Topic: Payment Cards
-
We are putting together account disclosures for business and consumer debit cards, specifically regarding error resolution under Regulation E. While Regulation E does not apply to business accounts, is there an Illinois law that might apply to business debit cards?
—
by
No, we are not aware of any Illinois laws that would impose error resolution requirements on a business debit card. Moreover, as you note, Regulation E applies only to consumer-purpose accounts. However, we do recommend consulting with your bank counsel when drafting the account disclosures for your business debit card customers. In addition, as you…
-
Are you aware of any limit on the use of a Visa debit card for POS transactions on a savings account, other than the Regulation D restrictions?
—
by
Other than Regulation D’s limitation to six transfers per month (including point of sale transactions), we are not aware of any other limitations on using a debit card tied to a savings account.
-
One of our business customers is past-due on its business credit card. We have a security agreement securing a separate loan with a cross-collateralization clause granting us a security interest in “all present and future debts.” Would any laws prohibit us from enforcing the security agreement with respect to the business credit card debt?
—
by
No, we are not aware of any laws prohibiting you from enforcing a security agreement that secures business credit card debt. For example, Regulation Z’s limitations on securing credit card debt with a borrower’s deposit account apply only to consumer debts. Also, we note that courts in Illinois generally have upheld cross-collateralization clause, provided that…
-
One of our customers recently died, and the customer had an outstanding credit card balance and a deposit account with our institution. Can we place a hold on the account in the amount of the credit card balance? We have not obtained a security interest in the deposit account.
—
by
No, you will not be able to place a hold on the deposit account. The Regulation Z prohibition on offsetting deposit account funds against consumer credit card debts — with certain exceptions that do not appear to apply in this situation — also applies to freezing or placing a hold on deposit account funds. For…
-
If we believe the customer initiated a false debit card dispute (based on information provided to us by the police), can we offset the customer’s deposit account to recover the final credit we provided under Regulation E? The debit card has no credit or overdraft features.
—
by
We believe that you may set off the customer’s deposit account in the amount of the credit that you provided to the customer under Regulation E. While Regulation Z places some limits on the right of offset for credit cards, those limitations do not apply to debit cards that lack any credit or overdraft features.…
-
We outsource our credit card program. Although the cards have our bank logo on them and we provide the credit card applications, the applications are submitted directly to the vendor, and we have no access to account information. If a blocked person opens a credit card, are we liable for the OFAC violation? Are we liable for transactions that are processed through the credit cards?
—
by
We do not believe that you would be held responsible for OFAC violations related to the credit card accounts issued by or transactions conducted through your third party credit card vendor, but it would be advisable to confirm this practice with your primary regulator. Of course, the scope of transactions covered by OFAC regulations is…