Avoiding Regulation E Error Resolution Troubles

In our blog earlier this week, we alerted you to some recent civil money penalties assessed to banks for violating both Regulation E and Section 5 of the Federal Trade Commission Act (Unfair and Deceptive Acts or Practices).  These banks essentially imposed requirements on consumers that were more burdensome than those allowed by Regulation E.  This resulted in delayed, denied or discouraged consumers’ error resolution claims.

Below are some common Regulation E misconceptions that get banks into trouble.  It’s a good idea to review these with your employees to ensure they are not happening in your bank.

  1. No Claim:

If the customer doesn’t make a written claim, no investigation is required.

2.  Police Reports:

We can require a consumer to file a police report before accepting their claim.

3.  Family Members:

If a family member used the card, it’s authorized.

4.  “Evergreen” Use:

If a consumer grants permission to another person use their card one time, any other use of the card is also authorized.

5.  60 Days:

If a consumer makes a claim after 60 calendar days, the bank has no liability.

6.  Merchant First:

The customer must attempt to resolve the error with the merchant first.

7.  Card Never Lost:

If the customer has their card and never lost it, they must have completed the transaction so we can deny the claim.

8.  Charges For Error Resolution:

We can impose a charge for any aspect of the error resolution process (i.e. documentation, investigation, etc.).


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