Customer does a 205.11 claim, and we send the transaction back as "unauthorized." Do you credit the customer's account immediately as "provisionsal" credit? If the merchant decides to counter the claim by demonstrating the authorization, we'd just re-charge the customer (taking back the provisional credit). Right?

I'm ready to loose my mind. Customer service is upon notification of the error "waiting" 10 days to credit the customer's account. I think they are a bit confused on the numbers.

Just because the merchant decides to counter does not mean you get to take it back from the customer. That is only done if your investigation determines that no error occurred. In the majority of these cases, the bank takes the loss.

So Skittles am I right in thinking that they need to credit the customer's account immediately? This 10 day waiting is a misinterpretation on their part.

Banks have 10 days to complete an investigation prior to crediting the customers account. If the investigation is not resolved in 10 days, it can be extended to 45; however they need to provisionally credit the customer's account. If the investigation is completed prior to the 10 days, then the customer's account needs to be credited within 1 business day of completing the investigation. See 205.11(c).

No, they can wait the 10 days, but you may not be able to debit just because the merchant challenges your return.

You legally have 10 Business days to resolve, or issue provisional credit. I find that if you need to do a chargeback anyway (and no way is that succer going to be represented in 10 days), the quicker you get the provisional credit in the account the better. Less Interest to calculate, less OD fees to figure out. Plus its just good customer service....

As far as getting documents (TID) back from the merchant you have three Business days to either present that to the customer for them to inspect and determine if it was authorized or you can deem it unathorized (Embossed name is totally different, proving conterfeit) and take the loss and close the claim with the three days of getting the docs (representment).

You cannot wait the 10 days, sorry. You have one day to put the credit on the account once you determine that the allegation of an error is valid.

205.11.(b).2.iii.c.(1) - The institution shall correct the error within one business day after determining that an error occurred (last sentence).

However, you can avoid this requirement by simply not reaching a conclusion. If you initiate a Chargeback for Unauthorized, that is not a conclusion (unless you want it to be, though I can't imagine why you want this). Side note - both Visa and MasterCard prohibit you from retaining in any way the credit that results from a Chargeback. Under their op regs, you must immediately credit any account that is due credit from a Chargeback. For example, if you initiate a Chargeback 7 days from the dispute date, you must immediately issue credit once the Chargeback clears. What you tell the consumer at this point is then up to you - either the Chargeback-related credit is permanent because the investigation is closed or the credit is temporary while you continue the investigation. If this is a non-association dispute, you can take up to the full 10 days to decide what you want to do.

Do not be misled - you do not have 10 days to complete an investigation. You have EITHER 10 days to complete your investigation OR or if unable to do so then you are to credit the account within 10 days and continue the investigation. It is here where you have 45 or 90 days (whichever applies) to actually conclude your investigation.

205.11.(b).2.c.(1) - A financial institution shall investigate promptly and... shall determine whether an error occurred within 10 business days of receiving a notice of error (first sentence).

205.11.(b).3.c.(2) - Forty-five day period. If the financial institution is unable to complete its investigation within 10 business days, the institution may take up to 45 days from receipt of a notice of error to investigate and determine whether an error occurred...

205.11.(b).3.c.(3).ii - The applicable time is 90 days in place of 45 days under paragraph (c)(2) of this section, for completing an investigation, if a notice of error involves an electronic fund transfer that:
(A) Was not initiated within a state;
(B) Resulted from a point-of-sale debit card transaction; or
(C) Occurred within 30 days after the first deposit to the account was made.

There is no restriction on how soon you must contact the consumer regarding a merchant response (Representment). Any such merchant response is simply part of your information gathering in the investigation stage.

So long as you resolve your investigation to keep the credit or re-issue the debit by the cut-off date (45 days or 90 days, whichever applies), then there is no restriction on you regarding when you contact the consumer. In fact, you may not even have to contact the consumer. The merchant response may be invalid, in which case you would continue with the Dispute Resolution process without any contact to the consumer.

(I modified this post to better clarify how the Chargeback may or may not represent the completion of the investigation in paragraph 3).