I know this has been discussed to death on here because we've been reading the threads on it, so I apologize in advance for asking this! But, after spending days reading and re-reading the rules, listening to webinars, etc. we've got ourselves twisted up and I just want to confirm my understanding of something.

Customer has unauthorized transactions in January 15, 2016. Statement sent January 31, 2016. Customer discovers the transactions November 30, 2016 and notifies the bank on December 1. Bank is liable for those transactions...doesn't matter that statement was sent so many months ago - discovery just happened. (Customer would be liable if any others occurred between Nov 30 and when he notified bank on Dec 1.)

Customer has unauthorized transactions in January 15, 2016. Statement sent January 31, 2016. More unauthorized transactions occur in the months that follow with the last one being on Jun 1. Customer discovers the unauthorized transactions June 15, 2016. Customer notifies the bank Sept 1, 2016.

*Bank liable for all of the unauthorized transactions from Jan 15 through March 31 (60 days from the Jan 31 statement).

*Customer would be liable for all of the unauthorized transactions from April 1 forward because timely notice wasn't given after customer discovered the issue, coupled with the fact that more than 60 days passed since the statement was sent with the first unauthorized transaction.

It would seem that the MC zero liability rules also "protect" the bank from the ones from April 1 forward because of the customer's negligence, particularly with not notifying the bank in that 60 day window. From MC:


Now, in terms of NACHA rules, IF there had also been unauthorized transactions that occurred in the last 60 days, we may be able to recover those for the customer, too but Reg E does not put the liability on the bank for those.

Correct, or am I way off base and just completely confused?

It depends on whether the transaction was the result of the loss or theft of an access device. I think your examples would work in that scenario, but not necessarily otherwise. Look at the commentary for 1005.6(b)(3)

Customer still has card in his possession. Yes, we've read Reg E and the commentary several times. Like I said, we've read so much we've got ourselves tied in knots now, particularly with the intertwine of MC and NACHA. Tried using Andy's handy dandy Reg E calculator and we are still not 100% sure the analysis above is right.