Dispute Fees; Foreclosure and Evictions
Posted by Anthony Demangone
Credit card and debit card disputes can be a drag. Especially if the dispute seems to be nothing more than an attempt to weasel out of a legitimate transaction. Can you fee members if the dispute resolution shows that the member actually conducted the transaction?
It doesn't look like it.
Regulation Z or Regulation E governs plastic disputes, depending on the situation. But both regulations indicate that financial institutions should not do things to "chill" good faith assertions of errors.
Regulation Z (Official Staff Interpretation to 226.13)
2. Charges for error resolution. If a billing error occurred, whether as alleged or in a different amount or manner, the creditor may not impose a charge related to any aspect of the error resolution process (including charges for documentation or investigation) and must credit the consumer's account if such a charge was assessed pending resolution. Since the Act grants the consumer error resolution rights, the creditor should avoid any chilling effect on the good faith assertion of errors that might result if charges are assessed when no billing error has occurred. (Emphasis added.)
Regulation E (Official Staff Interpretation to 205.11(c)
3. Charges for error resolution. If a billing error occurred, whether as alleged or in a different amount or manner, the financial institution may not impose a charge related to any aspect of the error-resolution process (including charges for documentation or investigation). Since the act grants the consumer error-resolution rights, the institution should avoid any chilling effect on the good-faith assertion of errors that might result if charges are assessed when no billing error has occurred. (Emphasis added.)
Both sections do use the word "should." But I think the Fed is very clear on this issue. And from a member service/reputation risk point of view, I know how I would come down on this issue.
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NCUA has issued NCUA Regulatory Alert 09-RA-08 to remind credit unions of their responsibilities under "The Protecting Tenants at Foreclosure Act of 2009."Â Â Here's a thumbnail sketch:
When a credit union takes title to a rental property after foreclosure, it must:
- Provide bona fide tenants with 90 days notice prior to eviction; and
- Allow bona fide tenants with leases to occupy property until the end of the lease term, with the exception that the lease can be terminated on 90 days notice if the unit is sold to a purchaser.
If your credit union does mortgage lending and has or will foreclose on properties, be sure to understand this guidance.
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NAFCU's Regulatory Compliance team is in a good mood. We're a collective 3-0, as Michigan, Ohio State and Penn State were victorious last weekend. Should one or more of our teams falter this Saturday, please take that into account when contacting us.  Just in case we're a bit moody.
Have a great weekend, everyone. Even you Syracuse Orangemen. And yes, I know they are now called the Orange. It is just that I am becoming an old fuddy-duddy who hates change of any kind.