A customer used Venmo to buy an Xbox from another person and has not received the Xbox and that person has now deleted their Venmo account.

Venmo is a P2P app used to transfer money to/from people you know and the terms and conditions/users agreement states that you cannot use a personal Venmo account to purchase concert tickets, electronic equipment, sneakers, watches, etc. from other personal accounts.

The person selling the Xbox, did so from a personal Venmo account and not a Merchant Account; therefore, the bank does not have chargeback rights through MC. Are we required to give him his money back since he did not comply with the users agreement?

The customer authorized the transfer and was charged the correct amount. This transaction does not meet the definition of an electronic funds transfer error. As you already noted, there are no chargeback rights for 'merchandise not received' since the customer did not make the purchase direct from a merchant using the debit card.

In this case, the customer received the requested service from the merchant. The customer asked Venmo to transfer money and Venmo did so.

The bank can deny a Reg E claim on the basis that the transaction does not meet the definition of an electronic funds transfer error.

Thank you Brian. That makes perfect sense. I appreciate your response.

Buyer beware. I completely agree with Brian. As a side note, why do customers feel that the bank should eat the loss because they made a poor decision? The bank did nothing wrong.

Yes! I agree Andy.