We have a cardholder who is disputing a transaction for Hertz Rent A Car. She gave authorization for a car rental to a friend in March for a 3 day rental. The friend did not return the car and was arrested in June on unrelated charges. The vehicle was picked up the day after the arrest, which was 52 days late. Our customer was charged over $2000.00 due to the late return, towing expenses, etc. As far as Regulation E goes, we first thought because the cardholder gave authorization and did not notify the bank that the authorization was revoked, she would be fully liable. But, the contract with Hertz is in the "friend's" name and no where shows our cardholder's signature. We are just unsure how to proceed due to the circumstances. Any help is appreciated!

She gave authorization for a car rental to a friend in March for a 3 day rental.

That says it all. You don't give authorization for a "3 day rental" - you give authorization for the rental and all expense there of related.

I would deny the claim under Reg. E.

Yeah, authorization is authorization. If she gave the actual card number to her friend then the authorization is for life until and unless she tells you she has withdrawn that authorization. I'm assuming she either told you this person is no longer authorized or gave you the strong impression that she did this when she contacted your center to dispute the transaction.

If she gave it to Hertz directly and said only charge her for 3 days that's unfortunate. That's not how rental car contracts work and her card would be tied to that contract via her authorization.

This is not a Reg. E error.

Well, it is an error claim if it's delivered to you as the account holding institution. Depending on the timing of the claim, you may have to adhere to the error-resolution time constraints and notice requirements in section 1005.11. If she didn't make the deadline for filing under 1005.11, you still have to make a determination under 1005.6 as to whether the transaction was authorized, and respond to that claim. If you've determined that she authorized the transaction under Regulation E, make your notification, which should be in writing, close the claim file and move on.

Consider whether you want to retain her as a cardholder/depositor.

Thank you all! We revoked credit and denied the claim.