Reg E Question Follow-up

Question:

The passage below is part of John Burnett's response to a Reg E question concerning unauthorized transactions reported beyond 60 days from the statement delivery date. For example, if there was an unauthorized transaction (no access device used) that appeared on the customer's June statement and he or she is just now reporting it, must the bank reimburse the customer? My bank has been denying these claims as too old. Based on everything I've read, I believe the customer is not liable for these initial transactions, even though they appear on earlier statements. I am wondering what John meant by "unless the transaction is one in a series" in the article below. Could someone elaborate please? Your consumer/customer is entitled to enter a claim with you that an entry was unauthorized at any time (the 60 day limit in section 205.11 only covers the customer's right to the procedures in that section, not the customer's liability for unauthorized transfers, which is found in section 205.6). If the transaction is unauthorized, the customer is entitled to a refund unless the transaction is one in a series and took place more than 60 days after the statement was available that showed the first unauthorized transaction in the series.

Answer:

Quote: "For example, if there was an unauthorized transaction (no access device used) that appeared on the customer's June statement and he or she is just now reporting it, must the bank reimburse the customer?"

A claim is never "too old". The customer can tell you 10 years later and you must still investigate promptly and resolve the issue. Section 205.6 of Reg E always applies, no matter when the consumer informs the institution. Section 205.11 only applies if they inform the bank within 60 days following the first statement showing the first error. What's the difference between these two? Section 205.11 requires provisional credit and the time limits (45/90 days) in which the institution must resolve the issue. Therefore, if they tell you "late" you don't have to provide provisional credit and you don't have to resolve it within 45/90 days, but you must resolve the issue promptly.

The "unless the transaction is one in a series" comment is referring to a cap on the liability to the institution. For example, let's say $100 is being taken out of my account by ACH every month, beginning in January. I don't open my statements until the end of the year. I don't provide timely notice, so the institution is not liable for any unauthorized debits following 60 days after the January statement. Therefore, the bank is liable for the January, February and March debits ($300), but not for any other unauthorized debits in the series.

First published on BankersOnline.com 12/17/07