One big bank paid a $3.5M civil money penalty and $12M in restitution. Why? In part it failed to handle Reg E claims correctly. It also failed to handle stop payments correctly and had other issues, but Reg E claims were a major issue. So Reg E remains in the compliance spotlight because it is consumer protection. We will look at the 4 commonly cited Reg E violations from the CFPB. UDAP penalties have been imposed numerous times because of a disconnect between what banks disclosed using model Reg E forms and what it actually did. The offending institutions received negative press, adding “insult to injury” in addition to the CMPs they had to pay and the increased scrutiny in future exams.
Sometimes you need to pause, take a breath and look at the forest. That is why I invite you to join me on a review of Reg E from disclosures, to procedural requirements, to claims. I always include claims in our discussions of Reg E because that is often where the day-to-day stress is. But you also have to understand your disclosures and how you actually “do” what you disclose.
There are basic questions that I see again and again such as “the card and PIN were loaned to a 3rd person, so they have authority to use that card forever, right?” Wrong! And “family fraud” isn’t a valid claim, right? Wrong! I’ll cover these.
EFT use is increasing. This means an increase in claims. When there is a financial loss, you already know that the bank loses! But there is more than one way to lose money on a claim. Do you have to investigate all claims? No. Are you charging off more in losses than is necessary? Maybe. Are there big penalties against banks for handling Reg E the same way they have for years? You can bet on it!
In this webinar, we will discuss the basic Reg E requirements and then there will be a focus on claims for unauthorized withdrawals. You must know when a claim is valid and has to be paid, and when it is not. Otherwise, you are cheating the bank, or the customer.
We will review the meat of Reg E - disclosures, in addition to the claims. I’ll look at the claims process and when it is just cheaper to pay the claim, and what safeguards you should have to avoid abuse of your process.
During this session, we’ll discuss:
- Regulatory hotspots — what is being violated and how to avoid doing the same
- Workflow for Reg E claims
- Tips and tricks to effectively compute liability for unauthorized withdrawals
- Definitions which guide the regulation
- Basic disclosure requirements of Reg E (a UDAP gotcha!)
- What constitutes a covered EFT
- Exceptions and special provisions
- Consumer liability limits for unauthorized withdrawals, and
- Ways that Compliance and Audit can audit the process.
- An overview of the overdraft fee rules and the UDAP confusion some banks have had;
- An overview of the gift card rule
Disclosure issues still lead to complaints. It is important that your staff have the basics of Reg E clearly understood. It is equally important that you understand the claims procedures. If claims are handled incorrectly, the losses can be extreme. You need the confidence that everyone is following the same procedure and that it is according to the regulation.
This webinar is focused on Reg E and will not address specific ACH rules or card association rules involving merchant chargebacks. These, and overdrafts and remittance rules are discussed at length in webinars dedicated to those topics.