Friendly fraud

Posted By: CAKE

Friendly fraud - 06/20/12 05:37 PM

One of our customers is disputing several transactions from Facebook Inc because he didn't do the transactions. His wife told one of our branch employees that their kids got the debit card and played online games to a tune of $200. Is the bank liable for these transactions? I want to tell the customer that their kids are their responsibility not the bank's responsibility.
Posted By: Milby

Re: Friendly fraud - 06/20/12 06:01 PM

It is still an unauthorized transaction. However, you now have details of who perpetrated the "fraud" so you could take that person to small claims and get your money back from them (or their guardian). Since their guardians/parents are the victims, you'd effectively be taking your customer to court.

In the end, your talking about $200. You could tell the parents that you can take the child to court to get your money back. But, it will cost you more to do that than $200 recovery, so I think your true business-case options are:

1) Refund, close their accounts, and take a $200 loss.
2) Keep the account, take a $200 loss, and get the parents to agree to their child completing X hours of community service in lieu of a civil claim. If they refuse, revert to option 1.
Posted By: BrianC

Re: Friendly fraud - 06/20/12 06:32 PM

Reg E doesn't care who performed the transactions. If it wasn't your cardholder, and the child(ren) did not have authority to use the card, your customer has a valid claim under Reg E. There is a third option that Milby did not suggest. You can advise your customer that they are entitled to a refund, but as the bank then becomes the financial victim in this theft, you will have to report the theft to local law enforcement. Mom and Dad may decide they're not ready for junior to have juvenile record just yet and decide to withdraw their claim.
Posted By: tdogz

Re: Friendly fraud - 06/20/12 08:42 PM

Originally Posted By: BrianC
You can advise your customer that they are entitled to a refund, but as the bank then becomes the financial victim in this theft, you will have to report the theft to local law enforcement. Mom and Dad may decide they're not ready for junior to have juvenile record just yet and decide to withdraw their claim.

We get customer's who are certain that they have fraud on their card. When we tell them that we will check videos/signatures and pursue it legally after we refund them, they suddenly remember to check with their family members. Then about 5 minutes later you usually get a call back saying that the charge was done by the "girlfriend" or "child" and they forgot to tell them. Works 99% of the time. Sometimes though, the cardholder is so sick of the girlfriend's/child's antics that they actually want you to call the police on them! In that 1% of cases, we usually just refund the money and back away slowly... you don't want caught in the middle of that mess over $50.