Can the institution deny claims where a client is unwilling to tell us how their PIN was compromised and cash withdrawals are made with their card that was supposidly never out of their possession? I read "Supplement I to Part 205—Official Staff Interpretations: 6(b) Limitations on Amount of Liability
2. Consumer negligence & 2(m)however, a client will not call the bank to say they revoked authorization as in most cases they do not know they are supposed to do that. In the cases we are seeing is when they state they do not know how the user obtained their PIN.

Since the regulation and Commentary are crystal clear that you can't increase the consumer's liability for unauthorized transfers based on the fact the consumer has written his/her PIN on the card, the how and why of the PIN compromise isn't really something the customer has to know or even should.

Remember, in skimming scams it's often the case that micro cameras have been used to capture key sequences so that the thief has both the mag stripe data and the PIN. That's not your customer's fault, and it's not his problem when it comes to working on his claim.

Agree with this, but I'm intrigued by the OP's use of the word "unwilling" instead of, say, "unable".

Has your client given you reason to believe that they are aware of the circumstances? And you think this additional info might give you what you need to deny?

Has it been your experience that there have been cases where these types of claims have been denied through investigation if there has been no additional reports of skimming on the machine(s) in question?

Bobby, in some cases the client will state they don't know or will just be silent when we ask if they have any idea how their PIN was compromised. Makes getting the facts more difficult to support either decision.

Gotcha. I inferred that a client said something that led you believe there was more to the story. I was interested in how you were going to proceed.

Thats the problem, they are very vague, saying they do not know, then change the story to they don't remember. Makes it difficult for the investigator to believe that the client did not participate and is just asserting there is an error to get the money, which unfortuately results in a loss to the bank.

They may believe that if they admit that the PIN was in the wallet or on the card, they'll have more liability.