BSAguy -- The regulation is pretty clear (I didn't say "perfectly clear") on the question of the cardholder who gives the card to an individual with authority to make transfers who exceeds the authority given. The consumer (cardholder) is fully liable for the transfers [completed by the other person] unless the consumer has notified the financial institution that transfers by that person are no longer authorized. [Definition of unauthorized EFT at §1005.2(m)(1) and comment 2(m)-2]
However, you can't use that to say that the "authorized person" can transfer that authorization to a third person. The son-in-law's wife (more simply, the daughter) was not authorized to use the card under the facts as you described them. If Mom wants to say that the ATM withdrawal for which you showed the photo was OK, that's fine, but anything else daughter did is unauthorized if you accept the facts as you have described them as true.
KLNesta -- Welcome to BankersOnline's discussion forums.
JustJean -- I like your reasoning.

But you didn't need to get that creative. The fact that he had permission to use the card was enough.