Could a bank disclose that it does not accept PIN based disputes other than transactions that are predicated by force or duress or transactions initiated by a 3rd party that are no longer authorized by the consumer (account holder) and the consumer has notified the bank prior to the unauthorized transaction taking place? Is there any practicality in this disclosure?

Reg Provision:


(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.

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.

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.

Sorry, but if your customer wrote his PIN on the card - it was then stolen and used - the bank will still be required to reimburse.

This is from the commentary:

2. Consumer negligence. Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. Thus, consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer's liability for unauthorized transfers. (However, refer to comment 2(m)–2 regarding termination of the authority of given by the consumer to another person.)

And you haven't addressed the issue of fraud in which a PIN is obtained from your customer by fraud, which is required by the very wording that you copied into your post. See the commentary, #3, to 205.2(m).

You must also address the question of liability for unauthorized EFTs initiated with an unaccepted access device, such as a counterfeit card created from information gathered in a card-skimming scam.

Unauthorized PIN based transactions can occur through Skimming. Go to youtube.com and search for ATM Skimming. You'll be shocked.