Can we deny a claim based on the fact that the customer had possession of his card, and the transaction was pin based?

No you cannot. ATM/Debit cards can be skimmed, counterfeited, phished, etc. If a customer has made a claim under Reg E for an unauthorized transaction, the burden of proof is on the financial insititution to prove the customer did the transaction, i.e. video footage of the transaction. If you can prove pattern of behavior and can reasonably assume that the customer did the transaction, then perhaps deny the claim. As Reg E is a consumer protection reg, I generally err on the side of caution and pay claims unless I am quite certain the claim is invalid.

I agree with crowman. Go to youtube.com and type in "ATM Skimming". You'll learn a lot and see how your customer could have certainly been a victim.

silverliner, I'll have a Reg E claims webinar coming up in a couple of months. You'll see some ads for it. I hope you can join in as this is one of the topics I discuss and demonstrate why. The answers are correct, you can't deny it based on that. Certain investigatory steps must be taken and you need answers. While concrete proof isn't necessary, the burden is on you if you want to deny a claim.