Under a Section 12(b) of Regulation Z, we seek to impose liability on a cardholder for unauthorized use. We have done our investigation and we think the cardholder's relative --a cousin -- committed the fraud. We know that the cardholder did not complete the transactions, but we do not know whether he benefited from them. We think, because of the relationship, the cardholder did benefit, but we have no concrete proof of this.

We want our cardholder to sign a sworn statement alleging that he did not participate in transactions or benefit from the transactions. We also want our cardholder to sign a release, authorizing us to provide our information to law enforcement authorities. Can we deny the claim if our cardholder refuses to sign statement? Can we deny the claim if our cardholder signs the statement but refuses to sign the release? I'd appreciate any thoughts you all would have on this.

It's been a long time since I dealt with credit card disputes but we (at a previous bank) use to require such an affidavit be signed. It served 2 purposes, it would indicate the cardholder's sincerity in the claim and if we later found out they lied we had them for fraud.

In cases where we had concrete proof of who committed the fraud we also made sure the cardholder understood that once we refunded the money it became our loss and we would criminally pursue the fraudsters.

Matt, Take a look at the Official Staff Commentary #3 for 226.12(b).

It states: "Reasonable investigation. If a card issuer seeks to impose liability when a claim of unauthorized use is made by a cardholder, the card issuer must conduct a reasonable investigation of the claim. In conducting its investigation, the card issuer may reasonably request the cardholder's cooperation. The card issuer may not automatically deny a claim based solely on the cardholder's failure or refusal to comply with a particular request; however, if the card issuer otherwise has no knowledge of facts confirming the unauthorized use, the lack of information resulting from the cardholder's failure or refusal to comply with a particular request may lead the card issuer reasonably to terminate the investigation."

Generally, the fact that the customer does not provide affidavits or police reports cannot in itself be used as a reason for denying the claim (e.g. "the reason we are denying your claim is that you did not sign/return the affdavit").