This week I am teaching a session at PayFusion’s Debit Card School in Boston about Reg E and debit card compliance issues. I thought I would share with you some of what will be discussed at the school. I also raise the issue here because recently the NCUA’s consumer compliance area indicated that some of the most common complaints they get are related to unauthorized transactions and Reg E.
If your member provides you with written notice that his debit card has been stolen and someone is using his card to make transactions that he didn’t authorize, what do you do? First, get out your error resolution procedures—his story may or may not be true, but that’s what you have to find out. Check to see that you have all the information you need from the member (name, account number and details of the error) because you can’t investigate if you don’t know what you are looking for.
Let’s assume the member’s notice provided the necessary info, was timely (provided within 60 days of the statement on which the error appeared), and was in writing. Based on those assumptions, you need to follow your error resolution procedures and investigate. But, you only have a limited amount of time to do so. Generally speaking, you have 10 business days to investigate whether an error occurred (you have more time for new accounts or if you grant provisional credit). Keep in mind that you may NOT require your member to complete an affidavit or a police report before you begin the investigation. You may request that he do so, but you cannot require it as a condition of investigating the error.
If you find that an error occurred (the member’s card was stolen and unauthorized transactions were conducted on the member’s account), you need to correct the error and notify the member. If you find that no error occurred (the member had actually authorized the transactions), you also need to notify the member of the results of your investigation. Reg E provides specific timeframes in which these actions must be taken.
So, it’s important to have a process in place to address Reg E complaints and to track that you are responding in a timely manner. But, the bigger question usually is, was it unauthorized and if so, how much liability does the member have? Stay tuned, or join us at school, this is sure to be a good discussion.