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#1851616 - 09/12/13 06:50 PM REG E - Card information saved to device.
TruthNTime Offline
Member
TruthNTime
Joined: Dec 2011
Posts: 84
Texas
Hello Everyone!

Let us start by saying a consumer owns an electronic device, and that device is connected to a service provider such as Amazon Market Place, and they have a debit card saved to the account on that device.

If they hand that device to little Johnny and tell him to have fun, and little Johnny gets into their account because all the passwords are saved and he can log in with no challenges, would any charges incurred be unauthorized?

As a totally separate example, what if they told little Johnny that he could use their card information to purchase a book or service on said device, but Johnny continues charging through the provider because the card info is attached to the account that was opened for him. Now grandma sais she did not authorize the other charges.

In both cases I feel like Johnny would be exceeding the authority given, and the charges would NOT be an error under REG E.

When you permit someone to go and play with a device with saved card information you are authorizing their access to current features available. This is not a stolen device with saved information, rather permission was given to use the device. (Consumer may or may not have considered the password is saved, or that the individual might buy online content.)

I don't presume to be right about this but I know some of you must have dealt with, and have an educated and experienced opinion/answer about these scenario's.

Thanks in advance for help and consideration.
Last edited by TruthNTime; 09/12/13 06:53 PM.
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Robert R.
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Beaumont, TX

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eBanking / Technology
#1851883 - 09/13/13 03:14 PM Re: REG E - Card information saved to device. TruthNTime
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,685
Illinois
In the case of an authorized individual exceeding the authority given, you are correct that all additional charges are considered authorized and not covered under Reg E. See the staff commentary to 1005.2:

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.


Now for arguements sake, let's say that Johnny stole the phone and grandma didn't bother to have a password on it. Who's liable?

Since Amazon, Paypal, Google Wallet, etc. issue the customer an access device in the form of a phone app or ID $ password, or in some cases a physical card that can be used to access their checking account, they meet the definition of an electronic transfer service provider in 1005.14. In these cases, the transfer provider has its own dispute resolution procedures and is responsible for the investigation. The bank is only required to refund any fees that are charged and provide copies of statements to the provider if they ask for them.
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Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
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#1852175 - 09/13/13 09:04 PM Re: REG E - Card information saved to device. TruthNTime
TruthNTime Offline
Member
TruthNTime
Joined: Dec 2011
Posts: 84
Texas
Thank you Brian. It is good to realize that those offerings described (password/id, phone app) place the actual investigation on the 3rd party.

On another note, I look forward to you VISA class!
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Robert R.
Fraud Specialist
Beaumont, TX

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#1852188 - 09/13/13 09:36 PM Re: REG E - Card information saved to device. TruthNTime
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,685
Illinois
"See" you on the 25th!
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Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
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