Provisional Credit to ACH Dispute: Interest

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Question:

When issuing a provisional credit to an ACH dispute, does the interest need to be credited on the same day as the provisional credit or just within 10 business days of the dispute being filed? Does the letter send to customers need to break down amount of interest/fees given or can a generic statement suffice? (ex: any fees or interest owed to you will be paid back within XX days.)

Answer:

As to whether applicable interest needs to be included with the provisional credit, here's what the regulation says, at 1005.11(c)(2)(i):

"(i) Provisionally credits the consumer's account in the amount of the alleged error (including interest where applicable) within 10 business days of receiving the error notice."

I read that to say that you have to provide the provisional credit within 10 business days (if you can't finalize a determination on the claim within that period), and the provisional credit must include any applicable interest. If you provide the provisional credit on business day 2, you include any applicable interest then. If you don't provide it until business day 10, you include it then. Just remember, though, it only requires the inclusion of interest if the customer lost interest on the account (or another account in your bank) due to the alleged error.

Interestingly, there's no mention of including any fees resulting from the alleged error until we read comment 6 to 11(c), which discusses correction of the error once the investigation is completed. Most bankers I've discussed that issue with, though, agree that the related fees ought to be included in the provisional credit, also, in order to "provisionally" return the consumer to the position he or she would be in had the alleged error not occurred.

The notice to the consumer that provisional credit has been provided doesn't need to be written. The regulation doesn't specify whether the interest and/or fee credit amounts should be identified, but if you do provide a written notice (letter or notice of credit), it would certainly be helpful to the consumer to have those amounts identified separately from the amount credited for the alleged error, even if the actual credit posting to the account is an aggregate of the alleged error, fees and interest amounts.

And, because of the need to include interest (at least, and perhaps fees) in the provisional credit, the "will be paid back within XX days" language you ask about can't be used.