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#2286959 - 07/25/23 05:03 PM Reg E claim by someone other than cardholder
Paris Johnston Offline
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Joined: Jul 2021
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On case-by-case basis we allow someone to file an unauthorized card dispute on behalf of the cardholder as long as that person is a signer on the account. I.e. Customer works out of town and cannot come in/call to file the claim, so we allow the spouse to file it on their behalf. The question has come up if we want to discontinue this practice, however I'm not sure if this violates Reg E. If someone OTHER than the cardholder reports fraud, does that constitute a valid Reg E claim, or must we get the notice from the affected cardholder? I would think only the true cardholder can validly state if the transactions was authorized or not, but I also do not want to inadvertently refuse a claim if it is valid. Please advise. TIA.

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#2286961 - 07/25/23 05:23 PM Re: Reg E claim by someone other than cardholder Paris Johnston
rlcarey Online
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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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#2286976 - 07/25/23 07:20 PM Re: Reg E claim by someone other than cardholder rlcarey
Paris Johnston Offline
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Can we require any further confirmation from the cardholder? Or is it recommended we follow up directly with the actual cardholder? Just curious how we should handle situations where the cardholder may not realize what is happening, or in this case, the customer turned around and had no clue about the dispute or why the card was turned off.

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#2286978 - 07/25/23 08:02 PM Re: Reg E claim by someone other than cardholder Paris Johnston
rlcarey Online
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"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."

I think the financial institution has some leeway in this area if you have any doubts about the person standing in front of you and why they are there.
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#2286982 - 07/25/23 08:30 PM Re: Reg E claim by someone other than cardholder Paris Johnston
burkemi Offline
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An important distinction... In your first post you mention you allow it if they're an owner on the account. At that point, they are the cardholder, as the card is simply the vehicle for account access. The name embossed on the card doesn't change that access or account rights.
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#2286997 - 07/26/23 03:59 PM Re: Reg E claim by someone other than cardholder Paris Johnston
rainman Offline
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That is true, but it's still a claim on behalf of someone else. If Joe submits a claim that he didn't do or authorize a debit card transaction, that doesn't really mean anything if the transaction was done using his joint owner Jane's card. It's not a whole lot different than if he says check #101 was forged. If it has Jane's signature, it's valid. The real question is whether Jane's signature is forged.
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#2287289 - 08/02/23 03:06 PM Re: Reg E claim by someone other than cardholder rainman
JR00K Offline
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This is not correct. If Joe notifies the bank of an unauthorized debit card purchase on his account, whether it was done with his card or Jane's is irrelevant. Joe is not making the claim on behalf of someone else. It is his account, and he has notified the bank. At that point, the bank is required to promptly begin its investigation.

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#2287304 - 08/02/23 05:16 PM Re: Reg E claim by someone other than cardholder Paris Johnston
rainman Offline
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You missed my point. Yes, it's a claim and the investigation has to begin. I didn't say otherwise.

The claim being investigated is whether the transfer was unauthorized. There are two consumers on the account and they each have a card. If the transfer was initiated or authorized by either of them or either of them benefitted from it, then it's not unauthorized.

If Joe says the transaction was unauthorized, it's relevant that the transaction was done with Jane's card because the bank will want to find out whether Jane did the transaction. If they've got ATM video showing her doing the transaction, they can deny the claim in spite of the fact that Joe says it's unauthorized.
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