Cross-posted from Deposits Forum - Thanks for reply rlcarey.

I've researched a number of past posts, but am looking for others view of handling fraud claims on PIN-based debit card activity (ATM and Merchant). We've had 2 scenarios in the last couple months where the customers disputed PIN-Based debit card transactions. In both cases, the customers freely admitted they were out drinking for the night and became quite inebriated. They report they used their card that evening they were out, but realized it was missing the next day or they saw unfamiliar transactions in their account in the next day or two. They say they have no recollection about losing their card, they did not have their PIN written down anywhere, and deny giving someone the PIN and permission to use their card. After the last recognized transaction, there is a series of ATM withdrawals and PIN based transactions at merchants that they claim they did not conduct. They filed a police report in each case. In one case we were able to obtain a picture from an ATM and the conductor is not our cardholder. In both cases, compliance and Legal advised that we had to honor the Reg E dispute claim of unauthorized activity. This is not sitting well with the Card Operations team - explaining that, based upon the circumstances, the customer must have given the card and PIN authorizing the transactions - otherwise how did the fraudster get both! It's hard to ignore that argument, but we don't see room under Reg E to deny the claim. The Card Team feels this opens the bank up to significant fraud risk if they can't rely upon PIN based transactions as authorized.

How have others treated Reg E EFT disputes where the PIN has been used and the customer claims there is no way that a crook could have gotten the PIN? (and yes I know what the Reg E Commentary says about consumer negligence and the writing the PIN on a piece of paper example). I do agree these situations raise fraud risk, and I am seeking other experiences and input.

Thanks all.