Dispute finalization with Regulation E
If a transaction covered under Regulation E (Reg E) reaches the deadline to resolve a case, but the investigation or recovery is still incomplete, the bank must finalize a case and provide the customer with a final decision.
If the bank is still attempting to recover funds when the case reaches the deadline for finalization, the bank must make a decision based on the customer's concern.
The following rules apply to all deposit account transactions performed by Debit Card, Debit ATM, Zelle, ACH, and any future dispute case types containing electronic-based deposit account transactions:
- When the deadline for finalizing the service-level agreement (SLA) is reached, the bank must decide whether to allow the customer to keep the provisional credit sent by the bank to extend the investigation.
- The system verifies whether the customer has previously received provisional credit.
- If the investigation or recovery efforts are ongoing, and the customer has already received provisional credit, the bank can finalize the provisional credit and recover the disputed amount from the acquirer or merchant.
- If the investigation or recovery is ongoing, and the customer has not received provisional credit, the bank can issue a final credit to the customer and attempt to recover the disputed amount from the acquirer or merchant.
- If the bank is not attempting to recover the funds from the acquirer or if it is determined that the customer may not be entitled to keep the funds, the system should enable the customer to either keep the funds and write-off the provisional credit (PC) that was granted or make the customer liable and reverse the provisional credit. Since recovery efforts are being stopped, the case may be closed.
- If provisional credit was not given, and it is determined at the deadline that the customer is not entitled to a credit, the bank stops investigating and confirm whether the customer is being made liable or a courtesy write-off is given. The bank must send out correspondence explaining the final decision within 3 business days of determining that the customer is being made liable.
- If the transaction is not covered under Regulation E, the bank should have a configuration option to enable them to choose whether or not they still want to follow Regulation E rules on a non-Regulation E covered transaction.
Reversal of provisional credit
Efficiently manage the reversal of provisional credit in accordance with regulations when the bank initially issues provisional credit to a customer on a Regulation E (Reg E) covered transaction, but later determines, by the finalization deadline, that the customer is not entitled to the credit.
Provisional credit reversal configurations
- The system initially confirms if the customer received provisional credit. The case must not have exceeded the service-level agreement (SLA) deadline, which is 45 or 90 days.
- If the bank decides to hold the customer liable, the system must notify the customer of the provisional credit reversal. This notification is sent within three days of the decision, notifying the customer that their account gets debited no sooner than five business days from the transmittal of the notification.
- The bank cannot reverse the transaction earlier than five business days on a Reg E-eligible transaction, and cannot change this timeframe to an earlier date. However, the bank can extend the time for more than five business days.
- The bank can reverse the provisional credit immediately if the transaction is not covered under Reg E, but the customer received provisional credit.
- Configure Smart Dispute Agentic Automation to enable the bank to choose whether to:
- Follow the five-business day rule
- Immediately reverse the provisional credit
- Set a reversal date
Regulation E implementation
If the dispute qualifies for Regulation E and is eligible for providing provisional credit to the cardholder, then provisional credit (PC) will be issued to the cardholder. This can be verified in the Regulations tab and the Financial Adjustment Ledger tab within the dispute case.
Note: The regulations may undergo some changes from time to time because of the government policy changes. Therefore, the financial institutions are advised to keep track on regulatory changes for the latest updates.
This Topic is available in the following Module:
If you are having problems with your training, please review the Pega Academy Support FAQs.
Want to help us improve this content?