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#377753 - 06/27/05 07:18 PM Internet Gambling Sites and Reg E
Caroline Offline
Junior Member
Joined: Jun 2004
Posts: 25
TEXAS, USA
Scenario: Customer comes in with an $8,000+ complaint saying he did not authorize all these charges against his debit card. He did admit to opening an account with the gambling site and going as far as telling us he really enjoyed playing the games. He can't tell us which transactions are his. And he had the hard drive cleaned off because the computer he was using belonged to his employer.
I have just touched on the very basics of this situation but what are our obligations to this customer?
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Carolyn L

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#377754 - 06/27/05 07:28 PM Re: Internet Gambling Sites and Reg E
Gotwood Offline
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Joined: May 2001
Posts: 715
You need to determine if 1) he authorized the transactions and 2) if he benefited from them. If he did either one, then you can deny the claim. One could argue that even if he did not benefit (because he lost??) the opportunity to win was the benefit.

I'd think carefully before I'd pay anything out.

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#377755 - 06/27/05 07:30 PM Re: Internet Gambling Sites and Reg E
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Unless he is able to tell you which transactions are his and which are allegedly unauthorized, you don't have sufficient information, IMO, for a claim.

With apologies to your customer if I am wrong, but I suspect this is a case in which your customer either doesn't realize how much he lost at the gambling site or is trying to bluff you into mitigating his losses at your expense.

I'd recommend that he try to contact the gambling site (not always possible) for details on the transactions. In the meantime, I recommend that you document his attempted claim, label it incomplete, and await further information from your customer.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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#377756 - 06/27/05 07:30 PM Re: Internet Gambling Sites and Reg E
Anonymous
Unregistered

Does your disclosure include the 2000 language that the card cannot be used for illegal activities?

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#377757 - 06/27/05 07:51 PM Re: Internet Gambling Sites and Reg E
Caroline Offline
Junior Member
Joined: Jun 2004
Posts: 25
TEXAS, USA
Quote:

Does your disclosure include the 2000 language that the card cannot be used for illegal activities?



Where do I find the "2000 language" information?
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Carolyn L

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#377758 - 06/27/05 08:29 PM Re: Internet Gambling Sites and Reg E
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Such a disclosure doesn't affect the customer's liability for unauthorized transfers (if they indeed took place). However, it is a good thing to include.

You should also contact your card service provider and inquire about blocking debit card use at recognized gambling sites.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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#377759 - 06/27/05 09:27 PM Re: Internet Gambling Sites and Reg E
Darkhorse Offline
Platinum Poster
Darkhorse
Joined: Nov 2004
Posts: 501
out of my mind
Sorry, I'm the anon above - forgot to log in. My processor sent me a copy of the 5-15-05 Visa Operation Regulations, Volume 1 - General Rules, page 3-9. Item 3.2.H.6 states "An Issuer must disclose in its Cardholder agreement that a Visa Card may not be used for any illegal Transaction." Page 3-11, item 3.2.L.1.b of the same document states "An Issuer may increase the limit of the Cardholder's liability for unauthoried Visa Transactions only if the Issuer reasonably determines, based on substantial evidence, that the Cardholder was grossly negligent or fraudulent in the handling of the account or the Card." I would use caution in this area, however, due to case law our processor mentioned where basically the lady filing the dispute said the bank should have stopped her - and WON. Gotta love the court system.

The processor did also mention some specific codes to block gambling sites as John mentions above. Go to one of these Visa/MC or processor seminars - it will just scare you!

Good luck and I hope this helps, if not now, for the future.
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proud 2 b BOLWYWTCCUT

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#377760 - 06/27/05 09:42 PM Re: Internet Gambling Sites and Reg E
Snowqueen Offline
Diamond Poster
Snowqueen
Joined: Jun 2003
Posts: 2,289
dreaming of a warm beach......
You may want to revoke his debit card priviledges too!

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#377761 - 06/27/05 09:44 PM Re: Internet Gambling Sites and Reg E
Caroline Offline
Junior Member
Joined: Jun 2004
Posts: 25
TEXAS, USA
That was the first thing we did!!!!
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Carolyn L

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#377762 - 06/28/05 11:53 AM Re: Internet Gambling Sites and Reg E
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Please remember that the Visa language cited above does not allow you to increase a consumer's liability beyond the limits in Reg. E ยง205.6.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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#377763 - 06/28/05 03:25 PM Re: Internet Gambling Sites and Reg E
Anonymous
Unregistered

Since when is Online Gambling Illegal? Can anyone answer this?

C.Alfonso

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#377764 - 06/28/05 08:26 PM Re: Internet Gambling Sites and Reg E
Andy_Z Offline
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Andy_Z
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Posts: 27,748
On the Net
Gambling is illegal in many/most states. Here is one Q&A example. It is also a bad idea to allow credit/debit cards to be used for this as the institution is often the loser. The odds are against you. For this reason many institutions block these transactions.
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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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#377765 - 06/29/05 02:04 AM Re: Internet Gambling Sites and Reg E
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Check here for information on the Department of Justice's views on the illegality of online gambling. Many websites have stopped accepting ads for online gambling because that too can be viewed as illegal by the DOJ.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#377766 - 06/29/05 07:28 PM Re: Internet Gambling Sites and Reg E
Andy_Z Offline
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Andy_Z
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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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#377767 - 07/01/05 09:00 PM Re: Internet Gambling Sites and Reg E
Anonymous
Unregistered

MasterCard, Visa and some very large credit card issuers have lost big in lawsuits due to the attempt to collect money used for online gambling. I believe CA and MA were two of the biggest suits were the courts ruled you could not collect a debt incurred as a result of illegal Internet gambling. I did extensive research on this topic for our bank as we were named in a lawsuit for attempting to collect one of these debts.

In one ruling, the MA Appeals Couty ruled that a gambler did not have to pay his MC bill for $5500 cash he got from an ATM on the floor of an Atlantic City casino. The Court held that under the laws of MA, where the gambler lived, NJ, where he gambled and CT, where the bank issuing the MC was located, credit card loans for gambling are unenfoceable.

In CA (1998), another person had their $70,000 in credit card gambling loans erased due to CA state law which bar credit card loans for gambling.

Shall I go on?

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#377768 - 07/05/05 07:17 PM Re: Internet Gambling Sites and Reg E
Anonymous
Unregistered

I just read a case on BOL Court Watch ( Thompson v. Mastercard International, Inc. ) that found in favor of the credit card companies.

Quote:

In one ruling, the MA Appeals Couty ruled that a gambler did not have to pay his MC bill for $5500 cash he got from an ATM on the floor of an Atlantic City casino




It doesn't make any sense that you wouldn't have to pay back a cash advance just because you took it from an ATM on a casino floor. If that was true wouldn't there be a pretty long line at that ATM for cash advances?

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#377769 - 07/05/05 07:57 PM Re: Internet Gambling Sites and Reg E
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
The Thompson v. Mastercard case involved claims in federal court under the RICO statutes, and was dismissed for lack of standing and lack of applicability of the RICO law.

The other cases involve state courts and state laws.

My advice above is repeated: Block customer access to gambling sites.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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#377770 - 07/07/05 10:07 PM Re: Internet Gambling Sites and Reg E
XODUS Offline
Power Poster
XODUS
Joined: May 2005
Posts: 4,384
How do these rulings pertain to debit cards and their usage for gambling? Would they be treated the same way? We block internet gambling but have a serious issue with gambling at the Native American casinos here.

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#377771 - 07/07/05 10:28 PM Re: Internet Gambling Sites and Reg E
Andy_Z Offline
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Use of a debit or credit card at an illegal facility may be viewed the same way. The consumer may complain that you should never have allowed the transactions. yes, they may win. The VISA brand restriction I believe, applies to both card types.

Remember that this can also be a vehicle for money laundering. The abuse possibility can go on, but my experience has been that it is best to just block these. I don't think I have the case info any longer, but I'd swear there was a ATM card case some years ago, in a casino, and the bank lost. That may be one cited in this thread already, I haven't read them all.
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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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#377772 - 07/07/05 10:55 PM Re: Internet Gambling Sites and Reg E
rainman Offline
Power Poster
rainman
Joined: Nov 2004
Posts: 3,237
There were two basic claims advanced by the plaintiffs (gamblers) in the suits against issuers, VISA and MC: 1) that state laws make certain types of gambling debts uncollectible, and that internet gambling transactions fell into that category; and 2) that internet gambling violated state and federal laws restricting conducting gambling activities, and that participating in the payment side of the transactions made the issuers, processors, VISA and MC part of an ongoing criminal conspiracy, subjecting them to civil RICO claims.

The first type of claim wouldn't apply to debit card use because there's no "debt" - just a withdrawal of funds.

Last I checked, the second type of claim had been uniformly rejected by all the courts that have considered it. That does NOT mean that internet gambling is legal, just that issuers who can't block transactions aren't deemed as participants in the illegal activity.
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#377773 - 10/05/05 05:51 AM Re: Internet Gambling Sites and Reg E
Anonymous
Unregistered

Perhaps you could also help by offering recovery links/800 #'s to those getting in over their heads and in despair. It's not all about the money thoug I understand this is a "bankers" site.

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