Topic: Payment Cards
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Under Regulation E, can we charge a business customer an overdraft fee when a debit transaction creates an overdraft on their account? Do business account customers have to opt in to an overdraft program?
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Yes, your bank may charge overdraft fees to business customers for debit card overdrafts, and they are not subject to the opt-in requirements in Regulation E. Regulation E, including its overdraft and opt-in provisions, does not apply to business accounts. We also are not aware of any other law or regulation that would impose restrictions…
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We have a Visa Business Cardholder who has reported several unauthorized transactions. Does the Visa Zero Liability Rule apply to ATM transactions or other purchases that did not go through the Visa network, such as Pulse, Mac/Star? Can we deny reimbursement for such unauthorized transactions? We believe that our disclosure permits us to deny such reimbursement claims.
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No, according to Visa’s website, Visa’s Zero Liability does not apply to ATM transactions, or PIN transactions not processed by Visa, or certain commercial card transactions. In addition, because this is a business customer, Regulation E’s unauthorized transaction requirements do not apply. However, before denying reimbursement for the unauthorized transactions, we do recommend reviewing your…
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Could you direct me to the Illinois Revised Uniform Unclaimed Property Act language that shortens the presumed abandonment period to three years for demand, savings, or time deposit accounts? Also, are there changes regarding gift cards or reloadable cards?
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Demand, Savings and Time Deposit Accounts The Illinois Revised Uniform Unclaimed Property Act (RUUPA), which becomes effective on January 1, 2018, changes the presumed abandonment period for many types of property, including demand, savings and time deposit accounts. The relevant section is copied and linked to in our resources below. Gift Cards The Illinois RUUPA…
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We have heard that Visa is changing its Zero Liability policy to reflect a different standard of care for zero liability protection for unauthorized transactions. Previously, a cardholder had zero liability for unauthorized transactions unless they were “grossly negligent.” Under the new policy, the cardholder will have zero liability for unauthorized transactions unless they were “negligent.” Does this change trigger a change in terms notice under Regulation E?
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Yes, we believe that this change to Visa’s Zero Liability policy triggers a change in terms notice under Regulation E. A Regulation E change in terms notice is required at least 21 days before the effective date of any change that will result in increased liability for the customer. In this case, Visa has changed…
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A consumer customer notified us of an unauthorized Visa debit card charge within 60 days of receiving her periodic statement. We notified Visa, but Visa denied the customer’s claim because the merchant used “Verified by Visa” to confirm the identity of purchaser. We are not familiar with the “Verified by Visa” program. Do we still have to reimburse the customer for the charge?
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In our view, you are required to reimburse the customer for debit transactions that you determine are unauthorized, regardless of whether the transaction was verified through the Verified by Visa program. Our understanding of the Verified by Visa program is that it is a free service for cardholders intended to verify customer identity during online…
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We currently offer ad hoc overdraft protection, but we want to establish a formal overdraft protection program for checking accounts, ACH transactions, and debit transactions. We have not yet established the exact parameters of our program, but we are planning to charge a fee for the service. What notice do we have to provide before rolling out the program? Can the notice be included in a periodic statement? Can we establish criteria that customers must meet in order to qualify for the program, such as that the customer does not have any delinquent loans? Or do we have to offer the program to all customers?
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Yes, your bank should provide advance notice and an opportunity to opt in to a new overdraft program. Regulation E requires financial institutions to complete a four-step process before charging a fee for paying an overdraft on an ATM or on a one-time debit card transaction. This process includes providing written notice of the overdraft…
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We are switching to a new core processor, which will result in several changes to our debit card program. The daily ATM withdrawal limit will be raised, and the current limits for PIN- and signature-based point of sale transactions will be combined, without lowering the current limits. Do we have to provide advance notice for these changes? If not, do we have to provide any kind of notice?
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No, we do not believe that these changes would require a change in terms notice. Regulation E requires change in terms notices when a change would result in “stricter limitations on the frequency or dollar amounts of transfers.” The changes you described would either increase or maintain your bank’s current limitations on the dollar amounts…
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Although we are not required to notify customers about the Visa Account Updater (VAU) program, shouldn’t we disclose to our customers that it is available?
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Although not expressly required, there are practical reasons to notify your existing customers about the VAU program and of their right to opt out, and also to include the opt-out right in your new account agreements going forward. For example, some customers may perceive the program as a violation of privacy — or simply may…
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We issue MasterCard debit cards, and we received an email from our core processor that we have to participate in MasterCard’s Automatic Billing Updater (ABU) program. This service requires us to notify MasterCard when a cardholder’s account information changes, so that merchants who have an existing relationship with the cardholder can continue to process recurring payments without an interruption in service. We are required to participate in the program, but customers may opt-out. We will review our privacy policies and account agreements, but what state privacy laws or notice requirements should we be aware of with respect to the ABU program?
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We are not aware of any federal or Illinois law that would require you to provide notice about the MasterCard ABU program and opt-out option to your debit card customers, although we believe it may be prudent to do so. Regulation P generally prohibits a bank from sharing nonpublic personal information about a consumer to…