We currently provide all customers (consumers and businesses) with the Reg. E disclosure at account opening and are looking into changing this for business customers. Because our business customers are “small businesses” they fall under MasterCard’s zero liability, so the bank is still liable for unauthorized transactions if the zero liability conditions are met. Also from what I understand, merchant disputes must also be processed as chargebacks with MC. Can someone please help me understand what scenarios would not be covered for businesses if we stop providing the Reg E disclosure? I’ve read the reg, but some real examples would be very helpful.
Thank you in advance!
Business accounts are not covered by Reg E and should not receive the Reg E disclosures. By providing the Reg E disclosure to businesses you are informing them of rights that do not apply to them by regulation. If you inform them of these rights via disclosure/contract then it could be deemed deceptive if an issue occurs and you do not honor your agreement or disclosure provided. Something else to consider is your periodic statement disclosure language – if your bank utilizes the Reg E short form error resolution notice on periodic statements, the language either should not be included on business account statements or there should be a clear disclosure that it applies only to consumer accounts. As for MC’s zero liability, generally speaking it applies to transactions processed through MC. It will not apply to PIN based transactions.
Here’s a link to MC’s zero liability page: https://www.mastercard.us/zero-liability.html.