One reason the EFT dispute and resolution process can be so confusing is, that while you must meet the requirements of Regulation E, you must also abide by any contractual agreements you have with Visa and/or MasterCard (MC). In other words, if you issue Visa/MC debit cards, you must play by their rules and yet stay within the boundaries of Regulation E. Failing to stay within Regulation E’s boundaries means regulatory violations, and failing to follow Visa/MC’s rules means contractual issues.
In some cases, your Visa/MC contracts may “up the game” and provide even greater protection for consumers than Regulation E does. One such area is provisional credit. Regulation E says you must determine whether an error occurred or provide provisional credit within 10 business days of being notified of an error. MC also has a 10-business day provisional credit rule, but Visa says you must provide provisional credit for unauthorized transactions within five business days. Visa ups the game here.
Regulation E also gives institutions an “out” from provisional credit if you require consumers to put the error in writing and they do not do so within 10 business days. Visa, on the other hand, does not allow this “out”.
The “Visa Core Rules and Visa Product and Service Rules” (October 15, 2022) state, provisional credit must be provided to a Cardholder’s account within 5 business days of notification of an unauthorized Transaction, unless the Issuer determines that additional investigation is warranted and allowed by applicable laws or regulations.
In other words, you must provide provisional credit within five business days of notification, whether the consumer puts it in writing or not. This raises another question, could you ask a consumer to put their dispute in writing within five business days? Unfortunately, not. Asking a consumer to put something in writing in less than 10 business days conflicts with Regulation E, as it places an additional burden on the consumer.
This makes it difficult for your frontline employees when trying to determine whether to ask the consumer to put it in writing. Our opinion is if you require consumers to put their error in writing within 10 business days, continue to do that whether the disputed transaction is Visa or not. This keeps it simple, and it’s nice to have something in the consumer’s own words for investigation purposes. That said, you will need to ensure you don’t “deny” a consumer provisional credit related to an unauthorized Visa transaction, as it needs to be provided within five business days even if they don’t put it in writing.
Published
2023/04/20
