How often do you have a member allege there is an error on their periodic statement? Ensure your credit union is following the proper Regulation Z requirements for billing error resolution. Regulation Z, Section 1026.13 discusses the proper procedures the member and the credit union must follow when an error is asserted.
Many credit unions require their members to first attempt to resolve a disputed transaction with the merchant who processed the transaction before submitting a dispute to the credit union. This is actually not required by Regulation Z and in-fact the commentary to the billing error resolution section states a member is not required to first notify a merchant or other payee before submitting a dispute with their financial institution.
When a consumer notices an alleged error they have 60 days from the date the credit union transmitted the first periodic statement reflecting the alleged error to report the alleged error to their credit union (some exception may apply). Many credit card dispute policies state the member has 60 days from the date of the transaction, this is not correct so make sure to review your policy.
Once the credit union has received a written notice (may be a credit union form has available for members to complete, but may not be written on a payment ticket) of an alleged error, the credit union has 30 days to mail or deliver a written acknowledgement of receipt of the billing error notice to the member. The credit union then has two complete billing cycles after receiving the billing error notice to comply with the appropriate resolution procedures.
During the resolution time period the credit union shall determine:
(1) There was a billing error – correct it and credit the member’s account with any disputed amount and related finance or other charges. The credit union shall then promptly mail or deliver a correction notice to the member.
(2) No billing error that occurred or that a different billing error occurred from the one asserted. The credit union shall then mail or deliver to the member an explanation outlining the reason for the credit union’s belief that the billing error alleged by the member was incorrect in whole or part. The credit union shall also provide copies of documentary evidence of the member’s indebtedness, if requested by the member.
If a different billing error from the one alleged is found the credit union shall correct the billing error and credit the member’s account with any disputed amount and related finance or other charges.
While a transaction is being disputed the credit union shall withhold the disputed amount from the amount the member’s account shows due and the credit union shall not furnish adverse credit reports.
For more specific information reference Truth in Lending (Regulation Z) Subpart B-Open-End Credit – Billing error resolution.