Answer:
Reg E only covers the account if they a.) did not authorize the transaction, b.) authorized the transaction but was charged the wrong amount or c.) the customer was promised a credit from the merchant but did not receive it. Reg E would not apply issues relating to missing or defective merchandise.
The bank is not responsible for taking a loss in these situations, but the bank is required under its contract with VISA to make every effort help resolve the situation for the customer after the customer has attempted unsuccessfully to resolve with the merchant.
If the cardholder does not receive the merchandise, file chargeback code 30 "Merchandise not Received." If the merchant can prove the customer received the merchandise, the customer loses, not the bank.
For chargeback code 53 "Defective/Not as Described" the cardholder must describe in detail the nature of the defect or misrepresentation. Also, for US Domestic Transactions, VISA rules state that this chargeback option is available when the merchandise is not returned if "the Merchant refuses to provide a return merchandise authorization or return address and the Issuer can provide evidence of the refusal." Again, if VISA sides with the merchant, the bank does not have to sustain a loss.
First published on BankersOnline.com 6/4/12
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