Regulation E- Didn't Provide Timely Notice

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Question:

Regulation E. Timely notice not given question? We often have customers file debit MasterCard claims 6 months or more past the date of the "unauthorized" transactions. Regulation E would have the bank responsible for the first 60 days from the statement date. What if we have proof of Online Banking activity or that the customer accessed their E-statements, during and/or after the disputed transactions? Would the liability now fall on the customer, or are we still responsible for the first 60 days unless proven authorized?

Answer:

The staff interpretations clearly state the customer negligence cannot be used by the bank as a reason for passing liability to the customer. The customer's failure to carefully examine their statements is not sufficient cause to deny a claim. Reg E still requires that you investigate even if you cannot use MasterCard's chargeback process due to the amount of time that has passed. Since the notice is not timely you are not required the provide provisional credit or complete your investigation in 90 days. This provides time to explore other investigation avenues such as contacting the merchant directly in an attempt to gather information regarding the authorization.As a side note, customer negligence is a reason to deny MasterCard Zero Liability protection. If your investigation determines that the unauthorized charges were the result of a lost/stolen access device (i.e debit card) you can assign liability on the first 60 days of charges according the schedule in Section 1005.6 of Reg E based on when the customer learned of the theft of the device. This is in addition to unlimited liability for any charges that occurred more than 60 days after the delivery of the first statement reflecting the unauthorized activity.

First published on BankersOnline.com 1/2/12