ARLINGTON, Va.—Have questions about Regulation E error resolutions related to burden of proof and duplicate credits?
This time of year questions around that issue tend to arise more often, according to NAFCU Senior Regulatory Compliance Counsel Jennifer Aguilar.
"As more errors tend to be asserted around this time of year, credit unions may find it to be a good time to review their practices," stated Aguilar. "Talking with call center and investigation staff may also be useful to ensure all procedures are being conducted as expected."
Aguilar reminded the burden of proof when investigating claims involving unauthorized electronic funds transfers (EFTs) falls on the financial institution under the Electronic Funds Transfer Act (EFTA).
"In other words, when a member claims a transaction is unauthorized, the credit union assumes that fact is true and must collect enough evidence to prove otherwise," noted Aguilar. "In effect, the credit union sits in the role of the prosecution and must prove the member really did authorize the transaction."\
Another Common Issue
Aguilar highlighted that duplicate credits are another common issue that arises with unauthorized EFTs, a result of a member disputing the transaction with the merchant, in addition to filing a claim with their credit union.
Aguilar noted that if the merchant and credit union refund the member, reversing a final credit is not permitted under the EFTA according to the Federal Reserve’s examination staff.
"As it is not exactly a fair outcome for the member to receive two credits for the same error, the examination staff did indicate credit unions may ask the member to reimburse the credit union, but it cannot require the member to do so by reversing the credit on its own," she said.