Have you ever encountered an unauthorized debit card dispute with a customer? Sure you have. Have you ever required the customer to put something in writing or attempt to settle the dispute with the merchant before you will start any kind of investigation? Told the customer too bad because there’s a signed receipt? If you said, “yes” to any of these questions, you like many other financial institutions, are in violation of Regulation E ‘s consumer protections.
You see, nowhere in Regulation E does it allow you to require the customer to put anything in writing (you are allowed to ask, however). You’re also not allowed to require that the customer attempt to resolve the error with the merchant first (you can ask if they contacted the merchant, however). Another, common misunderstanding is that if there is a signed receipt the financial institution doesn’t have “chargeback” rights. In many cases like this, we’ve seen financial institutions tell the customer they are out of luck. Not true (so long as the dispute is valid), as again there is nothing in Regulation E to support this.
At the end of the day, requirements such as those mentioned above typically trickle down from VISA, MasterCard, etc. If a transaction is covered by Regulation E, you can’t use VISA, MasterCard, etc. agreements to hold customers to a higher standard than what Regulation E allows. In other words, you can’t use a service provider contract to override consumer protection laws. This is sometimes unfortunate for banks, but remember, Regulation E wasn’t written to protect banks. It was written to protect consumers.
Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar, or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups, and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru.
Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports related!