Let's say we have a customer who claimed his card was stolen, and then returned, with several ATM withdrawals made in between. Let's also say that the customer's story is full of holes and contradicts itself and other facts about the transactions.

How does this factor into the unauthorized transfer liability section of Reg E? Can we just deny the claim altogether and argue that this section of Reg E does not apply since it's not an "unauthorized electronic funds transfer" or should we approve the claim, and then take the customer to court to dispute the unauthorized aspect of it. (of course, in this scenario, before crediting the customers account, we'd first *ahem* remind the customer that since we are now the ones with a loss we can challenge the unauthorized aspect in court and there are possible criminal charges at risk.)

Basically, how do you handle it when you are confident (enought to be willing to prove it in court) that a customer is lying about fraud.

First you register for my A-Z of Reg E webinar in mid-April, http://www.calendarwiz.com/calendars/pop...ingconnect&

Then you look at the claim. The burden is on you, but there is no "proof beyond a reasonable doubt" requirement. You come to a conclusion you can defend to the consumer, regulator and a court if necessary.

Can you show that your customer did the transaction, approved it, or benefited from it? Is it an error as defined in Reg E, § 1005.11? Is this a consumer and consumer account?

You may chalk this up to a lesson learned and also ask the customer to move their account after you refuse to reissue another debit card.

http://www.bankersonline.com/regs/12-1005/12-1005-011.html

Conservative answer: How can you know for sure the customer is lying. I have tons of stories where bankers thought there's no way that could happen to only find out later the customer is right. For instance, before people understood skimming, bankers would argue "how could someone use your card if it's always been in your possession?"

Reg E basically says they are innocent until proven guilty. If you prove it was truly authorized, deny the claim. If you can't, honor the claim. This doesn't mean you have to reissue a card to them or that you can't close their account.

Aggressive Answer: Since they are turning the claim over to you, you have the right to investigate. If it's truly a criminal act, ask the customer to come in so you can investigate. Have the police come and take a report - part of your due diligence.

Bank’s may certainly request a customer's cooperation in the investigation and can even suggest a police report be filed but it can't be a condition to starting an investigation or granting provisional credit. Banks can turn the transaction over to the police for investigation and they may require a report to be filed, but the bank cannot tell the customer they have to file a police report to make a claim with the bank.

Oh, I forgot. You need to register for Andy's webinar. That just goes without saying.