We received a dispute from a customer. He has disputed several ATM withdrawals on two separate, but consecutive days. All transactions were done at the same location. The customer stated that someone took the card out of his wallet while he was sleeping and then returned it.

However, we have noted that in between these two days, the customer did one transaction using his card (we obtained signed reciept). After we informed him of this fact, he said that someone had taken the card out of his wallet while he was sleeping - twice - and then put it back.

Do we have a leg to stand on for not refunding his money. We have tried to get a copy of the picture at the ATM that was used, however we will be unable to receive due to technical difficulties.

Help!

Reg. E defines unauthorized as usage of the access device by someone without "actual" authority AND for which the consumer receives no benefit.

Also from the commentary:
2. Authority. If a consumer furnishes an access device and grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given, the consumer is fully liable for the transfers unless the consumer has notified the financial institution that transfers by that person are no longer authorized.

Your obligation to investigate the claim is not limited to the ATM information. Reg. E does not prohibit asking the consumer questions, though tred lightly and always be aware of the "chilling effect" often cited by the FED. It is assumed that giving someone authority once is a continuing authorization unless the customer takes this step (which most never do). You are within the allowance of Reg. E to ask about those he has given previous use of the card. If he did not notify you about revoking that authority, you MAY be able to disqualify the claim.

Just because the consumer has an explanation does not mean it is a valid one. Avoid trying to prove the transaction is authorized; instead focus on whether or not the claim qualifies as a Reg. E claim for unauthorized transaction.

Just to say what Grodsky said in a diff way.

1. He has a valid claim under Reg E - be sure you document as usual and give him the provisional credit as required.
2. You investigation of this claim is basically what you are asking about. Sure you can play detective and try to prove him wrong.
3. But without the ATM Pictures showing him - - - - I don't think you have any evidence to deny his claim
4. If he continues to "abuse" the Claim Process, you might consider not giving him a debit card. It is a right and not a privilege that must be extended to every account holder.

"Reg. E defines unauthorized as usage of the access device by someone without "actual" authority"

Your bank should have been notified if this person had the authority and was permitted to withdraw funds at one time. You were not notified and you also were not notified that this person no longer had authority to use the card. This is why i would deny the claim. I would also let this person know that if he gives permission to someone else in the future that if you are not notified the card owner assumes responsibility. This was an actual reason for denial at our bank. He should get the message.

PS

I know i'm not a guru, this was from past experience.

If this was an ATM transaction, I'd ask how the person obtained the PIN. Then I'd go from that point and talk about his "authorizing" the transaction (once given and not revoked is authorized). If he is one of those folks that write their PIN on the card, then that won't help you. Sometimes if you talk about liability in giving someone the PIN and hence authority to make a transaction, they will come clean and they will say they know who did it or who "probably" did it.

I wouldn't waste a lot of time on this and I would:

1. Give him his money.
2. Close the account.
3. Move on to more profitable adventures.

We are going to give him his money ($1,000+) although reluctantly. The account is not being closed by the branch AND they gave him a new debit card. I'm assuming you can guess how I feel about that.

Apparently they believe in pouring gasoline on a fire that is already burning??? I would kick this way above the "branch" level.