claims cannot be denied for reasons that do not directly resolve or refute the member's claims.
Examples (This list does not include all examples):
Denying a claim for not getting information we did not need for CB
Misapplication of a merchant credit
Denying Claims Without Adequate Investigation
Claims cannot be denied for failing to provide additional information (beyond what is allowed under Regulation E). You also need to take care to review all relevant information you have. The example provided was from the USAA consent order. In that case, the bank would deny a claim because a customer previously authorized transactions with the same merchant.
Issues When Denying Claims
One area that seems to continually see violations are related to providing notice. Specifically, instances where the notice:
- Is not timely.
- Is not in writing.
- Does not state that the customer has a right to request the documents relied on (You must also be prepared to actually provide the consumer copies of the documents that you used in your investigation, in an understandable form); and/or,
- Does not include required language for reversing provisional credit (i.e. that you will honor checks, drafts, and similar instruments as well as preauthorized transfers for five business days, as applicable). Also, make sure that any provisional credit is not debited sooner than disclosed!
Issuing When Honoring Claims
There have also been issues with both the timing of notices and crediting when a claim is honored. Another shortcoming with crediting is not including interest or refunding fees.
...