The Security Section has a Question and Answer on ATM Robberies. It states that the bank would not have to reimburse the customer but I was wondering what regulation /code this interpretation is based on. Reg E? Thanks for your help.

I think someone had a wishful lapse. Look at the definition of an unauhorized transfer. This can't be excluded unless the customer is in on it.

From the commentary:
2(m) Unauthorized Electronic Fund Transfer

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.

4. Forced initiation. An EFT at an automated teller machine (ATM) is an unauthorized transfer if the consumer has been induced by force to initiate the transfer.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

Andy is correct. The bank is obligated to reimburse the customer for all but $50. However, as the Q&A states, I'd recommend reimbursing the $50 also, as the reputation risk issues greatly exceed $50.

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Opinions expressed are my own, and do not necessarily reflect those of my employer.