Question of the Week

Question: Can you explain to me a little bit about how Regulation E disputes work? How much is the member liable for?

Answer: Reg E liability limits the amount that a member loses when either an access device is stolen, an unauthorized transaction occurs, or there is another sort of error that causes the member’s balance to be reduced.

How that liability works is dependent on how the error occurred and how long the member has known about it. If the member loses an access device, such as a debit card, the liability is entirely based on how long the member knew about the loss until when the member reported it. If the error did not include an access device, the liability is based on how long the member was expected to have known about the error based on when that error first appeared on a statement.

Access device liability caps the amount that a member is responsible for on three different timeframes. Once a member loses an access device, the maximum liability they have for transactions that occur within two business days of noticing the loss is $50, although Mastercard and Visa liability rules will generally reduce this to zero. For transactions that occur after two days and up to 60 days (if for some reason the member still hasn’t reported the access device stolen), the member is liable for amounts up to $500. If the member delayed reporting until after 60 days, the member is responsible for all transactions after 60 days.

For non-access device disputes, there is no liability to members for unauthorized transfers that occur within 60 days from the first time an unauthorized transaction appears on a periodic statement. Member liability is unlimited, however, for unauthorized transactions that appear after 60 days from the first time the unauthorized transactions appear on a periodic statement.

Once a dispute is filed, either orally or written, the credit union has 10 business days to research the error. The credit union may request that oral disputes be followed with a written confirmation within 10 business days. If the credit union cannot complete the investigation within 10 business days, the credit union may take up to 45 calendar days but must provisionally credit the member for the disputed balance. If the credit union had requested written confirmation but the member failed to provide it, the credit union does not have to provide provisional credit.

After the investigation, the credit union must either correct the error within one business day of its determination that the error occurred, or if no error occurred (or a different error) report that to the member in a written form within three days.