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#2261116 - 10/14/21 10:14 PM Unauthorized EFTs After Death
MEB Offline
Junior Member
Joined: Oct 2006
Posts: 43
A customer passed away a few months ago. Prior to her death, according to her family, she gave her debit card to a friend to complete a transaction. However, that friend kept the card and initiated 5 additional EFTs the day after her death (and before we received notice of her death). The family is now wanting to dispute those charges. We know that Reg E allows a third party to provide notice about a lost or stolen device. However, it also says that if a consumer provides a device to another person and grants authority and that person exceeds the authority, the consumer is liable for transfers unless the consumers notifies the bank that the person is no longer authorized. In this case, the consumer couldn't notify us because she was deceased.

Does Reg E apply in this situation or is it just a matter of the estate potentially making a claim against the bank for wrongful payment?

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#2261120 - 10/14/21 11:06 PM Re: Unauthorized EFTs After Death MEB
rlcarey Offline
10K Club
Joined: Jul 2001
Posts: 77,297
Galveston, TX
The bank is on the losing end of this proposition.
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#2261122 - 10/15/21 09:35 AM Re: Unauthorized EFTs After Death MEB
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,240
The permission ended the second she died The bank may have a claim against the friend.
Integrity. With it, nothing else matters. Without it, nothing else matters.

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#2261236 - 10/19/21 03:45 PM Re: Unauthorized EFTs After Death MEB
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,336
Cape Cod
The laws in many states protect a bank that continues to honor items in innocent ignorance of a customer's death. Once the bank learns of the death, however, the bank has to act to stop doing so (there may be a 10-day post mortem window during which checks on the decedent's account can be honored, but that ONLY applies to checks).

Yes, the estate can file a claim that the transactions were not authorized. But I believe the bank is protected by a combination of paragraph 1005.2(m)(1) and state law (if there is one) that provides cover for a bank for actions taken before it learns of the depositor's death.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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