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volume 7 • fall 2014
• error resolution communica- tions. Every error allegation must be properly documented; documentation is essential for proving compliance during an audit and backing up your actions if an error resolution outcome is disputed. Your prepaid issuer will depend on you to produce the documenta- tion that shows Reg. E compli- ant procedures were followed.
The types of error resolution communications you’ll want to document thoroughly include:
o Scripts
o Written communications to/from consumers
o Actions taken and when those actions were taken
o Thorough written records of phone conversations, including what the consumer said and what the employee said
No Way Around It
There’s a lot more to Reg. E error resolution compliance for TPSPs than covered in these 3,000 words. But, the points we’re making in this article are threefold:
1. You must pay close attention
to Reg. E error resolution and the role you play in the process. Your full participation and commitment isn’t optional.
2. Reg. E error resolution isn’t necessarily intuitive. You can’t
wing it based on instinct, good intentions or how you handle other issuers’ requirements.
3. If you want to be a valued TPSP, you must make initial and on- going investment in training people and maintaining systems that support Reg. E error resolu- tion. If you don’t, you’re putting your prepaid issuer at risk for financial loss and potential issues with its regulators.
It’s likely your prepaid issuer has deep expertise in Reg. E error resolution, along with training and materials to help you understand
eNDNoTes
what you need to do to support it. Your client is undoubtedly your first and best resource. And by working closely with your client to achieve the status as a trusted partner, as Paul Reymann points out in his Paybefore Viewpoint on page 68, you’re positioning your organiza- tion as the go-to provider—and that’s good for business.
Thank you to the following people who provided significant assistance
in developing this article: Ellie Smith, Meta Payment Systems; Cheryl Slipski, Ubiquity Global Services; Nancy Sjogren-Petersen, The Bancorp; and the late Terry Maher, Baird Holm.
1 ThisarticleisanintroductiontoanumberofissuesrelatedtoReg.eerrorresolutionthatTPsPssometimesmisconstrueor don’t recognize. The article’s purpose is to reinforce the need for TPsPs to recognize their role in Reg. e error resolution and encourage them to take necessary steps to be strong partners for their prepaid issuers. It’s not intended as a comprehensive overview of Reg. e error resolution requirements. note: TPsP involvement in Reg. e error resolution depends on the services it provides and how responsibilities are allocated in the agreement with the prepaid issuer.
error resolution requirements under Reg. e, available at http://www.gpo.gov/fdsys/pkg/FR-2011-12-27/pdf/2011-31725.pdf, offer lots of twists, turns and exceptions. Realistically, you must read carefully the entire regulation, including the official staff Commentary, and work with an attorney or compliance professional to ensure you’re fulfilling your obligations.
2 Anothertwist:PaymentsnetworkrulesalsomayaffecttheroleandobligationsofTPsPs,andit’spossiblethatbothReg.eand network rules could apply in some situations. so, it’s important to comply with the more stringent requirement to ensure both network rules and regulatory requirements are met. ThIs ARTICle Does NoT ADDRess NeTWoRk Rules.
3 Theprovisionalcreditrequirementdoesn’tkickinfor20businessdaysfor“new”accountswhenthedisputedtransactionoccurs within 30 days after the first deposit to the account. once provisional credit is extended and other requirements are met, the investigation period may be extended to 45 calendar days or up to 90 calendar days in certain situations if certain requirements are met. For the purposes of this article, we’re assuming the 10 business day requirement applies.
4 ThereareanumberoftypesoferrorscoveredbyReg.e.Themostcommonisanunauthorizedtransaction.Anothercommon “error” is a missing direct deposit of funds.
5 There’sanexception,butitrequirescarefulscriptinganddocumentation:Iftheconsumerisinformedthatwrittenconfirmation of the error is required (including where to send that written confirmation) and he doesn’t comply within 10 business days (subject to exceptions that can lengthen the period), provisional credit isn’t required. You must, however, comply with all other Reg. e error resolution requirements.
6 PlacingmoreonerousrequirementsonconsumersthanallowedunderReg.eisatechnicalviolationthatcouldleadtoassertions of a uDAAP violation—and you don’t want to go there.
7 Becareful.The“federalpayment”termistricky.Itincludes,butisn’tlimitedto,federalwage,salaryandretirementpayments; vendor and expense reimbursements; benefit payments; miscellaneous payments, like interagency payments, grants; loans; etc.
8 TheCFPB’sNoticeofProposedRulemaking(NPRM)islikelytoexpandthecategoriesofprepaidcardsencompassedunder
Reg. e. Although many prepaid providers apply Reg. e (usually in the form applicable to payroll cards) to reloadable prepaid products when the cardholder is known to them, industry is likely to express significant concern about expanding the provisional credit requirement to more types of prepaid products. When this magazine went to press, the CFPB had not issued its NPRM.
9 Closed-loopcards—includingclosed-loopgovernment-administeredcards,suchassNAP—aren’tsubjecttoReg.eerror resolution requirements.
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