A cardholder filed claims of unauthorized activity relating to charges incurred at various restaurants ordered via phone apps. She claims her card was lost/misplaced for 2-3 weeks during the month of January. She knew of the loss and was looking for it during this time but did not notify the bank until mid-February. By then the card had reappeared. She indicated that several people were all living in the same house and she could not be sure who may have had access to her card. The restaurants could not tell us anything other than the orders were placed online via the app with the cardholder's credentials. In addition to the charges she has racked up several hundred in NSF fees. Other than the first tier late notification penalty, is there anything we can do to deny the claims? We really don't believe her claim; her story changes whenever we question her further. She says the card was lost for a time, but hasn't said anything about her phone (with the apps) being lost. It's just all very puzzling.

Unfortunately there is no way to deny the claim. There is no such thing as friendly fraud. She is stating she didn't give anybody permission to use her card and unless you can prove she picked up or consumed the food, you don't have grounds to deny. I doubt any of the restaurants have video of the pickups.

As for the liability, if she knew the card was gone in January and she didn't report it, why wouldn't she be liable for the second tier?

Her phone would not need to have gone missing for one of her housemates to have lifted the card and used it in a restaurant app to place the orders, then put the card back later.

I agree with Valley Girl that you'll likely have to honor the claim without any evidence from the restaurants that she was not the one making the food orders. And I also agree that you should see whether the timing of the purchases is such that you will be able to impose some second-tier liability on her for not notifying you of the missing card within 2 days of realizing she didn't have it.

If you refund her account for any transactions that resulted in overdraft fees, don't forget to refund the OD fee it triggered.

All of the transactions posted within the two-day period. That was actually one of the story changes. As to OD charges, I'm not likely to forget them, as they were as much as the disputed items!