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Debit card disputes are often complex — many transactions aren’t eligible for chargeback, and no merchant “breach of warranty” process exists. Debit card disputes aren’t solved on instinct; they’re cracked with clues. To uncover the facts, you’ll have to channel your inner detective, follow the trail of evidence and use Regulation E.

For debit card disputes, you must rely on a legitimate investigation within the timeframes set by Regulation E §1005.11(c), which is 45 days for ATM transactions and 90 days for debit cards. From the information collected, you must act as judge and jury to determine whether an “error” occurred, and either correct it within one business day or conclude “no error” if the account holder authorized the transaction. 

That’s easier said than done, as debit cards can be used in many ways and examiners expect consistency and clear justification when issuing a “no error” result. Consumers may also escalate disputes to the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC) or other regulatory agencies. Per the Reg E Compliance Handbook Section 205.13, financial institutions must retain investigation documentation for at least two years.

Let’s walk through how to investigate and gather key details to assess a cardholder’s claim:

1. Start with the Regulation E §1005.11 minimum dispute requirements. You’ll need to collect the following from the consumer:

• Date of the transaction,
• Dollar amount and
• A description of the error or why the consumer believes an error occurred.

2. Review card processor data for transaction context. Check the transaction record for:

• Whether a pre-authorization occurred,
• If the transaction was “Card Present” (inserted, tapped or swiped) or “Card Not Present” (online or in-app),
• Europay, MasterCard^® and Visa^® (EMV) chip usage and any fallback indicators,
• Whether a PIN or 3D Secure code was entered,
• IP address for online activity,
• Date, time, merchant name and address and
• Transaction location compared to the cardholder’s residence.

3. Gather merchant-related documentation. Reach out to the merchant or access APIs to collect:

• Receipts, signed contracts and shipping confirmations,
• Terms & Conditions or User Agreements from the merchant’s site and
• Notes from any merchant communication.

4. Evaluate transaction patterns and account behavior. Looking at the broader history can reveal potential patterns of misuse or fraud:

• Where and how has the card been used before? (Check processor reports or past statements.)
• How frequently does the cardholder file Regulation E disputes for both debit card and ACH transactions?
• Is there a history of overdrafts or NSF activity, and how often has the cardholder been charged related fees?
• Has there been a pattern of reissued cards followed by similar fraud or dispute claims?
• Are disputed amounts often just under your institution’s automatic chargeback threshold (used to avoid processor fees)?

5. Document the cardholder’s story and supporting details. Ask open-ended questions and record everything shared:

• Was the card lost, stolen or shared with someone?
• Did the cardholder authorize the person or transaction in question? If so, did the cardholder alert the financial institution?
• This matters under the “exceeding authority” clause in Reg E.
• Has the cardholder contacted the merchant? If yes:
• Who did they speak to?
• When and how?
• What resolution was offered, if any?
• Was the transaction through a peer-to-peer (P2P)/account-to-account (A2A) service? Clarify whether it was via your institution’s platform or an outside app.
• What was purchased, and how were the goods/services used? (e.g., crypto for puppies, gift cards for scams, etc.)

Investigating a debit card dispute is all about piecing together the evidence. Ready to channel your inner “Where in the World is Carmen Sandiego” detective? Follow the trail of clues to crack the case and find the right resolution.

Here are some example scenarios where solid documentation will help you reach a confident decision: 

1. A local debit card transaction used the EMV chip and PIN, and the card wasn’t reported lost or stolen. Since the chip can’t be cloned, fraud would require both card theft and PIN knowledge. Most likely, the cardholder did the transaction or remembers incorrectly.
2. An online chargeback was successful, but the merchant proved the cardholder authenticated and sent the shipment to their address, making the transaction likely authorized.
3. The cardholder signed up for a free trial but didn’t cancel within the required period. Reviewing the merchant’s terms shows a 30-day cancellation policy, explaining why charges continued.
4. A child made small in-game purchases without the cardholder reporting anyone else had their card information, meaning the cardholder allowed someone to “exceed their authority,” which isn’t covered by financial institution protections.
5. The merchant lacks EMV chip readers or PIN prompts, losing liability shift protection for counterfeit or stolen cards.
6. The cardholder regularly transacts with a merchant but disputes a recent charge. A review shows similar patterns: same IP address, device or digital wallet, suggesting authorization. 

These are just a few examples of debit card investigations. Remember, auditors and examiners expect consistency in applying regulations, making decisions and documenting outcomes. For a Regulation E §1005.11 “no error” decision, ensure it aligns with your policies and is based on the evidence collected. Be thorough but efficient in your investigation, treating each case fairly and consistently. 

Heading to Nashville, IN or Branson, MO, next month for EPCOR Payments University? This is your chance to ROCK OUT to our chart-topping sessions like We Can Work it Out: Dispute Basics (Reg E, ACH, Cards), Come Together: Reg E and ACH, Running Up That Dispute Scenario Hill: Dealing with Reg E, ACH and Cards and more! Check out our syllabus to see the full lineup.