Customer with sole checking/debit card gave boyfriend her card and pin to use frequently. They split up, he made an ATM withdrawal after they split with her card and she wants to dispute. Do we have a leg to stand on?

Yes. That is not an "unauthorized" transaction. See definition below:

(m) Unauthorized electronic fund transfer means an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. The term does not include an electronic fund transfer initiated:

(1) By a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized;
(2) With fraudulent intent by the consumer or any person acting in concert with the consumer; or
(3) By the financial institution or its employee.

1) By a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized;

She claims she couldn't notify us as this happened over the weekend. Can we still deny the claim?

I think that falls under the category of "not your problem". I suspect your ATM agreement prohibits sharing the card with another person anyway. She acted irresponsibly. There is usually a consequence to that. But let's here what the gurus have to say.

Acting irresponsibly doesn't necessarily negate the consumer's Reg E rights <i.e. PIN number on debit card>; however I tend to agree that she had given this person access and the PIN number. If they broke up how did he have her card? Also, did she try to contact the bank over the weekend?

A question...could she have called an after hours number to report her debit card as lost or stolen?

Yes. We do provide an after hours phone number for customers to report lost/stolen cards.

There you have it. I am back to "so sorry for your loss, not my problem".

Look further under the definitions:
2(m) Unauthorized Electronic Fund Transfer

1. Transfer by institution's employee. A consumer has no liability for erroneous or fraudulent transfers initiated by an employee of a financial institution.

2. Authority. If a consumer furnishes an access device and grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given, the consumer is fully liable for the transfers unless the consumer has notified the financial institution that transfers by that person are no longer authorized.

3. Access device obtained through robbery or fraud. An unauthorized EFT includes a transfer initiated by a person who obtained the access device from the consumer through fraud or robbery.

I have spoken with an attorney at the Fed and will maintain that there is no evergreen authority to use a persons card. The question here is did she give him the card, or did he steal it from her?

The fact that he had the PIN is inconsequential as she could have written it on the card and had no increase in liability. So why should she have an increased liability if she gave her PIN to one person, instead of writing it on her card for everyone to see?

If she gave the card and didn't take it back, authorized, if he stole the card without her knowledge, unauthorized.

Good point, Andy. I was following premise that she gave him the card. He could have stolen it when he left which is an entirely different situation. Thanks for clarification!!

The original post wasn't specific and I have seen claims both ways. The consumer feels they have been wronged, and someone should pay, why not the bank?

While I agree 100% with Andy's statement, it would be really helpful if the Fed Staff would publish an update to the Commentary to clarify that authority ends when the access device is returned to the cardholder's control, and if it's taken by the friend later without authorization, it falls under the "theft" rule.

However, the numbers (including the expiration date and three digit code on the back) on the card also are an access device if they are used for a card not present transaction (Internet, phone). Trying to figure out whether Andy's argument would apply if the card numbers were used without the cardholder's knowledge, after the card had been loaned to the individual making an Internet/phone purchase, makes my head hurt.

Some of the provisions and protections of Reg E would make anyone's head hurt. Revisions to the UCC to place more liability on the person that could better prevent a fraud or loss should be incorporated into Reg E as well. The very idea that someone can write the PIN on the back of a card and a subsequent loss be the responsibility of the bank is simply ridiculous. [careful not to fall as she steps down from soapbox]

I know i'm not the REG E guru by any means, i am trying to follow the logic in this language...seems that when she gave it to be used she had a responsibility to the bank to report the permission granted.


(1) By a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized;

Does this not imply that the institution actually should have been notified initially if permission for usage by Joe boyfriend was granted in the 1st place? Then if charges are made that the card owner did not agree to but didn't notify the bank that permission was revoked, those charges would not be considered unauthorized. Therefore no protection?

Am i making any sense at all?

Yes, you make sense, but the rule doesn't have to. There's no requirement that the issuer be notified of the authorization for it to be effective. It simply IS. The interpretation then says that to end the authorization, the consumer needs to notify the issuer. Except ... as Andy said earlier, if the card is returned to the cardholder, and later taken without OK, its use would no longer be authorized because the theft of the card trumps the authorization to use it. Nowhere in the regulation or commentary does it say that, but Andy and I both believe that is what the result would be if the bank got dragged into court. And Andy said he got agreement from a Fed Staffer.

As I said, life would be simpler if the Fed would put these important little unofficial opinions down in writing so we'd all benefit from them. And yes, the Fed ought to start tightening up on the consumer protections. It's not like consumers don't know that it's stupid and even irresponsible to write a PIN on their cards. And a lot has happened to EFTs since 1980 that the Fed hasn't yet addressed in the regulation, leaving us to feel our way around in the dark.

Definitely is dark, Reg E revision is way overdue without doubt. In the meantime pins on cards, card owners who believe in sharing and disputes galore!

"Nowhere in the regulation or commentary does it say that, but Andy and I both believe that is what the result would be if the bank got dragged into court. And Andy said he got agreement from a Fed Staffer."

Of course my stance has been to show me one court case where this has actually happened. I'm all for compliance as you know, but I am also all for banks making a profit. If someone wants to share their card and PIN with a deadbeat friend, I would view all transactions as authorized until notified. Once I have that fact documented in the investigation file, I don't really care how they remained in contact with the access device.

But that is just MHO. Of course I have been known to kindly let Mom know that little Junior was going to jail over the $200 unauthorized ATM withdrawal also once we got the film out of the ATM. It's amazing how many of these frivolous claims suddenly disappear.

The banks lose enough on the legitimate claims.

I have to confess, i also have been known to use a few filtering techniques

Of course the opinion I shared should be considered from the perspective that I had my banker hat on and not my compliance consulting hat.

same here Banker hat on, training hat off

I've also had mom and dad comment "jail will do him some good. This has to stop."

So don't bluff. If you intend to pursue it, say it and do it.