VIDEO: Error Resolution Notices in Writing or Verbal
In this Compliance Clip (video), Adam addresses a common question on whether error resolution notices need to be provided in writing or can be delivered verbally. Adam dives into Regulation E and breaks down what you need to know to stay compliant when issuing error resolution notices.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about error resolution notices, whether they must be in writing or they can be delivered verbally.
Recently, we got this question: do the error resolution notices to the customer have to be in writing or can we give them verbally?
The answer to this, of course, comes from Regulation E, specifically Part 1005.11. Now, there are several different notice requirements that are found in this 1005.11, which is the “procedures for resolving errors” section of Regulation E. And those different notice requirements include: a notice to inform the consumer of the requirement to provide the written confirmation in order for them to get provisional credit; the notice requirement that it must be sent two business days after provisional credit is provided.; the notice that must be provided to the consumer three business days after completing the investigation; a written explanation of findings when no error occurred or a different error occurred;aAnd finally, the notice of debiting provisional credit.
As you can see, these are all of the things that financial institutions must tell the consumer. And so the question is a little vague. It doesn't tell me which one specifically they're wanting to know. Can it be verbally or does it have to be in writing? So, let's take a look at all of these and determine whether or not these have to be in writing or these can be provided verbally.
To do this, let's take a look at the commentary. Specifically, Comment 1 to 1005.11(c) says, “unless otherwise indicated in this section, the financial institution may provide the required notices to the consumer either orally or in writing.” So, if they don't tell us it has to be in writing, we are permitted to provide it verbally to the consumer.
Now, are there any sections that require it to be in writing? Well, they probably wouldn't have put this notice in if there weren't. But, there is only one section that specifically requires a written notice. So, there's only one section that requires a written notice and that section is 1005.11(d)(1). This is the section that requires the written, that's the key there, written explanation of a finding when no or different error occurred. So, all the other other notices can be provided to customers verbally. That said, the best practice is to provide written notice.
Now why is that? Because if you're providing a video, verbal notice to the consumer and not putting in writing, how does an examiner or somebody investigating a complaint by a consumer know that you in fact provided the notice as required under Regulation E? So, the best practice tends to be to just provide the notice in writing because if you're not providing in writing, you have to somehow document internally that all the elements of each section in each notice requirement are provided to the consumer.
In practice, it's easiest and really the best practice to just give a written notice every single time to dot your i's and cross your t's and prove that you provided the required notices to the consumer. So, there's only one section that actually requires a written notice to the consumer under the error resolution procedures, that's 1005.11(d)(1). However, the best practice is to always provide the written disclosure, though you don't have to for the other areas, but that is definitely the best best practice.
Now, that's it for this Compliance Clip.