Can we deny a customer’s Regulation E claim if the customer does not first attempt to resolve the claim with the merchant? Can we require the customer to sign an affidavit or provide a copy of the return receipt, proof of purchase, email, cancellation number, etc.?

No, you may not deny a Regulation E error resolution claim based on the fact that your customer did not first attempt to resolve the claim with the merchant. Also, you may not require the customer to sign an affidavit or provide a proof of purchase, receipt, email or cancellation number. You may request confirmation of a verbal error notice in writing, but you may not delay or cancel the investigation due to a customer’s failure to provide the written confirmation (although you may withhold the customer’s provisional credit until the customer provides the written confirmation).

If a consumer provides a timely notice of error, Regulation E’s investigation and resolution requirements are triggered after the consumer provides: (1) sufficient information to identify the consumer’s name and account number, (2) an indication of why the consumer believes an error exists, and (3) to the extent possible, the type, date and amount of the error. You may request that the consumer attempt to resolve the claim with the merchant or provide other documentation, but you may not require the consumer to do so.

The FDIC emphasized this issue in a 2014 conference call, in which it noted several error resolution concerns, including “requiring consumer to physically come in to bank to complete paperwork,” “requiring consumer to attempt to resolve error with merchant first,” and more. The FRB and OCC also have emphasized this issue in their publications.

For resources related to our guidance, please see:

Regulation E, 12 CFR 1005.11(b)(1) (“A financial institution shall comply with the requirements of this section with respect to any oral or written notice of error from the consumer that: . . . Enables the institution to identify the consumer's name and account number; and indicates why the consumer believes an error exists and includes to the extent possible the type, date, and amount of the error, except for requests described in paragraph (a)(1)(vii) of this section.”)

Regulation E, 12 CFR 1005.11(b)(2) (“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.”)

Regulation E, 12 CFR 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.”)

FDIC, Chicago Region Regulatory Conference Call (July 29, 2014), slides 26–28 (“Concerns: Some financial institutions are imposing greater requirements on consumers for reporting unauthorized electronic fund transfers than allowed by Regulation E. Examples: . . . “Requiring consumer to physically come in to bank to complete paperwork . . . Requiring consumer to attempt to resolve error with merchant first . . . .”)

FRB, Philadelphia Fed, Compliance Alert: The Long and Short of Regulation E’s Error Resolution Process and Notarized Affidavits (“Regulation E does not permit a bank to require documentation such as notarized affidavits, statements, or copies of police reports. . . .”)

OCC, EFTA Consumer Compliance Handbook, page 27 (“An institution may request a customer’s reasonable cooperation in any such investigation. It may not, however, deny a claim of error based solely on the cardholder’s failure to comply with such a request.”)