Reg E And Written Confirmation

Article contributor / Diana Kern, Senior Financial Solutions Consultant

Regulation E is a straightforward concept, yet the language can be complicated. And applying the regulation to each situation is often not a black-or-white matter — many scenarios fall into a gray area.

In this article, we’ll look at the option to require written confirmation of an oral error notice and review a related condition financial institutions might place on the consumer before giving provisional credit.

Requirements related to PC are stated in 1005.11, Procedures for resolving errors. And regarding written confirmation, section 1005.11 (b)(2) reads:

Written confirmation. A financial institution may require the consumer to give written confirmation of an error within 10 business days of an oral notice. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification.

Many SHAZAM^® clients have expressed the challenges of getting anything in writing from cardholders, even when electronic documents are offered and communication happens via email or mobile app. It’s a frustrating situation and making written confirmation a condition of PC for some error claims may help.

Reg E tells financial institutions to “…investigate promptly,” and that PC is required if the investigation isn’t completed within 10 business days of receiving a notice of error. Read on, and you’ll see this excerpt from section 1005.11 (c)(2)(i):

An institution need not provisionally credit the consumer's account if:

(A) The institution requires but does not receive written confirmation within 10 business days of an oral notice of error.

Of course, closely tracking the receipt of written confirmation is critical to ensure PC is given if the consumer provides the document within 10 business days.

The supplemental section of Reg E titled Official Interpretations can help financial institutions work through gray-area scenarios and make the best decisions for their institution and consumer cardholders. SHAZAM suggests checking it when researching — don’t stop after viewing Reg E’s official language. In the interpretations related to written confirmation, you’ll find:

2. Investigation pending receipt of information. While a financial institution may request a written, signed statement from the consumer relating to a notice of error, it may not delay initiating or completing an investigation pending receipt of the statement.

In short, that means receipt of written confirmation, or lack thereof, can affect how financial institutions handle PC, but it can’t impact their other error resolution obligations.

Refer to 1005.11, Procedures for resolving errors for broader guidance on requirements to investigate, including PC and length of investigation.

We’ll continue to explore Reg E requirements and Official Interpretations guidance in upcoming editions of MagniFI.

Source: Code of Federal Regulations, Title 12 / Chapter X / Part 1005