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#2246862 - 12/23/20 02:51 PM Debit Card Dispute Customer in Jail
bande Offline
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Joined: Jul 2013
Posts: 48
We were notified by a family member in late November that one of our customers was in jail (since August). Per the family member who was not on the account, someone was using the customer's debit card. The bank did not release any information as the family member was not on the account, but given the nature of the charges, the card was restricted from allowing further transactions.

This week, the customer from jail sent a copy of his statements for Sept-Nov with a note that he had been in jail since August 15. Per his note, a woman was supposed to be watching over his stuff, but was "instead seeing how much she could steal". He goes charge by charge to indicate authorized or not authorized. In September the only authorized charges are the inmatessales.com and jailfunds commissary. At some point she was supposed to turn over his wallet and keys to the customer's brother, but the customer states the woman wrote down his card number before she did so and was using the card online. Based on ATM footage the brother does have the card in his possession by October 6.

I am trying to determine what the customer authorized. I believe that since he left her in possession of the card to "watch over things" that all the charges (mostly chip/pin) are authorized until the card is given over to the brother. At that point, since the woman allegedly wrote down the card number, the online charges in October and November become unauthorized. Is my thinking correct or are all the charges until the brother has the card unauthorized?

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#2246866 - 12/23/20 03:17 PM Re: Debit Card Dispute Customer in Jail bande
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Notice was properly given by the family member - see 6(b)(5) - Comment 2.

I think that you are correct under 2(m) - Comment 2, that until the card was relinquished, they would be covered under this comment. After the card was given back, I think any further transactions would have been unauthorized.
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#2246874 - 12/23/20 04:24 PM Re: Debit Card Dispute Customer in Jail bande
Valley girl Offline
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Joined: Aug 2014
Posts: 394
TX
Did the brother or the cardholder ever contact you to "revoke" her authorization to use the card?

2(m) Unauthorized Electronic Fund Transfer

1. Transfer by institution's employee. A consumer has no liability for erroneous or fraudulent transfers initiated by an employee of a financial institution.

2. Authority. If a consumer furnishes an access device and grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given, the consumer is fully liable for the transfers unless the consumer has notified the financial institution that transfers by that person are no longer authorized.

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#2246889 - 12/23/20 07:27 PM Re: Debit Card Dispute Customer in Jail bande
Skittles Offline
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Skittles
Joined: Sep 2002
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TN
I am still struggling with this and keep coming back to it. Asking someone to 'watch over your stuff' does not give them permission to use a debit card.

Obviously this is your bank's decision how you will handle it, but customer negligence does not come into play in Regulation E.

Just my 2 cents.
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#2246890 - 12/23/20 08:39 PM Re: Debit Card Dispute Customer in Jail bande
Andy_Z Offline
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Friend was given the card and authorized to use it, yes? She abused her authority and that is on the customer/inmate.

When the card was taken back and secured by the brother, friend's authority ended. The 2(m) cite above is moot at that point. There is no evergreen authority granted and now it's fraud on the friend's part. The device she used was not an authorized device so your customer has zero liability for those as well. You need an accurate date and time she gave up authority to start accounting for unauthorized transfers.

You may consider revoking access via a card at all to prevent this happening again, or decide if the account is worth keeping.
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#2246903 - 12/23/20 11:41 PM Re: Debit Card Dispute Customer in Jail bande
Valley girl Offline
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Joined: Aug 2014
Posts: 394
TX
I misunderstood - I thought she set up the inmatesales.com charges and that the card number became an authorized device at that point and that the authorization would continue until the FI was notified. Thank you for the clarification Andy Z.

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#2246907 - 12/24/20 02:23 PM Re: Debit Card Dispute Customer in Jail bande
InFairness, CRCM Offline
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InFairness, CRCM
Joined: Nov 2010
Posts: 919
USA
I don't think we can state with certainty that the friend had authorization to use the card. As Skittles noted, asking someone to 'watch over your stuff' does not give them permission to use a debit card.
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#2246911 - 12/24/20 03:04 PM Re: Debit Card Dispute Customer in Jail bande
CompliantOkie Offline
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CompliantOkie
Joined: Dec 2013
Posts: 425
OOOOOOklahoma
We have a similar situation at the moment. Customer opened the account, received a debit card. Customer claims she gave the card to her bf to "hold." Approximately a month later customer received a substantial sum of back unemployment. The account is then drained by ATM over about 2 weeks. 2 months later the customer states all the ATM charges are unauthorized. Customer states she never authorized bf to withdraw any funds. Customer claims she was unaware of the unemployment deposits. Customer also claims the teller wrote the PIN on the card envelope when the card was made.

So I am at a loss. The customer gave her physical card to someone else but there was no verbal authorization. I don't have a way to determine if the PIN was written on the envelope since the account was opened early this year. Anybody have opinions on this situation?

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#2246913 - 12/24/20 03:42 PM Re: Debit Card Dispute Customer in Jail bande
rlcarey Offline
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rlcarey
Joined: Jul 2001
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Galveston, TX
How much is the "substantial sum"? You know that while I know that Regulation E is totally to protect the consumer, at some point of time I really think that a bank needs to call "bull merde" on some of these situations. Were the ATM transactions the only transactions conducted with the card over this time period that the BF was "holding" the card for her? Do you have any ATM photos yet? Is she aware that you will press charges against the boyfriend and sue him to recover your monies? I think there are number of unanswered questions that need to be answered during the investigation.
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#2246914 - 12/24/20 03:43 PM Re: Debit Card Dispute Customer in Jail bande
Skittles Offline
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TN
'bull merde' - crack me up Randy!
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#2246918 - 12/24/20 04:31 PM Re: Debit Card Dispute Customer in Jail bande
CompliantOkie Offline
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CompliantOkie
Joined: Dec 2013
Posts: 425
OOOOOOklahoma
It's just over $16K. The ATM transactions are the only trans on the account. We can't get any of the ATM owners to cooperate which is becoming more and more common unfortunately. We have called her to ask additional questions but haven't heard back from her yet. The bf is an ex-bf now so I'm not sure the threat of legal trouble would sway her but we will still try. This is just a case where I'm trying to determine if giving him the card to hold with the PIN is implicit authorization. I'm about 50/50 on it.

And bull merde is exactly what I'd like to tell this future former customer.

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#2246925 - 12/24/20 04:57 PM Re: Debit Card Dispute Customer in Jail bande
RockChucker, CAMS Offline
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Joined: Jul 2013
Posts: 1,700
The Country
I recommend double checking to make sure the unemployment transaction(s) is intended for her and not a fraudulent one in someone else's name like the many that have been popping up.
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#2246928 - 12/24/20 05:23 PM Re: Debit Card Dispute Customer in Jail bande
CompliantOkie Offline
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CompliantOkie
Joined: Dec 2013
Posts: 425
OOOOOOklahoma
They're legit. They all came in her name and did not come in a lump sum. The look like legitimate back unemployment pay.

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#2247003 - 12/29/20 09:48 PM Re: Debit Card Dispute Customer in Jail bande
bande Offline
Junior Member
Joined: Jul 2013
Posts: 48
Thanks to everyone for your input. We did cut the card off when notified there were unauthorized charges. I know from the ATM footage that the brother had control of the card in October and November. The online charges are all unauthorized for those two months. We are working to clarify what authority was given to whom and when as the customer in his letter stated it two different ways. We have sent a letter to the customer in jail to have him clarify some questions, such as his exact instructions to the woman, who authorized the inmate sales charges (he marked authorized but those are normally not initiated by the inmate as they do not have the card). We will need to see those answers before making a decision about August and September charges. If he does not respond, we will proceed based on the information I have. Thanks again.

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#2247006 - 12/29/20 10:35 PM Re: Debit Card Dispute Customer in Jail bande
Valley girl Offline
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Joined: Aug 2014
Posts: 394
TX
Thank you for the update bande!

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#2284626 - 05/17/23 07:05 PM Re: Debit Card Dispute Customer in Jail bande
bthorguson Offline
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Joined: Feb 2017
Posts: 16
Bumping this discussion up. We have almost the same situation.

Man goes to jail in November and hands his wallet over to girlfriend He states she has PIN and has had authority to use his card before. While he is in jail until last month, she used his card on various items. He wants to dispute them. He also wants to dispute the ones for the Jail commissary and other Inmate payments.

We have been mailing his statement for the time he was incarcerated. Can we claim that he did not give proper notice to us and we also delivered statements during the time period?

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#2284630 - 05/17/23 07:16 PM Re: Debit Card Dispute Customer in Jail bande
rainman Offline
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rainman
Joined: Nov 2004
Posts: 3,237
You don't need to make any such claim. Deny his claim because the charges were not unauthorized per Regulation E. They were conducted by someone to whom he gave the card, the PIN and authority to conduct transactions.
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#2284638 - 05/17/23 08:06 PM Re: Debit Card Dispute Customer in Jail bande
John Burnett Offline
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John Burnett
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Cape Cod
Girlfriend has the card and the OK to use it, and cardholder did not notify the bank that he had rescinded that authority. And clearly he had to have given the jail commissary the okay to use the card number, plus he benefited from those transaction (regardless of what he may think about the quality of jail food.) I think his claim should be denied because the transactions were not unauthorized as defined in the regulation.
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#2285678 - 06/20/23 02:59 PM Re: Debit Card Dispute Customer in Jail bande
Eagle06 Offline
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Joined: Jan 2018
Posts: 22
Our customer gave permission to a family member to use her card to pay bills, purchase groceries, etc. The family member exceeded the authority given and made Cash App transactions. The customer is disputing the charges claiming she has never had a Cash App account. We realize that in this case the transactions are not unauthorized since the family member had permission to use the card; however, the customer stated the family member went to jail and that several of the transactions occurred afterward. I'm assuming he gave someone else permission to use the card and/or his Cash App account. Does Reg E cover the transactions that occurred after the authorized user went to jail, or is the customer still liable?

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#2285681 - 06/20/23 03:49 PM Re: Debit Card Dispute Customer in Jail bande
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Just because someone is in jail, it doesn't mean they lost access to cash app.
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#2285700 - 06/20/23 08:00 PM Re: Debit Card Dispute Customer in Jail bande
HappyGilmore Offline
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Posts: 19,844
Pulling people out of the ditc...
did your customer tell the bank they have rescinded authority for the family member to use the card? because that is when liability switches per Reg E. Reg E is silent on people going to jail...
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#2289037 - 09/25/23 05:21 PM Re: Debit Card Dispute Customer in Jail bande
Dodge Offline
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Joined: Mar 2010
Posts: 266
Bumping this thread...

Customer is in jail and the person the customer gave her debit card to use while she is in jail came in to dispute unauthorize charges on the customer debit card while it was in their care. We did not receive any notification from customer that they were going to jail and they authorize this person to use their card. We didn't provide provisional credit because the customer did not dispute the charges. Could we deny the dispute since the customer did not notify us about allowing another person to use their card?

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#2289040 - 09/25/23 05:44 PM Re: Debit Card Dispute Customer in Jail bande
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
6(b)(5) Notice to Financial Institution

2. Notice by third party. Notice to a financial institution by a person acting on the consumer's behalf is considered valid under this section. For example, if a consumer is hospitalized and unable to report the loss or theft of an access device, notice is considered given when someone acting on the consumer's behalf notifies the bank of the loss or theft. A financial institution may require appropriate documentation from the person representing the consumer to establish that the person is acting on the consumer's behalf.
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#2289066 - 09/26/23 05:06 AM Re: Debit Card Dispute Customer in Jail bande
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,694
Illinois
The fact that the customer shared their card with a third party does not eliminate their Reg E protections. 1005.2(m) notes that anything the third party does the customer is liable for, but if the third party loses the card, or if the card information is compromised, Reg E still protects the customer, and you must still follow 1005.6 when calculating liability and 1005.11 to investigate and provide provisional credit.
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