A few months ago, our system generated a fraud alert regarding the activity on one of our customer’s checking account. We contacted her about the suspicious activity, and she came into the bank, reviewed the transactions, and confirmed that she authorized them. However, now (a little over 60 days after we sent her the account statement containing those charges) she has submitted a formal dispute. What are our obligations under Regulation E at this point?

We are not aware of any law, regulation, or guidance that clearly establishes your obligations under these circumstances. However, in our view, you may treat this as a reassertion of error, in which case you have no further obligations under Regulation E.

Regulation E permits a customer who has withdrawn an allegation of error to reassert the allegation only in limited circumstances: (1) When the error is based on information or clarification requested by the customer and provided by the bank regarding the transaction, or (2) when the bank has not yet complied with Regulation E’s error resolution requirements, and the customer makes her reassertion within 60 days of when transactions appeared on her periodic statement.

In this case, we believe none of these conditions for reassertion are met. First, the customer did not request information or clarification regarding the transactions. Instead, she appears to be changing her mind about whether she authorized them. In addition, your bank complied with Regulation E’s error resolution requirements by promptly investigating the suspicious activity and determining (based on the customer’s confirmation) that there was no error. Finally, the customer’s notice falls outside the 60-day deadline for reassertion. Consequently, Regulation E relieves you of any further responsibility with respect to this dispute.

However, we note that Regulation E does not include a final deadline for reporting unauthorized transactions. In other words, regardless of whether a customer takes longer than 60 days to report the error, Regulation E still requires you to investigate disputed transactions. Therefore, if your regulator views the customer’s dispute as an initial notice of error (rather than a reassertion), then you may be obligated to conduct a new investigation, make a new determination, and reimburse the customer for any unauthorized transactions that occurred within the first 60 days after she received her bank statement.

For resources related to our guidance, please see:

Regulation E, 12 CFR 1005.11(e) (“A financial institution that has fully complied with the error resolution requirements has no further responsibilities under this section should the consumer later reassert the same error, except in the case of an error asserted by the consumer following receipt of information provided under paragraph (a)(1)(vii) of this section.”)

Regulation E, 12 CFR 1005.11(a)(vii) (“The term ‘error’ means …The consumer's request for documentation required by § 1005.9 or § 1005.10(a) or for additional information or clarification concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under paragraphs (a)(1)(i) through (vi) of this section.”)

Regulation E, 12 CFR 1005, Paragraph 11(e), Comment 1 (“The financial institution has no further error resolution responsibilities if the consumer voluntarily withdraws the notice alleging an error. A consumer who has withdrawn an allegation of error has the right to reassert the allegation unless the financial institution had already complied with all of the error resolution requirements before the allegation was withdrawn. The consumer must do so, however, within the original 60-day period.”)

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 … is received by the institution no later than 60 days after the institution sends the periodic statement or provides the passbook documentation, required by § 1005.9, on which the alleged error is first reflected…”)

Regulation E, 12 CFR 1005.6(b)(3) (“A consumer must report an unauthorized electronic fund transfer that appears on a periodic statement within 60 days of the financial institution’s transmittal of the statement to avoid liability for subsequent transfers. If the consumer fails to do so, the consumer’s liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period. . . .”)