I have a customer who gave her debit card and PIN (written on a paper)to her stepson so he could buy cigarettes. Since the stepson's shorts did not have pockets, he gave the card and PIN (written on a paper) to his friend to hold. The friend withdrew $100 and then returned the card.

Does the bank cover the loss? I was leaning toward the cardholder being responsible since the card was never physically stolen. Rather, it was given by choice to the stepson and then from the stepson to his friend.

What do you think? Thanks for any input.

I don't believe that the woman in this case authorized her step son's friend to use the debit card, she authorized her step son. You might ask her to file a police report, but you can not require it. Inform her that the bank may seek recourse against the boy in this situation... she may choose to go through his parents, but that is her choice. If she wants to file unauthorized EFT you must comply.

I agree, but there may be one loophole here. The definition of "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:

a) 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;
b) With fraudulent intent by the consumer or any person acting in concert with the consumer; or
c) By the financial institution or its employee.

If the son's friend and the son were acting together when this "unauthorized" transaction occurred, you could say this is exempt.

I think that exception requires that the consumer be the one with fraudulent intent.

Thanks for the replies and insight. We refunded the customer her loss after the suspect would not admit to the crime and repay her directly.

Was the ATM in the store? If so, be sure to tell the suspect that you appreciate his help in answering your questions and not to worry, the location has an excellent surveillance system and you are certain the film will identify the individual making the withdrawal.