closed acct and debit card

A checking acct was closed, owner turned in 1 db card only but empl. forgot to cancel all the debit cards. Other acct owner continued to use her card and transactions posted causing nsfs and ods. Our processor doesn't receive acct balances real time. Another issue is that some of the trans. were treated as credit card trans. per processor. I believe that since it was a bank error, we have to take a loss. Someone else thinks the customers are liable for the trans. even though emply didn't cancel cards. If so, can we charge off only one of the acct holders (the one using the card)? Or...Processors says we can try disputing transactions but they will probably not honor this. What do you think? Any advice? BTW, I had the cards canceled as soon as I found out about the error. Thanks.

This may be more of a legal question, but I'll take an uneducated stab at it. Since the account was in fact closed, I don't believe you are entitled to fees. If checks came in, they'd have simply been returned. The customer however received goods/services. If the chargeback doesn't work, I'd consider the amount and potentially going after the customer for undue enrichment.

By the way, have you contacted the customer, will they pay any amounts due and make this discussion moot? It is their responsibility to one of you in any case.

Did the merchant obtain an approval for the authorizations?

Some of the transactions were POS but taken as credit (?). Another transaction was at our atm. I heard now that the offending customer called because her card wasn't "working". Apparently, she wasn't aware that the account had been closed by the other owner. She was told of the od and said that she would cover that. We'll wait and see but if not, then we'll probably charge-off the account. Now my question is...Can we charge off (report to the credit bureau) only one of the owners?

Sorry, I forgot to login. The prev. post is mine. Thanks.