We have a customer who has unauthorized transfers on his account going all the way back to April and we received
notification of the unauthorized transfers on August 4. As I understand Reg E, he is liable for the lesser of $50 or the unauthorized transfers during the first 60 days after the first statement on which the error occurred. Total unauthorized debits during the 60 day period are $4,400. Our customer does not want us to credit him with this amount because the "unauthorized" person was his "troubled" wife....are we required to credit him with the money? I'm thinking yes???

If the transfers in question were made by the depositor's wife, your customer has a choice to make. Either he decides to pursue error resolution under §205.11, thereby ensuring that the bank will want to pursue the alleged thief (his wife), or he decides to, in effect, ratify the transfers, in which case they are no longer unauthorized.

In other words, he can either put in a claim that you must work, or not.

If he refuses to enter the claim, you should not refund the money. If he has entered the claim, you can decide the transactions are not unauthorized if the customer says so in writing. Otherwise, I believe you'd have to complete your investigation, which would lead to a credit to his account, and would undoubtedly lead to discovering that his wife made the transfers. Then you'd have to decide whether to prosecute her.

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Our customer does not want us to credit him with this amount because the "unauthorized" person was his "troubled" wife....are we required to credit him with the money?

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If he filed a claim and that is how you are aware of this, have him submit a notice withdrawing the claim and possibly stating that it was his wife and he does not consider these unauthorized.