Our procedures for ACH disputes filed by customers by phone specify that the dispute desk returns the transaction to the ODFI and sends a letter to the customer notifying them of provisional credit and requesting that they return the dispute form with signature.

Reg E requires that we provide provisional or final credit within 10 business days, but that we may require customer signature be provided within 10 business days.

NACHA rules state that the RDFI "warrants that, when required, it has obtained a Written Statement of Unauthorized Debit"

Does this require that we hold ACH disputes filed by phone until we receive customer signature, or if not obtained by the 10th business day, notify the customer on the 10th business day that the dispute is rejected for lack of signature?

Reg E and nacha conflict on this, Reg E requires you to take action "upon notification" and does not specify what type of notification, and your clock starts at that point. Reg E does not require that the client sign the form. Nacha requires a signature.

You start your investigation at that point. You can ask the ODFI for proof of authorization prior to having the WSUD signed by your client. You can send the client the form and ask them to sign but there is no guarantee they will. You can capture the phone call on a recorded line and supply that as proof of client signature, we have successfully used that. But you can't deny a Reg E claim solely because the client does not sign the WSUD.

Reg E does state that "A financial institution may require the consumer to give written confirmation of an error within 10 business days of an oral notice. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification."

However, it also requires that "A financial institution shall investigate promptly and, except as otherwise provided in this paragraph (c), shall determine whether an error occurred within 10 business days of receiving a notice of error."

Reg E does not state that we can wait to investigate the error to receive the customer signature, but it does imply that we can deny the dispute if we do not receive signature within 10 business days.

How do other financial institutions balance the timing requirements imposed by Reg E with the NACHA signature requirement?

This is incorrect. You can proceed forward to the 45-day resolution deadline without issuing provisional credit, but you may not deny the claim solely for lack of a signed WSUD.

Can you please clarify? 1005.11(b)(2) states "A financial institution may require the consumer to give written confirmation of an error within 10 business days of an oral notice. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification."

If by Reg E we may require written confirmation of error, does this not state that we can deny the claim because the customer did not sign? Otherwise, how is written confirmation of error a requirement that we may impose?

If you do not receive written confirmation, it gets you off the hook on providing provisional credit as noted in 1005.11(c)(2)(i)(A), but it does not get you off the hook of conducting an investigation. Absence of written confirmation does not constitute evidence that no error occurred.

See CFPB Reg E Investigation FAQ #4

QUESTION 4:
Can a financial institution require a consumer to file a police report or other documentation as a condition of initiating an error resolution investigation?
ANSWER (UPDATED 6/4/2021):
No. A financial institution must begin its investigation promptly upon receipt of an oral or written notice of error and may not delay initiating or completing an investigation pending receipt of information from the consumer. See Comments 11(b)(1)-2 and 11(c)-2. In the past, Bureau examiners found that one or more financial institutions failed to initiate and complete reasonable error resolution investigations pending the receipt of additional information required by the institution. These examples can be found in the Bureau’s Summer 2020 edition of Supervisory Highlights and Fall 2014 edition of Supervisory Highlights. The Bureau cited similar violations in 2019-BCFP-0001

And FDIC June 2019 Supervisory Highlights

Not beginning the investigation promptly when notified of a potential error.

An institution’s investigation of an error claim must begin promptly upon the receipt of an oral notification, even if the institution requires the
consumer to provide written confirmation of the error under Section 1005.11(b)(2) in the Official Interpretations to Regulation E. After receiving an oral notification regarding an error, the institution may require confirmation of the error in writing from the consumer. If the institution requires written confirmation of an alleged account error, and the confirmation is not received within 10 business days, the institution need not provide provisional credit to the consumer while investigating the error. Nevertheless, as provided in the Official Interpretations to Regulation E, 12 C.F.R Part 1005, Supp. I, Section 1005.11(c)(2), a financial institution “must begin its investigation promptly upon receipt of an oral notice. It may not delay until it has received a written confirmation. ”The FDIC found some financial institutions failed to investigate consumer error claims promptly upon receipt of oral notification in violation of Regulation E.

Thank you everyone. This is very clear. We will continue with our current practice of requesting, but not requiring, written notification of error, and will provide these citations to our auditors