3 Reasons Why Issuers Fall Out of Compliance

Written by Devon Anderson & Jennifer Marshall

The Consequences of Non-Compliance

When conducting a fraud and disputes investigation, financial institutions must follow guidelines set out by the government. From the jump, these investigations are a highly involved and nuanced process.Banking institutions and Fintech organizations need to understand how this process affects their regulatory compliance, customers, and administrative overhead.Thetwo primary banking regulations that come into play during a fraud and dispute investigation are Regulation E (Electronic Fund Transfer Act) and Regulation Z (Truth in Lending Act).Theseregulations are not new to the industry, but upholding Regs E & Z remainsthe most significant challengefacing issuers whenremaining compliantto avoid fines and penalties.

What happens when Reg E and Reg Z are not upheld?

If a financial institution displays an inability or unwillingness to follow government regulations, the government issues fines. Reg E and Reg Z fines are typically $1000 per violation, not to exceed 1% of a financial institution’s total assets.

In more extreme cases, when a financial institutionfails to comply, they can also be issued a Consent Order. A Consent Order is the OCC’s last effort to force a financial institution to become compliant with regulations., If the Consent Order is not followed, the FDIC has the authority to shut down the financial institution in question.

Why do Financial Institutions fall out of compliance during an investigation?

Reg E, Reg Z, Nacha, and card network mandates use many reason codes and rules stipulating everything from debit card issuance, provisional credit, online merchandise, and unauthorized transfers. However, the process in which financial institutions choose to work or prioritize dispute investigations is not regulated.This means that financial institutions are solelyresponsible for managing the fraud and dispute investigationprocess. The top three challenges toremaining compliant are manual workflows, human error, and lack of insight to outsourced processes. Luckily, there is a solution for each issue.

The Automated Dispute Management SaaS Offering

Quavo’s complete Disputes-as-a-Service solution offering allows issuers to tackle fraud and disputes while also reducing costs and assuring compliance.We provide end-to-end solutions for all fraud and dispute claims, no matter how much or how many. The financial, Fintech, and payments industries are rapidly evolving. Isn’t it time fraud and dispute management processes did as well?

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To learn more about Quavo SaaS offeringor for assistancebuildinga business case for automation contact our team online orvia experts@nullquavo.com.