We had a customer that used a merchant, Techfix.com, to fix an issue on their PC. They received a phone call last week from someone that said that there was an issue with the downloaded file, and they were going to refund their money. The catch was, they had to set up a Western Union account to get the refund. The customer set up the Western Union account and gave the scammer the information expecting a credit. However, they received two charges for $325.00 and $226.00 from Western Union, and the scammers got the money. My question is, since the customer set up the Western Union account and gave them the info, is this considered a Reg E dispute? The customer willingly gave out their info, even though it turned out to be a scam.

Official Interpretations to 1005.2(m)--I'd say unauthorized EFT because the information was obtained through fraudulent means. Your customer is gullible, but probably would be covered.

However, based on your description of the incident, this appears to be covered by 1005.14 and your customer should be placing the complaint with WU.

Could you please elaborate, I am not familiar with this?

Actually, my reference to 1005.14 was incorrect because WU didn't issue your customer an access device that would debit his account at your bank. So if your customer enters a claim with you that a transfer from his account to his account at WU was unauthorized, you will have to handle the claim under Regulation E sections 1005.11 and .6. In doing that, if you contact WU to determine whether your customer gave WU the authorization to transfer funds from his account with you, my guess is that WU will be able to provide documentation of such an authorization. That's how the scam works. WU believes it gets valid charges to the account with WU (these are the charges initiated by the scammers who said they would credit the WU account), and debits the account with your bank to replenish the balance of the WU account, per whatever agreement they have with your mutual customer.

If WU does document that authorization, you can deny the claim under Reg E, and your customer will have to try to get his money back from WU under a claim that the charges to his account there were not authorized. That account would also be covered by Regulation E, but the claim would be WU's problem to resolve.

Follow up per Debit Card Dept.:

We gave the customer a provisional credit, but we are still processing the dispute. We are unable to do a chargeback to Western Union and recover the funds. I have learned since looking closer at the charges that they were made with the customer’s PIN. The customer was asked if they gave the merchant the PIN and she said that she did. Now, we are dealing with a PIN debit that was not routed through Visa. I think that we could prove that the customer was negligent in giving the merchant their PIN and take the money back. Then they will have to file a complaint with Western Union. What do you think?

I'm thinking that it still qualifies as unauthorized because of the following and should be handled accordingly:

2(m) Unauthorized Electronic Fund Transfer
3. Access device obtained through robbery or fraud. An unauthorized EFT includes a transfer initiated by a person who obtained the access device from the consumer through fraud or robbery.

So then would it fall under the loss/stolen access device rules for consumer liability-correct?

I think we have another similar situation. Was my final conclusion above correct?

I’m a little confused by how this transaction cleared the customer’s account at your bank:
Was the transaction a PIN or a PUR? And it came through from WU, not the tech company, correct?
Are you saying she gave out her debit card PIN to WU, or some sort of PIN to her WU account?
(Not that this would determine liability, I just find it confusing).

If the transaction was a PUR and card-not-present, then you may have chargeback rights (I would check with your processor or whoever handles chargebacks for your bank). In any case, you should be able to submit a receipt request to try and determine if WU had authorization to debit your customer. If there is some sort of agreement that states they can debit and credit her account to settle her WU account, then I would say the dispute becomes between her and WU.

I would be careful with two items here:

>Denying a claim for "customer negligence" - review the official interpretation of section 1005.6. I would approach this not from a negligence perspective, but try to confirm whether the customer conducted or authorized (by way of agreement) the transaction.

>Lost or stolen access device. Again, in the official interpretation of section 1005.6, you can’t use the fact that unauthorized debit card transactions cleared the account as conclusive evidence the customer was aware their card was lost or stolen. I could be going a bit too far on the side of caution, but I only consider a card as lost or stolen if the customer tells me they realized their card was physically missing, at which point I ask: “when did you realize it was physically missing?” and use that to determine the $50 lost/stolen access device liability.

Hum. dang thing won't let me edit my post, but the last sentence above should read "... and use that to determine between the $50 or $500 lost/stolen access device liability."

Without knowing all of the facts -- and they appear to have changed -- there's no way I could suggest how this has to be resolved. If the OP has the stamina to restate the case in full, I'd be happy to offer an opinion.