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Do consumer disputes reported to the bank regarding a merchant, such as I did not receive merchandise, duplicate charge, billed incorrect amount, and returned product but not refund given, need to be handled the same as unauthorized/fraudulent transactions such as I did not make this purchase and I did not conduct the ATM transaction? i.e. aren’t we required to give provisional credit within 10 days for merchant type disputes (if the investigate will take longer than 10 days), as we do with unauthorized/fraudulent transactions? Are there any merchant type disputes that do not fall under the requirements of provisional credit within 10 days and 45 days to investigate?
The definition of error in 1005.11(a)(1) Types of errors is broad, and (ii) An incorrect electronic fund transfer to or from the consumer’s account, seems like it covers the merchant examples given. Would there be any outside of this where we would not be subject to 1005.11(c)?
Generally, if the customer has authorized the transaction but has a problem/unsatisfied with the goods or services they received that is not a Reg E error. The FRB has done a good job of giving us some info on this topic. Take a look at this FRB resource: https://www.consumercomplianceoutlook.org/assets/outlook-live/2019/121219-transcript.pdf?la=en (p. 18 addresses merchant disputes) and this https://www.consumercomplianceoutlook.org/2016/first-issue/credit-debit-card-issuers-obligations-consumers-displute-transactions/.
If it fits into one of these categories then Reg E would apply. Reg E, 1005.11(a), says these are errors:
(i) An unauthorized electronic fund transfer;(ii) An incorrect electronic fund transfer to or from the consumer’s account;
(iii) The omission of an electronic fund transfer from a periodic statement;
(iv) A computational or bookkeeping error made by the financial institution relating to an electronic fund transfer;
(v) The consumer’s receipt of an incorrect amount of money from an electronic terminal;
(vi) An electronic fund transfer not identified in accordance with § 1005.9 or § 1005.10(a); or
(vii) The consumer’s request for documentation required by § 1005.9 or § 1005.10(a) or for additional information or clarification concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under paragraphs (a)(1)(i) through (vi) of this section.
Even if Reg E doesn’t apply your contract with the credit card company likley does, so review what you are required to do per that contract.
Thank you for those resources, this is helping, but I am a little concerned that if the customer has already contacted the merchant and the merchant did not yet resolve the issue to the customer’s satisfaction, at what point does that merchant dispute become a dispute subject to Reg E? If the customer is disputing the quality of the goods or services received, that seems to fall under the merchant disputes not subject to Reg E. But if the customer has contacted the merchant, and either did not receive a credit or is still unsatisfied, would that information on our Reg E Dispute form cause the merchant dispute to be subject to Reg E?
Similarly, if the merchandise arrived damaged, or the customer just decided to make a return, that seems to be a merchant dispute not subject to Reg E. However if the customer sent it back for a return but never received credit, would that information included on our Reg E Dispute form signed by the customer cause the merchant dispute to be subject to Reg E?
It all comes back to, does is qualify under Reg E as an error. With each scenario that is questionable you need to ask if is the result of an error under Reg E (e.g. unauthortized, incorrect amount, etc.). Knowing that, plus the info linked above should answer your question. A customer that is unsatisfied with the product is not unauthorized, an incorrect amount, or any other “error” under Reg E. If the customer returned a product and was still charged, that could possibly be deemed an error depending on the sitution.
If you can’t decide if Reg E applies then it would be safer to comply when it isn’t needed than to not comply when it is required.
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