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#968188 - 06/03/08 03:56 PM Reg. E error resolution
CaseyBoo30 Offline
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Joined: Feb 2007
Posts: 262
Winchester, KY
In the situation described below, am I correct that according to 12 CFR 205.6(b)(3) the borrower would only be liable for transactions that occurred after the 60 time period and before the customer notifes the Bank that the Bank can reasonably determine would not have happened otherwise.

A bank receives a call from its core processor. Police have apprehended a suspect in another state who had a card in his possession with one of the Bank's account holder's debit card numbers.

The customer never lost possession of his card, so it sounds like a case of a counterfeit card.

After reviewing his bank statements, the customer found five transactions from February that totaled around $1,400. According to the Data Processor, in a situation involving a counterfeit card, the bank does not have any chargeback rights. Here are the facts:

notification date 5/30/2008
periodic statement date 2/14/2008
60 days 4/14/2008

Does the customer have any responsibility for the loss? Or, does the bank have full responsibility to
reimburse the customer?

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#969538 - 06/04/08 09:05 PM Re: Reg. E error resolution CaseyBoo30
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
The liability under 205.6 applies when there is an authorized access device used. That isn't the case here. No liability under 205.6.

205.6 Liability of consumer for unauthorized transfers.
(a) Conditions for liability. A consumer may be held liable, within the limitations described in paragraph (b) of this section, for an unauthorized electronic fund transfer involving the consumer's account only if the financial institution has provided the disclosures required by ยง205.7(b)(1), (2), and (3). If the unauthorized transfer involved an access device, it must be an accepted access device and the financial institution must have provided a means to identify the consumer to whom it was issued.
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#970416 - 06/05/08 10:25 PM Re: Reg. E error resolution Andy_Z
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
I agree with Andy. There was an access device used, but it was not accepted by the depositor. The bank is left holding the bag.
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