Our customer has a home equity line of credit with access to it available through a credit card. She admits she provided her granddaughter with the credit card and the PIN number and authorized her to make some withdrawals from the account through an ATM. However, she claims that the granddaughter took much more from the account than she was authorized to do.

Reg. Z 226.12(g) seems to be saying that, in this scenario, when trying to determine the grandmother's liability, we should be following Reg. E guidelines instead of Reg. Z. Am I interpreting this correctly?

Reg E states:

(b)(1) Account means a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes.

And

(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.