Kinda surprised I couldnt find this scenario posted, but here goes:

Disputed transaction: Parent loaned their child their phone to play games. The child makes purchases intentionally or unintentionally by clicking flashy images. The parent, upset and having not extended authority to the child to make purchases, files the dispute. Pay? Deny?

Some have written it off as a domestic issue (but I know we at least have to investigate.)

To a certain extent, I think it is all a bit circular. Should we pay and attempt any recourse, this might have unexpected consequences the parent wouldn't want or could end up "paying" anyway.

Thanks for any and all help!

there is you answer, parent never gave authority, it is not authorized, you must refund.

Right after you inform the parent that you will filing a police report on the child for fraudulent banking transactions. IF they are unauthorized, they are also illegal.

Some of these may fall into "exceeded authority." So if mom gives her phone to her child and they are playing the game and racking up the charges all at the same time she gave permission to play the game, it is her loss. If she let the kid play games on Saturday and he takes her phone without permission Monday night, it is theft and we take the loss.

Totally not my area, but i'm curious (Randy's post seems to support this, but i don't want to speak for him)....but if banks are taking losses for these types of things, shouldn't they be requiring the parents to file charges? Seems disengenuous to me to expect banks to take the loss for junior's shenanigans, but with no real repercussions coming from mom and dad.

We can't require the customer to file charges but the bank can file their own charges. The bank can also close out the customer's debit card and refuse to reissue.

Here's my 2 cents. I worked for Cingular Wireless (AT&T) back in 2003-5. We got calls all the time about large phone bills because of giving their child the phone. We did not give refunds. Phones are not toys! If you are giving your phone to a child to play with, you are authorizing them to use the phone, no matter what buttons they may push. Period. Same as if you gave your child your debit card. You gave it to them, what they do with it is your responsibility.

If they took it without your knowledge, that is different and will require a police report for dispute.

On a side note, one was over $300, the woman swore up and down her child did not know how to access the internet on the phone and proceeded to have same child help her log on to her account on a PC with me on the line to look at the charges......then proceeded to mumble and hung up.....

This issue makes me twitchy lol!

Yeah, i'm of the belief that if a customer wants to throw out "unauthorized charges", they need to be ready for their kid to be treated as a criminal.

You cannot require the customer to file a police report. If the customer states it was unauthorized, then you immediately begin your investigation.

A phone company can pretty much do what they want too but you are correct that does not work for Regulation E. However, nothing prevents the bank, since they are taking the loss from filing one, which is the point that I was making.

i'm curious if any police department would actually arrest a minor child for incurring charges on a parents phone if a bank wanted to press charges. or if a local DA would actually prosecute.

I can see the headlines now:

Evil Bank Causes 5 year Old Child to be Arrested Over $75 Reg E Claim

I would think it wouldn't come to that. Bank: "Ok, we'll file the police report on your kid." Customer: "Nevermind about those unauthorized charges. I'll have a talk with Junior."

Which is what should have happened in the first place.

I would just always casually mention in these family type situations that we more than agree to refund these unauthorized charges but in doing so, they should know that the bank assumes the loss and thus has the ability to pursue both criminal and civil remedies against the perpetrator that they have identified. At that point 90% of the claims were withdrawn.

Reg E = Cost of doing business

Yes - Regulation E is a cost of doing business, but your job as a duty to your shareholders of your bank is to not to give it away unnecessarily.

I also remind members that although we may not want to file charges, our bond insurer may insist that we do since ultimately they "could" take the loss. I let them know that my eyes are not the only set on the claim.