We have a prepaid card division that is getting killed by who we believe to be illicit actors gaming the Reg E dispute requirements. We have seen multiple examples where the actor will load anywhere from $600 to $3,000, conduct multiple ATM cash withdrawals, and then almost immediately dispute the cash withdrawals. We have received almost no help from other financial institutions when requesting CCTV footage, etc. Unfortunately this area does non-documentary ID verification and switching over to documentary isn't something we can do.

Has anyone encountered this (We don't see this with our debit cards as we use documentary ID verification)? If so, have you been denying these claims? If so, what is the basis for denying the claims?

You basically have no basis for denying these claims. Sounds like you have a due diligence problem. If they are losing money, then they need to change their ways or the bank needs to jettison the product.

Randy is it accurate to state that claims cannot be denied due to consumer negligence? For example if the consumer wrote his PIN on a piece of paper and kept it with the card.

From the Official Interpretations to Regulation E:

2. Consumer negligence. Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. Thus, consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer's liability for unauthorized transfers. (However, refer to comment 2(m)-2 regarding termination of the authority of given by the consumer to another person.)

Thank you.

Can someone please provide the link to the Reg E Staff Interpretation?

The staff interpretations (i.e. commentary) are incorporated right into the regulations here on BankersOnline. You can find Reg E at the below link, and the two main sections for disputes are 1005.6 and 1005.11.

https://www.bankersonline.com/regulations/12-1005-000

Thanks Adam