When is it acceptable to use a police report. I know it be unacceptable to require a police before a Reg E investigation is recorded and started. Requiring the debit card holder to go through hoops before an investigation is started is contrary to the purpose of Reg E to investigate errors. How could a police report be used to determine if a fraud claim is legitimate once an investigation has started and the Reg E clock has started?

It has no use at all in determining the legitimacy of a claim. The fact that I file or don't file a police report does not prove that the transaction is or isn't authorized.

Some institutions ask for police reports thinking that it will somehow dissuade customers from making false claims. If I'm willing to make a false claim to a federally insured institution, why would I have any greater reservations about making a false claim to law enforcement?

That being said, some business owners may not be willing to provide security tapes to the bank whereas law enforcement may have more success in working with a merchant if they have opened an investigation.

I agree with Brian that police reports should not have any use in determining the legitimacy of a claim. From auditing other financial institutions who had issues with requiring police reports, I wouldn't even have my staff "recommend" a police report. I have seen first hand how a "recommendation" turns into an actual requirement when front-line staff are talking to customers, or worse - being secret shopped by examiners or auditors.

I have heard of banks making it known to customers that they will be filing a police report for every claim over a certain amount.