Skip to content
BOL Conferences
Learn More - Click Here!

Thread Options
#2203931 - 01/24/19 09:28 PM Reg E Dispute by Executor
CUOps Offline
New Poster
Joined: Jul 2010
Posts: 19
Texas
We have a situation in which we have an executor disputing some transactions on an account. We were notified of our customer's death (12/7/18) on 12/10/18. We closed his card on 12/10/18. The executor is claiming that the customer could not have made the transactions (ATM withdrawals so PIN based) because he had been incapacitated in the hospital for months. We had no knowledge of this. Two additional transactions were made AFTER the date of death, but before we were notified. It seems like this is a grey area in Reg E.

My questions are: Can an Executor claim that a transaction was unauthorized that occurred before the customer's date of death? and are we covered in any way for the post death transactions because we closed the card immediately upon notification of customer's death?

Return to Top
Operations Compliance
#2203959 - 01/25/19 12:37 AM Re: Reg E Dispute by Executor CUOps
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
First, what does it matter if it's the customer or the executor making the claim. Your customer has died. Do you want the executor going to the media saying you wouldn't accept his/her claim and, obviously, the customer can't make the claim. If there are unauthorized transactions, who do you expect to make the claim? But to get technical, the Staff Interpretations to §1005.6(b)(5)#2 specifically state a 3rd party CAN make the claim. This isn't grey at all.

2. Notice by third party. Notice to a financial institution by a person acting on the consumer's behalf is considered valid under this section. For example, if a consumer is hospitalized and unable to report the loss or theft of an access device, notice is considered given when someone acting on the consumer's behalf notifies the bank of the loss or theft. A financial institution may require appropriate documentation from the person representing the consumer to establish that the person is acting on the consumer's behalf.


Second, if the customer was incapacitated (whether you had knowledge or not), your customer didn't make them. It could be that your customer wrote the PIN number on the back of the card (or on a piece of paper with the card) and someone took it. Either way, Reg E says the customer is not liable:

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. [Staff Interpretations to §1005.6(b) #2]

Last, if there were electric transactions after the customer's death, it obviously wasn't your customer. I think the executor can certainly make these claims.

The question you might want to try to resolve is did your customer give someone authorization, but that will be very difficult to prove now.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#2203972 - 01/25/19 01:51 PM Re: Reg E Dispute by Executor CUOps
CUOps Offline
New Poster
Joined: Jul 2010
Posts: 19
Texas
Thanks for the help. This is a very different answer than I got from another compliance source, so I appreciate it!

Return to Top
#2204050 - 01/25/19 06:44 PM Re: Reg E Dispute by Executor CUOps
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,844
Pulling people out of the ditc...
Originally Posted By OpsBanker
Thanks for the help. This is a very different answer than I got from another compliance source, so I appreciate it!
i'd trust Dave...
_________________________
Providing alternative truths since the invention of time

Return to Top
#2204172 - 01/28/19 07:58 PM Re: Reg E Dispute by Executor CUOps
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I'm curious wha the other compliance source stated.

The first question is not vague at all to me. You asked: Can an Executor claim that a transaction was unauthorized that occurred before the customer's date of death?

The regulation is very clear:
2. Notice by third party. Notice to a financial institution by a person acting on the consumer's behalf is considered valid under this section. For example, if a consumer is hospitalized and unable to report the loss or theft of an access device, notice is considered given when someone acting on the consumer's behalf notifies the bank of the loss or theft. A financial institution may require appropriate documentation from the person representing the consumer to establish that the person is acting on the consumer's behalf.

Your second question was " and are we covered in any way for the post death transactions. . .
I stated you certainly could be as negligence can't be used to impose greater liability. Plus, there are many ways people can have unauthorized transactions. Maybe the customer did write their PIN on their card, but possibly it was skimmed and they didn't know it. If you're not familiar with these possibilities, there's a numerous ways crooks have invented to steal money and the customer never did anything wrong or gave their card out.

Again, I'd love to hear what your other source stated.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top

Moderator:  Andy_Z, John Burnett