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#235546 - 08/23/04 07:40 PM
Reg E help
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Joined: Sep 2003
Posts: 196
I have fallen down the rabbit ...
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If a customer knowingly gives an atm/debit card to his brother and says- go take out $100.00. The brother does so, but also takes an additional $150.00. The owner of the card now claims the $150.00 was not authorized. This claim/request for reimbursement is within the appropriate time frames.
We must return the funds- make the account whole- regardless of the neglegant behavior?
Please point me in the right direction- section of the reg.
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Some days, it is all a mystery to me.
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#235547 - 08/23/04 07:44 PM
Re: Reg E help
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Joined: Oct 2000
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No. The customer eats this one.
OSC 2(m)2. Authority. If a consumer furnishes an access device and grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given, the consumer is fully liable for the transfers unless the consumer has notified the financial institution that transfers by that person are no longer authorized.
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#235548 - 08/23/04 07:51 PM
Re: Reg E help
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Joined: Sep 2003
Posts: 196
I have fallen down the rabbit ...
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Ok I give- point me to the detailed reg/law guidance, help me out I am not familiar with this, but glad to get some clarification.
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#235549 - 08/23/04 10:48 PM
Re: Reg E help
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This is the Official Staff Commentary to Reg. E and it carries the same weight as the Reg. It is exactly on point for you. Look for the text here that mirrors what I posted above.
The situation would be different had the brother taken only what was asked for, but later stole the card and used it again.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#235550 - 08/24/04 01:18 PM
Re: Reg E help
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Joined: Jul 2001
Posts: 83,396
Galveston, TX
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Quote:
but later stole the card and used it again.
Andy, I would think that this would fall under the "exceeds the authority given" protion of this commentary and I think once you give the card and PIN to someone, any use of that card in the future is an authorized transaction unless the bank is notified.
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#235552 - 08/24/04 08:49 PM
Re: Reg E help
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Platinum Poster
Joined: May 2004
Posts: 833
Michigan
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Quote:
So does the notification of unauthorized use have to be given prior to the transactions or is the fact that the customer reviews thier statement- realizes the extra transactions happened, reports it to the bank- doesn't this meet the guidelines for reporting unauthorized transactions?
We've had to deal with this: Customer gives her boyfriend unfettered access to her ATM/debit card. Customer dumps boyfriend but he still has the card. We've taken the position that his authorization to use the card ends when the customer contacts the bank, at which point we deactivate the card.
I've also run into the situation where the cutomer let his girlfriend use his card once. She then started getting up in the middle of the night, lifting the card from his wallet and running to the ATM for $300. She did this about 6 times before he caught on. In this case, we were liable so we told him he could have his money back but we were going to prosecute his girlfriend. He didn't want us to prosecute, so we asked him to sign a waiver which he was happy to do. . . we also made him change his PIN. He still has his girlfriend, she still has his money and we still have our money. I'm not sure about the two of them but I know we're happy!
Seriously, just because Reg. E says the bank is liable doesn't mean we have to roll over and play dead. If it's a close friend or family member most people would rather give up the money than see that person face prosecution. Use the leverage you have.
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#235553 - 08/24/04 08:53 PM
Re: Reg E help
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Joined: Jul 2001
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Galveston, TX
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Once the customer authorizes someone else to use their card, they stay authorized until the customer notifies the bank. They would have to notify the bank prior to a transaction happening.
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#235554 - 08/24/04 08:56 PM
Re: Reg E help
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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Quote:
I've also run into the situation where the cutomer let his girlfriend use his card once. She then started getting up in the middle of the night, lifting the card from his wallet and running to the ATM for $300. She did this about 6 times before he caught on. In this case, we were liable..............
Greg,
Why do you feel the bank was liable for these transactions since the girlfriend was now an authorized user but exceeded the authority given??
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#235555 - 08/26/04 02:45 PM
Re: Reg E help
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Member
Joined: Apr 2003
Posts: 79
southeast
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We have a similar situation that has occurred which I need some help on. Our customer files a Reg E dispute on 8/19 claiming that he did not authorize the ordering of some merchandise over the phone. He claims he still has possession of the card. We have a UPS tracking sheet where his wife signed for the merchandise but she is not on the debit card. Is this a legitimate claim by the customer? Can we say that we will give him provisional credit but that we will go against the person who signed for the merchandise hoping that he will not want to go that route?
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#235556 - 08/26/04 03:32 PM
Re: Reg E help
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Galveston, TX
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That's the way I would go.
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#235557 - 08/26/04 03:58 PM
Re: Reg E help
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Member
Joined: Apr 2003
Posts: 79
southeast
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I have more info on this - as it turns out - nothing is ever simple. We have tried to contact the customer, his phone is turned off and his house is up for sale. Can we hot card his card?
His wife has an account at our bank. Can we legally take the money out of her account?
It really doesn't seem fair that we should have to give this customer pack his money based on the fact that his phone has been disconnected and his house is up for sale. More than likely he will close his account as soon as we give him his money back. So the issue of trying to go against the wife is a mute point. Now what should we do?
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#235558 - 08/26/04 04:00 PM
Re: Reg E help
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Posts: 18,763
Central City, NE
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Quote:
His wife has an account at our bank. Can we legally take the money out of her account?
Is he on the account, or is this her's only?
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#235559 - 08/26/04 04:03 PM
Re: Reg E help
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Member
Joined: Apr 2003
Posts: 79
southeast
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I forgot one other issue - on his dispute form - he did not indicate why he or she believes an error occurred. But the OCC AL states that the bank may not delay initiating or completing an investigation pending receipt of the statement. If we can't get it touch with the customer - does that mean he has not provided reasonable cooperation in the investigation?
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