We have a customer who had several debit card transactions made in May and June of 2009 that they are now disputing. About that time, the customer moved and did not give the bank a new address. The statement showing the transactions was returned as "undeliverable".

Does the "60 days after the FIRST statement was sent" still apply if we know the statement was returned. Or, do they still have two business days after learning of the loss?

The transactions overdrafted the account, the debit card was closed, and the account was charged off.

The customer is entitled to claim the transactions were unauthorized (if that is what this is about) regardless of the Section 205.11 60-day rule, because the liability for unauthorized transactions rules are in 205.6, which has no deadline (it merely provides a framework for determining what the bank has to pay back -- if anything).

If you sent the statement to the most current address provided by the consumer at the time, you've satisfied the statement requirement and the day-by-day countdown in the 205.6 time line starts.

You do not have to follow the procedures and timing restrictions in 205.11 in your investigation to determine whether the challenged transactions were authorized. That means you do not have to provide provisional credit (which is good since the account is closed out).

If you determine that the challenged transactions were unauthorized, and can determine the date on which the consumer first knew the card was lost or stolen (if a card was involved), you now have enough to determine when the 2d business day after the lost card date and the 60th day from the sending of the first statement showing an unauthorized transaction. Therefore, you have enough info to calculate which transactions the consumer is not liable for and which the consumer is liable for, and you can apply the credit first to the amount charged off (excluding overdraft fees) and remit the balance, if any, to the consumer. If the overdraft fees were caused by the transactions refunded, you should remove them from the record of the charge-off.

Of course if you determine that the transactions were not unauthorized, you should notify the customer, and remind him of the charge-off.

Thank you. Your answer was very helpful.