Regulation E Length of Investigation — 45 or 90 days?

Article contributor: Diana Kern, AAP / Sr. Financial Solutions Consultant

A well-known requirement of Regulation E states “…financial institution shall investigate promptly,” but doesn’t define a timeframe for “promptly.” Provisional credit is only a consideration if more than 10 business days are needed to determine whether an error occurred. In practice, it’s not uncommon to need more than 10 business days to complete an investigation sufficient to conclude whether an error occurred.

Let’s assume an investigation wasn’t completed within 10 business days and provisional credit was handled as required. The default maximum length of investigation is 45 days from receipt of a notice of error. But Reg E covers several situations that extend to 90 days.

Subsection 1005.1 (c)(3)(ii) says those situations are for an EFT that:

(A) Was not initiated within a state;
(B) Resulted from a point-of-sale debit card transaction; or
(C) Occurred within 30 days after the first deposit to the account was made.

To further clarify Reg E’s definition of (B) above, the official interpretation reads: ,

11(c)(3) Extension of Time Periods

1. POS debit card transactions. The extended deadlines for investigating errors resulting from POS debit card transactions apply to all debit card transactions, including those for cash only, at merchants' POS terminals, and also including mail and telephone orders. The deadlines do not apply to transactions at an ATM, however, even though the ATM may be in a merchant location.

In summary, most, but not all, debit card transactions qualify for the 90-day maximum length of investigation.

Source: Code of Federal Regulations https://www.ecfr.gov/current/title-12/chapter-X/part-1005