First, let me just explain that REG E is new to me. I have read the REG and searched, but still can not find an answer. With that being said, here is my situation/question.

We have a customer that claims she lost her ATM card and is disputing a withdrawal. I was told that because a card and PIN had to be used for this transaction that there is no chargeback rights available. What exactly does this mean? The customer brought this to our attention on the day the unauthorized transaction was posted to her account. She did not have the PIN written on the card and thinks that it is possible that the person saw her enter her PIN when she made a purchase. Do we have to credit her for the disputed amount?

Unfortunately, it sounds like you must reimburse the customer. Your decision must be based on a reasonable investigation. Chargeback rights between banks have nothing to do with whether a customer's claim of unauthorized transactions is valid. That would be something to pursue under different regulations (UCC I believe). It was mentioned in a BankersOnline webinar I attended a couple of years ago: "Reg E is not fair [for banks]." So true.


Check out the banker tools on this site for some good Reg E stuff. If you also search these threads for "+unauthorized +transaction" you will probably find some good discussions as well.

Based solely on the information you have provided, it would appear the consumer has asserted a valid claim under Reg. E. You are not prevented from reviewing security camera footage or account history to determine if this is a transaction type the consumer normally engaged in ($500 every Friday for the past 6 months, etc.) and therefore a valid transaction. However baring that, the claim appears to be valid.

That is what I thought. Thank you!

The customer has some liability ($50) since it was a PIN based transaction, because it appears they notified the bank within the required timeframe.

"No chargeback rights" means just that. When a valid PIN is entered into a terminal it in effect relieves the terminal owner of having to ID the cardholder any further. The terminal owner did what it was supposed and dispensed the money in good faith. If we are all allowed to chargeback fraud on ATM's none of us would accept the others cards at our terminals. We would have no protection.

It sounds like she reported it timely to prevent more loss, that is a good thing. Did your customer file a police report? We had a discussion a while back about how this is NOT a REG E requirement..but as a FI it does add some credability to her claim.

I LOVE REG E!!! Whoo hoo...no really I do.

Your question is already answered but I'll ensure you add Banker Tools Reg. E section to your resources here.