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.
- 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.).
David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.
He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.
David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.