Reg E Dispute - Arbitration Fees

Take a look at the Official Staff Interpretations to Section 205.11 of Regulation, specifically at Comment 3 to Section 205.11(c):

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.

There is no question in my mind that the filing and review fees would have a chilling effect on your customer's assertion of errors, and if the customer is actually correct, and an error occurred, you absolutely can't pass on the fees. What is unclear, however, is whether there is a Regulation E issue. If there is not, you can refuse the claim on those grounds and then decide with your customer whether to proceed with the arbitration. In that case, Regulation E would not prohibit you from imposing a fee on your customer.

First published on BankersOnline.com 8/03/09