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#58930 - 02/04/03 02:49 PM Fee for Unauthorized Debits
waldensouth Offline
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waldensouth
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FINALLY ABOVE the gnat line
A bank in our market has recently begun charging a $25 fee to return every unauthorized debit - basically a Reg. E error resolution charge. I wondered if anyone has seen this in their market or what your thoughts are on this topic.
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General Discussion
#58931 - 02/04/03 02:54 PM Re: Fee for Unauthorized Debits
Andy_Z Offline
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So if I cancel my health club membership and they debit me in error, the bank charges $25 to me?

I believe the bank could impose a previously disclosed fee if it is not the fault of the customer. If it is the bank or a third party's error, the customer should not be penalized.
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#58932 - 02/04/03 02:57 PM Re: Fee for Unauthorized Debits
BrendaC Offline
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Isn't this the stuff new laws are made of?
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#58933 - 02/04/03 02:59 PM Re: Fee for Unauthorized Debits
Elwood P. Dowd Offline
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The customer's right to have unauthorized transfers handled in a certain way is federally protected; your competitor cannot condition it on payment of a fee. The first person to complain to that bank's regulator will put a stop to the practice.
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#58934 - 02/04/03 03:02 PM Re: Fee for Unauthorized Debits
complylady Offline
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complylady
Joined: Jul 2002
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Michigan
We do charge a fee for stop pays on automatic debits, just like other stop pays. This is not to be confused with charging fees for unauthorized transfers under Reg E, which we do not charge for.

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#58935 - 02/04/03 03:03 PM Re: Fee for Unauthorized Debits
DawgFan Offline
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DawgFan
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United States
I agree with Ken. It seems a little harsh that your competitor would charge a fee to the customer for someone else's mistake . I'd like to know the reasoning for this one.
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#58936 - 02/04/03 03:22 PM Re: Fee for Unauthorized Debits
Andy_Z Offline
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The customer's aggravation level will top out if AOL, as an example, starts to debit a wrong account for $19.95. The customer complains and is told it will cost them $25 to fix it. (Similar to the resolution process some bigger banks imposed on us little guys when things were out of balance.) It is cheaper to let AOL debit the wrong account.

I just can't see this as the way it will work. Say it ain't so, Lo.
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Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#58937 - 02/04/03 03:33 PM Re: Fee for Unauthorized Debits
SMQ, CRCM Offline
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Between the lines
My thoughts exactly!! I have also heard of this, I just wish one of our local competitors would do this. What an easy way to grow our market share.
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#58938 - 02/04/03 05:11 PM Re: Fee for Unauthorized Debits
waldensouth Offline
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Joined: Nov 2001
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FINALLY ABOVE the gnat line
I think I'm going to find out the name of the bank and go "fishing". Our deposit compliance officer at our bank in that market just called to ask if they could legally do that. If we could charge the people who issue the unauthorized debits, that's one fee I would gladly impose! Charging our customer, however, is not something I would wish to do.
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"Once you learn to read, you will be forever free."

- Frederick Douglass




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#58939 - 02/04/03 09:26 PM Re: Fee for Unauthorized Debits
Princess Romeo Offline

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Where the heart is
Check out the Commentary for Reg E - 205.11(c) - comment # 3

11(c) Time Limits and Extent of Investigation


3. Charges for error resolution. If a billing error occurred, whether as alleged or in a different amount or manner, the financial institution may not impose a charge related to any aspect of the error-resolution process (including charges for documentation or investigation). Since the act grants the consumer error-resolution rights, the institution should avoid any chilling effect on the good-faith assertion of errors that might result if charges are assessed when no billing error has occurred.
(emphasis added)

So it would seem the bank is in violation of Reg E. Banks need to remmeber that the Commentary is part of the Regulation and carries just as much weight.

**sigh** This is the type of activity that makes it so hard to defend banks when they ARE justified in what they do.
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