Learn More - Click Here!

Thread Options
#2078712 - 05/13/16 08:50 PM Reg E Unauthorized Use by Joint Account Owner
Banker 1025 Offline
Junior Member
Joined: Dec 2015
Posts: 28
We have been presented with the following scenario and are uncertain whether we must treat this as a dispute for Reg E:

Customer A and Customer B are joint owners on a checking account. A Visa check card is issued to Customer B only. Customer B gives the Visa check card to Customer A to make a purchase at a merchant. Customer A makes that purchase and then an second purchase with cash back. Can Customer B claim the second purchase and cash back are unauthorized when the person who made the purchase is a joint owner on the account and could have written a check to make the purchase or get cash?
Last edited by Banker 1025; 05/13/16 08:52 PM.
Return to Top
Operations Compliance
#2078735 - 05/13/16 10:29 PM Re: Reg E Unauthorized Use by Joint Account Owner Banker 1025
Inspector Offline
Gold Star
Joined: Apr 2016
Posts: 267
A bit of an odd one there since you have the joint owners. I think you would still treat it as a dispute since the consumer is asserting an "unauthorized electronic funds transfer" but from what you described I would not find in the consumers favor based on the commentary below.

Reg E Commentary:

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.
_________________________
Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.

Return to Top
#2078750 - 05/14/16 04:59 PM Re: Reg E Unauthorized Use by Joint Account Owner Banker 1025
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,310
Galveston, TX
Then cancel the card and close the account.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2078774 - 05/16/16 01:22 PM Re: Reg E Unauthorized Use by Joint Account Owner Banker 1025
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,486
Pulling people out of the ditc...
Quote:
Can Customer B claim the second purchase and cash back are unauthorized when the person who made the purchase is a joint owner on the account and could have written a check to make the purchase or get cash?


no, they gave them the device, unless they notified you prior to the 2nd transaction, they are on the hook. and why would anyone issue a check card to only one person on a joint account? bad practice.
_________________________
Providing alternative truths since the invention of time

Return to Top
#2078775 - 05/16/16 01:26 PM Re: Reg E Unauthorized Use by Joint Account Owner Banker 1025
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,630
Cape Cod
"Why would anyone issued a check card to only one person on a joint account"?

Perhaps the other joint owner said he didn't want a card. Maybe the account is joint with a minor (in a state allowing such accounts), and the other joint owner (parent) didn't ask for a card for the kid. There are a lot of reasons, and some of them make sense.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#2078778 - 05/16/16 01:56 PM Re: Reg E Unauthorized Use by Joint Account Owner Banker 1025
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,630
Cape Cod
One joint owner can't really argue non-authorization when the other joint owner is the "culprit." Each joint owner has the same claim on the funds in the account, and that isn't changed by the fact that one of the owners has an extra "tool" for using the funds -- the card issued with his or her name on it.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#2078908 - 05/16/16 10:10 PM Re: Reg E Unauthorized Use by Joint Account Owner Banker 1025
Inspector Offline
Gold Star
Joined: Apr 2016
Posts: 267
John - just to clarify for my self and possibly for the OP you would still treat this as a Reg E dispute but just not find in the consumers favor? Or are you saying that you would not process this as a dispute at all?

Thanks.
_________________________
Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.

Return to Top
#2079432 - 05/19/16 07:14 PM Re: Reg E Unauthorized Use by Joint Account Owner Inspector
Banker 1025 Offline
Junior Member
Joined: Dec 2015
Posts: 28
Yes, please clarify as to whether we should accept the dispute. Thank you.

Return to Top
#2079442 - 05/19/16 07:28 PM Re: Reg E Unauthorized Use by Joint Account Owner Banker 1025
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,630
Cape Cod
I'd start by simply telling the customer that "Sam made the withdrawal and he's a joint owner of the account with the same withdrawal rights you have. I you file a claim that Sam's withdrawal was unauthorized, we will have to process it, but we will deny it."

If the claim is filed, you have to process it. My investigation period would take about 5 seconds. The written notice to the customer from that investigation would have been something like "The transaction was completed by Sam, and he is a joint owner of this account, with the same withdrawal rights you have. We have decided the transaction was not unauthorized, and we won't be making an adjustment to your account. You can ask us for the documents (the account signature card) we used in making this determination."
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#2079446 - 05/19/16 07:33 PM Re: Reg E Unauthorized Use by Joint Account Owner John Burnett
Banker 1025 Offline
Junior Member
Joined: Dec 2015
Posts: 28
Thank you so much for the guidance John! Very much appreciated!

Return to Top

Moderator:  Andy_Z, John Burnett