Reg. E Liability - PIN on Card
by John Burnett, BOL Guru Guru BIOS
Question: What is the bank's liability if a customer writes their PIN on the back of their debit card and their roommate creates unauthorized ATM withdrawals? The customer contacted the bank more than 3 weeks after the first transaction wanting his money back.
Answer: There are two issues here.
• PIN on card. Regulation E has been interpreted consistently and very clearly by the Fed to say that a consumer's negligence (even gross negligence) in writing a PIN on, or carrying it with, an access device cannot be used to shift the burden of unauthorized EFTs back to the consumer. So the PIN on card question is a red herring.
• Delay in notification. The consumer's liability calculation starts with the day on which the consumer learned of the loss or theft (or in this case, misuse) of his card. We don't know when this consumer learned his roommate had "borrowed" the card. If the consumer contacted the bank within two business days of learning of the roommate's duplicity, the consumer's liability is capped by §205.6(b)(1) to the lesser of $50 or the amount of unauthorized EFTs occurring before he notified the bank.
We're missing a key piece of information we need to determine the limits of the consumer's liability here: When did the consumer first learn of the roommate's nefarious deeds?
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