WE have a customer who made a statement that there was an unauthorized transaction on her statement (Visa POS). We sent the information in to STAR and today received back from STAR information that the Merchant followed all applicable regulations and that no further chargeback rights were available. But when we look at the signature on the receipt and compare to our signature card, it is obvious that it is not our customers signature. STAR is saying then the bank will have to eat this one. MY question is WHY?????

I regretfully welcome you to the world of debit card disputes. Visa/Mastercard operating rules place the liability squarely on the bank when the merchant obtains a valid preauthoriztion and a signed sales receipt. The bank, not the merchant is responsible for the charge. This is what your insitition signed on for when it signed its contract with Visa.
We participate in the STAR FRIS (early fraud detection system) and this has helped us detect charges early to keep them from piling up. Contact your STAR rep for information about this.
Also remember Visa has a zero liability policy so on signature based transactions this supercedes the liability provisions in Reg E.
Sorry to give you bad news, but this is a liability all banks who offer Visa or Mastercard debit cards face.

The only way to pursue a potential fraud situation like this is to have in hand the sales slip copy and the card that is alleged to have been used. That means getting the card from your customer. The signatures on the sales slip and the card (not your signnature card) are what matters in a card dispute on whether the customer signed the slip.

Thanks for the reply information John and crowman3, but John, are you saying that we can continue through VISA for potential fraud if we do have the sales slip and signature comparison, or is this something to take to local law enforcement?

you can file a pre compliance through Visa if you have the card and can show the signature on the receipt does not match the signature on the card.

Really? We were always told that as long as the merchant has a signature (whether it matches or not) we lose.

Really. Check your Op Regs under Compliance. If you use Visa it is section 3.4.A.1.e. We have used that even when the name was spelled correctly but the writing was significantly different.

I concur with whodunit as we have been successful in recovering funds when the card is recovered and we can show a different person than the name on the card signed the draft.

'Tis true.