Used to dealing with about two to 10 customer transaction disputes per week, employees at Moorefield, W.Va.-based Summit Community Bank in the summer of 2011 found themselves inundated with 400 claims of fraudulent charges by bank customers.
Turns out criminals had stolen debit card numbers by hacking into the systems of a small movie theater chain and manufactured fake (or "cloned") cards, which fraudsters then took to New York and used to purchase Xboxes and other gadgets they later converted to cash by selling the items on eBay. The sophisticated scam occurred simultaneously in states where the cinema chain had screens.
A deluge of fraudulent charge claims poured in from Summit customers. The single employee assigned to track disputes via spreadsheet was immediately overwhelmed; so were the people reassigned to help her: They couldn't keep up tracking the cases on paper, nor could they type up letters fast enough to inform customers they were receiving provisional credit.
Internal auditors at the $1.4 billion bank dinged Summit for falling out of compliance with Reg E, which requires that banks finish investigations within 10 days of being told of a disputed charge. Banks must let customers know within three days after completing a transaction probe whether they've been made whole or not, and provide provisional credit to customers' accounts if investigations will take longer than 10 days.
A serendipitous email from Centrix Solutions, the bank's positive pay system provider, arrived shortly thereafter in the inbox of Summit's operations chief, saying Centrix was launching a Reg-E dispute tracking system called CentrixDTS. But only one other bank had so far used CentrixDTS. So a guaranteed money-back agreement was forged in which Summit would test the product. After Centrix agreed to make various fixes to the system to accommodate Summit's dispute management desires, the vendor and bank focused on getting the platform deployed, which they finished doing in September.
Now the workflow in Summit's dispute procedure is electronic. So users are better able to see where they're at in the process. The system keeps track of various time periods within which the bank is required by regulation to complete certain tasks. And disputes can be processed over the phone. The old way required customers to come into the bank and fill out a seven-page form. Plus, employees are guided through the dispute process by the system.
"Now when a customer comes in to dispute a transaction, we're able to complete the documentation online," says Scott C. Jennings, COO and senior vice president at Summit. "If a customer signature is not required, which it's not in three-fourths of the disputes we do, the customer service representative can take the information over the phone and give it to our backroom to process. In most cases we're giving provisional credit to the customer that same day, or the next day, whereas before it would take us four or five days."
Follow-up is also built into the workflow, so if an employee forgets to get a customer signature when it's required, backroom personnel can spot the error and send emails to remind staff to contact the customer and get the form signed.
Back office employees monitor the activity on their computer screens and alert frontline staff to tasks needing completion. They can also make notes via the system that might say, 'Waiting for this document from the customer' or 'Notified the CSR.'
"Prior to this, we would fill out one of our electronic forms on our Intranet site and our backroom staff would work it the next day after the document came in," Jennings says. "But that made it a nightmare to keep up when there were a lot of disputes. Now any of our backroom staff can log in, or I can log in myself, to see where a dispute is. I don't have to go and talk to this one person to figure out where we are in the process."