Withdrawals at the ATM & the Compromised PIN
by John Burnett, BOL Guru Guru BIOS
Question: I have a customer that is disputing 4 ATM withdrawal transactions totaling over $800.00. He states he did not do the transactions, but his ex-wife knows his PIN number and the card is not in his possession. He reported the dispute within 2 days. He says he will file a police report. He has compromised his PIN number since he stated his ex-wife knows it, but he did not do the transactions. I am trying to determine the liability here. Is he liable for the transactions?
Answer: The fact that he may have compromised his PIN to his ex-wife may be a matter you'll want to take up when you decide whether to reissue this guy's card, but it really has no bearing on his liability.
If he gave the card to his ex-wife with the authority to use it, and she has not returned it to him, then, if she did the withdrawals, he cannot claim lack of authorization (see 12 CFR 205.2(m)), unless he notified the bank of the fact that she had the card and no longer had authority to use it.
If, however, he never gave her the authority to use the card, and you believe that he didn't make the withdrawals, the transactions appear to be unauthorized and your customer is due back his money, less the amount that was withdrawn (up to $50) within 2 business days of his learning of the loss or theft of his card.
It has been written in Bankers' Threads scores if not hundreds of times, consumer carelessness or negligence does not affect the consumer's liability under Regulation E for unauthorized EFTs.
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