I am hoping to gain some insight on Regulation E and Online transfers from one account to another. We recently received a dispute on over 8,000.00 in online transfers from one account to another account, and the owner is claiming that her grandson must have obtained her user name and password somehow. She does not know how he would have obtained the login information, as she "keeps it in her safe".

She further states that she at no time, gave him the login credentials.

I feel as though we are going to be on the hook for all of the transfers, but any information would be greatly appreciated.

Our system only allows transfers between accounts owned by that customer. I would mention she would need to file police report and I would say after that conversation, she will not be willing to proceed.

Thank you so much for the response!

She is an owner on both accounts. The funds were transferred from her main account into a joint account with her grandson, who then turned around and withdrew all of the funds. This took place over the course of a month. She claims that she did not notice the transfers until 9-30-16 when she logged in to her internet banking to pay bills.

She filed a police report, and has not seen or spoken to her grandson since that day (he was living with her at the time, and used her computer to make the transfers).

While I understand in this case the customer did file a police report, Reg E 1005.11(b) only requires that the customer provide their name, enough information to identify their account number and why they believe an error exists. We can ask for, but not require a police report. Examiners have been handing out UDAAP citations for adding extra requirements to Reg E notification requirements such as police reports, copies of sales receipts, and merchant contact. If a customer refuses to file a police report, we still must investigate and cannot deny a claim on the basis of their refusal to file. As the financial victim, we can advise them that we will be filing a police report in an attempt to recover the funds from the thief and sometimes that will cause folks to voluntarily withdraw claims.

Back to the question at hand:

Unless you can demonstrate that your customer provided the access device (ID and Password) to the grandson, the transfers would be considered EFT errors and the bank would be liable for the unauthorized transfers. Based on the dollar amount and the fact that you can identify a subject, be sure to refer this matter to your BSA Department for investigation into a possible SAR.

You need to file suit against the kid also when you give grandma the money back.

$82,500 the cost of a bank's requiring a police report as a condition precedent to processing a Regulation E claim according to the regulation.

Caveat: If you are pursuing criminal charges, and you have a prosecutor who is willing to see those charges through, check with the prosecutor and/or the bank's own counsel prior to filing a civil suit. You don't want to risk damaging the criminal case by initiating a parallel civil case.

Thanks all for the responses.