Reg E - Recurring Service Cancelled by Customer

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Question:

Could you direct me to some guidance with regard to Reg E disputes relating to claims by client that he/she has cancelled a recurring service? We seem to get confused as to what we need to be doing from a compliance perspective vs. what our card processor (acting on our behalf with Visa) requires in terms of documented actions taken by the client to resolve the charges assessed after the alleged cancellation.

Answer:

You are correct to separate the requirements of Regulation E from your card processor's rules. The two serve different purposes, even though you need to have them both under control.

Regulation E, Section 205.6, provides your customer with the right to reimbursement for unauthorized transfers. Section 205.11 provides a mechanism for your customer to make you step through specific hoops to handle his claim (the claim for an unauthorized transfer is still valid under 205.6 even if the customer misses the deadlines in 205.11; you just don't have to meet the notice and timing deadlines in 205.11).

Visa and processor rules govern whether and how you'll be able to get your money back from the merchant. You need your customer's cooperation in many cases (written claims, for example) to help you adhere to those requirements.

Take a look at the commentary to Regulation E, section 205.10(c). You'll find there an obligation to block future debits once your customer tells you he's canceled an authorization (and provides you written documentation he's done so).

First published on BankersOnline.com 9/17/07