Payment Systems Credit-Cards -Authorized by TILA and implemented by Reg-Z -Each section goes hand-in-hand TILA Only applies to credit lines extended for personal use (104(1)) and not for business, commercial, or agricultural purposes. Id. Cannot exceed $50k in charges (104(3)) Reg-Z 0 Encompasses everything else 0 Collected payment comes from merchants holding credit slips authorized (signed) by payors See pg 374, fig. 21.1 Error or Fraud . Right to withholding Payment from issuer (bank) . TILA 170/Reg-Z 1026.12 . Right of cardholder to w/hold payment to pay a charge on a credit card to the bank This extinguishes if cardholder pays the credit card bill of the charge that was made (170(a) and 170(b)/1026.12(c)) Cardholder may only w/hold amount which disputed charge is worth Cardholder must 1st make a Good Faith attempt to obtain a satisfactory resolution of disagreement w/ merchant Cardholder cannot seek a refund from bank . Cardholder can dispute charge if in same state or w/in 100 miles of billing address 170(a) (3) Erroneous Charges TILA 161/Reg-Z 1026.13 Resolving billing errors w/ CC Billing errors 161(b)= charges cardholder didn't make and when merchant doesn't deliver goods/services covered by charge made :Cardholder must give proper notice of error to creditor (bank) Bank returns written notice of erroneous charge w/in 30 days -and must resolve problem in 2 billing cycles (abt. 60 days) : Bank must reasonably investigate charges and determine that goods/services were actually given (161(a)(3)(B)(ii)/1026.13(f) -If bank doesn't find a problem, they must (w/in 2 billing cycles) notify cardholder (written explanation) of why (161(a)/1026.13(c)(2)
period of investigation (161(d)) -Bank may issue finance charge on disputed amount if investigation ends against cardholder - If bank fails to follow procedure, they are minimally charged w/ first $50 of all costs incurred (161(e)) Unauthorized Charges :TILA 133 and Reg-Z 1026.12(b)(1) o Limits unauthorized charges that cardholder is liable for to a max of $50
TILA 135 o Liability of corp. who issues co. cards to employees Debit Cards Gov'd by EFTA and Reg-E . Also govern gift cards, stored value cards, prepaid cards, or payroll cards (903) . Debits may be used w/ or w/o a PIN . When a debit transaction is processed it is final Payor bank immediately becomes obligated to honor payment after authorization by system Error and Fraud Erroneous Transactions Usually covered by bank as a mistake Fraudulent Charges . Main issues are who bears risk b/n merchant and bank and b/n bank and holder . EFTA 908 and 909 Encompasses transactions individually and as a series of transactions (a) 0 Minimal security features are required for a card to confirm transactions If missing, consumer liability goes away w/ unauthorized use (a) If card lost or stolen w/ security features 1. Banks an hold cardholders responsible up to $50 for unauthorized transactions that occur before bank learns of cardholder notice Applies w/o fault or diligence (applies even if cardholder is aware of transactions yet) (909(a)/Reg-E 1005.6) 2. Bank may also charge up to $500 dollars (alre