Blockchain credit unions
The normal timeline to resolve a Reg E error is within 10 business days of when the member notifies the credit union of an unauthorized transfer from their account. Some credit unions pride themselves in providing extreme member service and correcting most errors within this timeline and to save themselves the hassle of providing provisional credit. While admirable and very member-friendly, this also means the credit union will have to mad-rush to investigate the dispute, contact merchants, compare signatures, pull video from the security cameras if any and come to a conclusion.
I am exhausted just thinking about the process. In POS dispute cases, 10 days is simply not enough to even get a return call from merchants, let alone any documentation of the transaction. To remedy this, the regulation permits the investigation period to be extended up to 90 days for point-of-sale POS debit card transactions such as swiping your debit card at any store in the mall.
To take advantage of the extended timeline, the credit union must: Taking the time to investigate a POS dispute is essential as lately, credit unions are noticing that merchants are refunding members after the credit union has already resolved the error and finalized provisional credit.
Basically, the member is getting back their money twice. As awesome as it is to get a windfall, it is simply not right. So credit unions want to know whether they can remove funds from a member's account if the member had been made whole by the merchant or if the credit union uncovers convincing evidence that the transaction was not unauthorized. The answer to this question is not found in the regulation—of course. That would make it way too easy on the NAFCU compliance team that takes these questions as a white elephant gift from the regulators.
Regulation E explicitly states that credit unions can reverse provisional credit if there was no error or a different error occurred. Nothing in the regulation states that credit unions can take back final credit if it later discovers that no error or a different error occurred. If this seems inherently unfair, you are not alone.
There is an entire contract law concept called unjust enrichment that has been around long before any of us or our predecessors were thinking about compliance. The just of this notion is that someone received a benefit they were not entitled to at the expense of someone else.
Unfortunately, to pursue an unjust enrichment claim, the credit union would have to file a civil suit against the member who received the windfall. A less expensive option may be to politely ask the member to reimburse the credit union if the merchant credited the member or if the member later admits to having made the transaction. But an even better option is probably to take the full 90 days to investigate the dispute and ensure the credit union is monitoring the member's account during that time.
Regardless of the option, this is an area where the regulation is not entirely clear on when or whether a credit union has the ability to revoke final credit if the member is unjustly enriched. Interestingly enough, the remittance transfer rule that makes up sections Distributed ledger technology W.
The Florida-based CUSO is the latest to sign on with the distributed ledger technology scheme for credit unions. CULedger joins global blockchain network. The CU blockchain vendor joins global entities like American Express, IBM and Samsung in a consortium aimed at creating distributed ledger technologies.
Blockchain Nathan DiCamillo March A digital strategy without blockchain isn't a digital strategy: Blockchain Nathan DiCamillo March 6. A 'mental shift' after crash course in distributed ledger technology.
This week marks the return of a series of intensive, hands-on training sessions in distributed ledger technologies for credit union executives. Can blockchain technology revive peer-to-peer lending? The people-helping-people model proffered by LendingClub and others quickly foundered, but several startups aim to bring it back with the help of distributed ledger technology. Peer-to-peer lending Penny Crosman January 4.