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If a customer just now reports an electronic debit as unauthorized from a statement dated over six months ago, do we still need to investigate the claim even though we don’t have to follow the timing and provide provisional credit?
This 60-day statement provision in Regulation E is an area of great confusion and there are a lot of misconceptions.
Jerod explains more in the video.
Transcript:
If a customer just now reports an electronic debit as unauthorized from a statement dated over six months ago, do we still need to investigate the claim even though we don't have to follow the timing and provide provisional credit?
So, again Regge has two different sections. There's 1005.6, 1005.11.
The misconception about unauthorized transfers is surrounding the whole 60-day mark
There's this misconception out there because of really a failure to read the notice for what it really says, error resolution notices in your disclosures. Make sure you read them very carefully because the misconception is if the customer doesn't tell you within 60 days of the statement being provided, the banks are off the hook. That's not what they say. What they say is that it's encouraged that the customer tells the bank within 60 days so don't lose any more money. They don't take on more liability. It boils down to this. The bank will always be on the hook for the statement on which the error first occurs plus the next 60 days.
So, statement plus 60 is the bank's liability. Now yes, there are some liability tiers based on access devices that we're not going to get into today. They have to do with 50 and $500 limit tiers. But, plain English is statement plus 60, the bank's responsibility. If the customer doesn't tell you within that within 60 days of getting their statement, they're going to be responsible for what's beyond the statement plus the 60 mark. So, it's in their best interest to tell you right away in the first 60 days, so they don't incur liability because their liability starts after the statement plus the 60 mark.
I have essentially forever to tell you about an error. So, if I don't open up my statements for three or four years and I finally get bored one day and do that and go, "Oh, that's not mine from three years ago," you have to take that on. Now, you won't have to provide provisional credit because it wasn't provided within 60 days, but you will have to investigate and ultimately complete the investigation and if it is unauthorized, make me whole again.
Published
2022/03/29
