I need some back up on this one. Our customer got her new VISA debit card in the mail. When she went to the ATM to use it, it was missing. She contacted the bank to report card missing. We told her there were transaction performed on the card, POS transaction had been completed on her account. The situation: her son took the card and used the card (supposedly without her permission) with the PIN that she had either made know to him or directly told him. Security / Fraud Officer say she is out of luck because she should have protected her PIN. I say she says they are unauthorized transactions, and even went to the police, and so they are unauthorized transaction. I think if we deny we are out of compliance with Reg E AND VISA.

Yes, they are unauthorized, and you need to take care of the customer. That said, you may want to discuss the situation with your customer, because if you process these as fraudulent, you will have to prosecute her son since he is the person who performed the transactions. Her choice, deal directly with her son, or claim the fraudulent transactions and the bank will prosecute him for fraud.

Look at 6(b)2 under Reg. E and you'll see the answer clearly that this is unauthorized, assuming she didn't give him the card and PIN and then not re-secure the card.

12 CFR §205.6 Liability of consumer for unauthorized transfers.
2. Consumer negligence. Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. Thus, consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer's liability for unauthorized transfers. (However, refer to comment 2(m)-2 regarding termination of the authority of given by the consumer to another person.)

Thanks for your input... I just gave this customer final credit. We are working with the local PD to prosecute, just for the heck of it. I know we will never see any $$$. Susan

Just a note - I always train people taking the error information to not "lead" the customer. You want to ask questions as open-ended as possible in order to get as much information as you can. For example, in this case, you mentioned that she may have given her PIN to her son. Why did she do that or what were the circumstances? While there is no negligence standard as Andy pointed out, if she gave her son the authority to conduct a transaction once, then unless she notifies the bank that transfers by that person are no longer authorized, she is liable for future transactions where he "exceeded the authority given". (OSI - 205.2(m)(2))

Had the customer activated the card when she got it, or did her son do that as well? If her son actually made the activation call, I would suggest getting in touch with your call center (or wherever those calls go) to see what information you can obtain about the call.

Because they suspect she may have given him the PIN or acquired it, I assumed she activated the card. If in fact she didn't, it wasn't an accepted access device and she has no liability.

Did you get a signed affidavit from her indicating that the transactions were fraudulent? You may need this if she doesn't want to give evidence against her son when you prosecute him. We always get thee from the customer for our records. If they don't wish to give it to us, then they are considered to have withdrawn their claim that the transactions were unauthorized unless it is obviously the case. (i.e. withdrawals from Spain when the cust has never even been to that country)

I strongly disagree with Banking Bard. The lack of an affivadit in no way evidences the withdrawal of a claim. In fact, the lack of ANY documention in no way alleviates your center of its credit obligations since there is no documentation requirement on the customer. Reg. E. does not prohibit you from asking for it but if you do not receive it, you cannot deny the claim simply for that reason.

As always, i could be incorrect. Not being on the operations side of things does kind of leave me missing a few pieces of how they work.

I do know that one of the things all reps are trained to do when dealing with a Reg E dispute is to ask the customer to fill out an affidavit. It allows the bank to gather the facts in the customers own words and it does give something to fall back on if we later discover that these charges weren't unauthorized.

It also helps in the above case. If the bank credits the cust, then prusues legal action against the son, isn't the case weakened if she won't provide the information that he was the culprit to the police?

However, claiming that it wasn't unathorized without the affidavit might be overboard, I agree.