Hi! I saw a thread on this topic but I couldn't find it again to add my question.

Is there ever a time a creditor can deny a cardholder's claim for unauthorized use?

If I am reading the reg correctly, if the card was accepted, we provided the liability limits disclosure, and we can identify the cardholder - we can assign liability - but is that $50 or is it liability for the full transaction amount because we have now identified the cardholder as making the transaction (thus it is not unauthorized). 1026.12(b)

It's late and I may be confusing myself, but I don't see where we can ever deny a claim for unauthorized use except as I have described above and that isn't really denying the claim, it's determining the amount of liability. Help!

Anytime you can prove that the transaction was actually authorized under Reg. Z, you deny the claim and the customer is fully liable. This is separate from any zero liability provisions under Visa or MC rules.

Thank you. So, bear with me please, does it even make sense to review all the transactions to determine Reg Z liability if MC/VISA zero liability comes into play? Let's say the cardholder is claiming 25 fraudulent transactions - do most banks check first under MC/VISA zero liability rules or Reg Z or do they do it concurrently? (Sorry if that is a dumb question - I am trying to figure out a process).

Randy's point is that before we can determine liability under either set of rules, we should answer the question, "Is the transaction truly unauthorized?" (e.g. perform an investigation.). If we are denying the claim because we determined that no error occurred, then we're done. The liability rules for V/MC and Reg E/Z apply to transactions when we determine an error occurred.

If the transaction(s) are unauthorized, look to Zero Liability first since it is the most restrictive. If Zero Liability does apply, I don't need to waste my time calculating liability under Reg Z or Reg E since it will be reduced to Zero anyway.

Thanks Brian.

They are wanting to deny the claim for a large amount of unauthorized transactions. The borrower is allegedly not being cooperative, but the regulation says you MAY deny based on lack of cooperation but doesn't say you must or you can. I'm not sure how to guide them.