Let me correct something in the original post. The debit card - pull yours out now and look at it - most probably, very likely, and has about a 99.9% chance of saying that card is the property of the bank. The consumer doesn't get an option of losing it and should consider that the bank has no obligation to reissue. Also, the collection agency just doesn't want to give back $50. I'll bet they absolutely can do it.
The customer has a valid claim based on the above description. The collection agency should be forced to refund the bank. DO NOT close your claim until that is settled unless your Reg E period expires. You pay the consumer, and take the credit when it comes back and your investigation is still open. You issue a new card and tell the consumer that a recurring claim may result in no new card being issued.
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell