May 28, 2015 12:00 pm

By: Gina Ellis

Regulation E generally requires a bank to resolve a disputed error or give a provisional credit within ten business days of receiving a dispute.  A bank may also have a contractual obligation to provide provisional credit within five business days for Visa or MasterCard point of sale disputes.  When provisional credit is provided, the bank may take up to 45 calendar days to investigate an error and may extend the investigation period to a maximum of 90 calendar days for disputes involving new accounts or point of sale transactions.  When the Bank determines an error did in fact occur, the error must be corrected within one business day, and the customer must be notified within three business days that the provisional credit has been made final.

Remember to make sure your staff is providing notification when the provisional credit is final.  This notification can be oral or written, but there should be distinct procedures for documenting the date of notification either way.

Alternatively, if you determine an error did not occur and the provisional credit is reversed, a written explanation of the findings and the consumer’s right to request documents relied on in making the determination is required to be provided within three business days.  Additional notifications are also required which we recommend including in the written explanation. These additional notifications include the date, amount of funds debited and a statement that checks, drafts or similar instruments, payable to third parties will be honored for five business days after notification,  and any resulting overdrafts up to the amount of the credit, will be paid with no charge to the customer.

We recommend reviewing your procedures for handling disputes to ensure you are properly documenting the date you receive a dispute from a consumer. Do not make the mistake of delaying an investigation or requiring a consumer to contact the merchant or file a police report.  You should also ensure your procedures require a prompt resolution, timely notification to the consumer when the investigation is finalized and accurate documentation of critical dates.