Sterling

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COMPLIANCE

REGULATION E DISPUTES & ERROR RESOLUTION

This document has been developed to assist in identifying when an error has occurred under Regulation E, to determine the critical information needed to investigate errors per regulatory requirements and calculate the amount of a consumer's liability. A bank's Regulation E Error Resolution procedures should provide for a sufficient audit trail to follow the process from the consumer's initial knowledge of a lost or stolen access device or unauthorized account activity through final resolution.

Critical Information to Obtain and Document Upon Notice of an Error

Date on which customer identified that card was lost or stolen or that unauthorized transactions were conducted

Date on which the customer notified the bank of the lost or stolen card or unauthorized transactions Date on which the periodic statement was sent that showed the 1st unauthorized transaction Was notification oral or written? If the notice was written, was the account credited within 10 business days of receiving notice? If the notice was oral, did the bank advise the customer of a requirement to provide written notice

within 10 business days? Types and amounts of errors and/or unauthorized transactions Account number(s) affected Start Date of Investigation Date of provisional credit Date on which investigation was completed Resolution (brief summary) Was provisional credit revoked? Was provisional credit made final? Total consumer liability (calculation should be documented in accordance with table on Page 4) Bank loss Date of consumer notification of resolution Form of consumer notification of resolution

REGULATION E | DISPUTES & ERROR RESOLUTION

Is it an error?

If YES, Continue.

Was the error reported within 60 days of the transmittal date of the statement in which the error first appeared?

NO. No investigation required.

YES. Is the notification oral or written?

WRITTEN

ORAL

Is account credited within 10 business days of receiving error notice?

Bank can require written notification within 10 business days if it so advised the customer when notified of the error. If confirmation is not received

within 10 business days, the bank must still investigate promptly, not to exceed the required

time limits below, but won't have to credit the account.

NO

YES

Investigate error promptly ? not to exceed 45 calendar days1

Investigate error promptly ? not to exceed 10 business days2

Notify customer of provisional crediting, orally or in writing, within 2 business days. Give customer full use of funds.

Error Occurred Error Did NOT Occur Error Occurred Error Did NOT Occur

1. Make correction within 1 business day after determining that an error occurred

2. Inform the customer about the correction, including a notice that a provisional credit has been made final***

Mail or deliver written explanation within 3 business days after concluding the investigation. Letter must let customer know that he or she has the right to see the bank's error documentation.

1. Make correction within 1 business day

2. Inform the customer about the correction and that the provisional credit has been made final

Within 3 business days after concluding the investigation, bank must notify customer:

1. In writing, that it has determined no error occurred

2. Orally or in writing that it has debited the customer's account the amount of the error

3. Orally or in writing, that it will honor transactions against the account for 5 business days after oral or written notification.3

4. In writing, that it will mail or deliver, upon request, bank's error documentation

1 Not to exceed 90 calendar days for new accounts, transactions not initiated within a state and POS debit card transactions 2 Not to exceed 20 business days for new accounts 3 Does not apply if account was not provisionally credited because customer failed to provide the required written notification within 10 business days

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REGULATION E | DISPUTES & ERROR RESOLUTION

CALCULATING CONSUMER LIABILITY

Event Loss or theft of access device Loss or theft of access device

Loss or theft of access device

Timing of Consumer Notification to Bank Within 2 business days after learning of loss or theft More than 2 business days after learning of loss or theft

More than 60 calendar days after transmittal of statement showing 1st unauthorized transfer made with access device

Consumer's Maximum Liability

Lesser of $50 OR total amount of unauthorized charges

Lesser of $500 OR the sum of: $50 or the total amount of unauthorized transfers occurring in the 1st 2 business days AND the amount of unauthorized transfers occurring after 2 business days and before notice to the bank

For transfers occurring within the 60-day period, the lesser of $500 OR the sum of: Lesser of $50 or the amount of unauthorized transfers in the 1st 2 business days AND the amount of unauthorized transfers occurring after 2 business days

For transfers occurring after the 60-day period, liability is unlimited (until the bank is notified)

Unauthorized transfers appearing on periodic statement (no use of access device)

Within 60 calendar days after transmittal of the periodic statement

No liability

Unauthorized transfers appearing on periodic statement (no use of access device)

More than 60 calendar days after transmittal of the periodic statement showing the 1st unauthorized transfer

Unlimited liability for unauthorized transfers occurring 60 calendar days after the periodic statement and before notice

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