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#10391 - 05/17/06 10:11 AM Visa Debit Card & Stop Payments HELP!!!!!!!
Anonymous
Unregistered


I understand that a consumer has “Stop Payment” rights for recurring preauthorized electronic debits from their bank account. Does this hold true when the preauthorization is on their debit card, which is of course linked to their checking account. Are there any regulation differences for direct debit from an actual bank account or through a debit card to a bank account, or do they all follow under Reg. E and the EFTA?

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#10392 - 05/17/06 11:52 AM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
Chiquita Banana Offline
Platinum Poster

Registered: 06/11/02
Posts: 867
Loc: The banana bin
From how I understand: you can't place a stop payment on any debit card transaction. However, if it is a reocurring transaction and the consumer cancels all future transactions, you would be obligated to persue chargeback rights. Now, I believe that in both the Reg E environment as well as VISA/MC, the consumer would need to contact the merchant first to cancel the authorization...otherwise it is a valid transaction.

I could be misunderstanding though. Anybody else interpret it differently?
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#10393 - 05/17/06 12:52 PM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
John Burnett Administrator Offline
Compliance is my life

Registered: 10/27/00
Posts: 12643
Regulation E gives the consumer a stop payment right on preauthorized debits from the consumer's account. Visa and MasterCard rules cannot take that right away. While there's no stop capability on individual, one-time debit card transactions, a consumer has a right to stop any of a series of recurring debit card transactions under section 205.10 of Regulation E.

The consumer is under no requirement to cancel the authorization first. However, if the consumer is trying to cancel all future debit card transfers under a standing authorization, the consumer must inform the merchant of the cancellation of the authorization. Card-issuers should look at the official interpretations 2 and 3 under section 205.10(c) regarding how they need to handle revocations of authorizations.

The primary thing to remember is that the consumer's rights under Regulation E cannot be overridden by card association rules.

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#10394 - 05/17/06 01:00 PM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
XODUS Offline
Diamond Poster

Registered: 05/31/05
Posts: 2346
Loc: OKC, OK
Visa does have the ability to put Stop payment orders on recurring transactions also now. That went in effect a little over a year ago. There is a fee involved but when isn't there?
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#10395 - 05/17/06 03:12 PM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
Chiquita Banana Offline
Platinum Poster

Registered: 06/11/02
Posts: 867
Loc: The banana bin
Thanks for clearing that up.

I want to lock all of the reg writers with Visa/MC and NACHA all in a room and demand (my right as an only child haha) that they all come out with the same thing.

Who's with me?!
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#10396 - 05/17/06 03:57 PM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
Banking Bard Offline
100 Club

Registered: 07/15/05
Posts: 184
Loc: Kentucky
Quote:

The consumer is under no requirement to cancel the authorization first. However, if the consumer is trying to cancel all future debit card transfers under a standing authorization, the consumer must inform the merchant of the cancellation of the authorization. Card-issuers should look at the official interpretations 2 and 3 under section 205.10(c) regarding how they need to handle revocations of authorizations.



So does that mean that have to revoke standing authorizations for recurring payments at some point, but not before telling the bank to not honor it? Or am I just misreading that?

CB: When you dream, you dream of the big impossible things, don't you?
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#10397 - 05/19/06 08:07 AM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
John Burnett Administrator Offline
Compliance is my life

Registered: 10/27/00
Posts: 12643
If the consumer doesn't revoke the authorization, the merchant has the right to keep submitting debits under the authorization. Reg. E provides a way for the consumer and bank to work together to put a standing stop payment on those future debits, but the bank may require the consumer to provide documentation that the consumer has told the merchant to cancel the authorization.

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#10398 - 05/19/06 08:11 PM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
GoCowboys Offline
Member

Registered: 08/09/03
Posts: 93
Loc: Texas
I have sort of a similar situation ...

My sister ordered something off the internet. She was to pay shipping only ($4.99) for the first order, and then if she didn't cancel within 15 days, she would be automatically charged $69.95 plus shipping for the next shipment.

She didn't cancel within 15 days because she never got the product to begin with; she didn't even know that it was supposed to have been delivered.

She called the credit union and they said they could not dispute the charge, and that the company would have to fax a letter to the credit union to have the charge removed from her account.

She called the company and they said "too bad." My sister told them that she never received it, but they said "too bad, the post office said they delivered it."

Is the credit union correct, and if so, is there anything else she can do?
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#10399 - 05/20/06 12:03 PM Re: Visa Debit Card & Stop Payments HELP!!!!!!!
crowman3 Online   content
100 Club

Registered: 11/26/04
Posts: 198
Loc: Crystal Lake IL
I am sorry to hear that your sister had this happen. There are two sets of rules at work here. First is Regulation E which covers unauthorized electronic transactions. The credit union is correct that this will not apply because your sister did authorize the charge.

However, VISA/Mastercard does allow disputes based on non-receipt of merchandise and the credit union should be able to initiate a dispute based on this fact. This will force to merchant to supply proof of shipping, the address where it was shipped, as well as who signed for the package. If they cannot , your sister will win the dispute and recover the money. Ask to speak with someone in management who may be more knowledgeable about the dispute process.

Your last option is to file a complaint about the merchant to the better business buerau.
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