Debit Card Dispute Customer in Jail

Posted By: bande

Debit Card Dispute Customer in Jail - 12/23/20 02:51 PM

We were notified by a family member in late November that one of our customers was in jail (since August). Per the family member who was not on the account, someone was using the customer's debit card. The bank did not release any information as the family member was not on the account, but given the nature of the charges, the card was restricted from allowing further transactions.

This week, the customer from jail sent a copy of his statements for Sept-Nov with a note that he had been in jail since August 15. Per his note, a woman was supposed to be watching over his stuff, but was "instead seeing how much she could steal". He goes charge by charge to indicate authorized or not authorized. In September the only authorized charges are the inmatessales.com and jailfunds commissary. At some point she was supposed to turn over his wallet and keys to the customer's brother, but the customer states the woman wrote down his card number before she did so and was using the card online. Based on ATM footage the brother does have the card in his possession by October 6.

I am trying to determine what the customer authorized. I believe that since he left her in possession of the card to "watch over things" that all the charges (mostly chip/pin) are authorized until the card is given over to the brother. At that point, since the woman allegedly wrote down the card number, the online charges in October and November become unauthorized. Is my thinking correct or are all the charges until the brother has the card unauthorized?
Posted By: rlcarey

Re: Debit Card Dispute Customer in Jail - 12/23/20 03:17 PM

Notice was properly given by the family member - see 6(b)(5) - Comment 2.

I think that you are correct under 2(m) - Comment 2, that until the card was relinquished, they would be covered under this comment. After the card was given back, I think any further transactions would have been unauthorized.
Posted By: Valley girl

Re: Debit Card Dispute Customer in Jail - 12/23/20 04:24 PM

Did the brother or the cardholder ever contact you to "revoke" her authorization to use the card?

2(m) Unauthorized Electronic Fund Transfer

1. Transfer by institution's employee. A consumer has no liability for erroneous or fraudulent transfers initiated by an employee of a financial institution.

2. Authority. If a consumer furnishes an access device and grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given, the consumer is fully liable for the transfers unless the consumer has notified the financial institution that transfers by that person are no longer authorized.
Posted By: Skittles

Re: Debit Card Dispute Customer in Jail - 12/23/20 07:27 PM

I am still struggling with this and keep coming back to it. Asking someone to 'watch over your stuff' does not give them permission to use a debit card.

Obviously this is your bank's decision how you will handle it, but customer negligence does not come into play in Regulation E.

Just my 2 cents.
Posted By: Andy_Z

Re: Debit Card Dispute Customer in Jail - 12/23/20 08:39 PM

Friend was given the card and authorized to use it, yes? She abused her authority and that is on the customer/inmate.

When the card was taken back and secured by the brother, friend's authority ended. The 2(m) cite above is moot at that point. There is no evergreen authority granted and now it's fraud on the friend's part. The device she used was not an authorized device so your customer has zero liability for those as well. You need an accurate date and time she gave up authority to start accounting for unauthorized transfers.

You may consider revoking access via a card at all to prevent this happening again, or decide if the account is worth keeping.
Posted By: Valley girl

Re: Debit Card Dispute Customer in Jail - 12/23/20 11:41 PM

I misunderstood - I thought she set up the inmatesales.com charges and that the card number became an authorized device at that point and that the authorization would continue until the FI was notified. Thank you for the clarification Andy Z.
Posted By: InFairness, CRCM

Re: Debit Card Dispute Customer in Jail - 12/24/20 02:23 PM

I don't think we can state with certainty that the friend had authorization to use the card. As Skittles noted, asking someone to 'watch over your stuff' does not give them permission to use a debit card.
Posted By: CompliantOkie

Re: Debit Card Dispute Customer in Jail - 12/24/20 03:04 PM

We have a similar situation at the moment. Customer opened the account, received a debit card. Customer claims she gave the card to her bf to "hold." Approximately a month later customer received a substantial sum of back unemployment. The account is then drained by ATM over about 2 weeks. 2 months later the customer states all the ATM charges are unauthorized. Customer states she never authorized bf to withdraw any funds. Customer claims she was unaware of the unemployment deposits. Customer also claims the teller wrote the PIN on the card envelope when the card was made.

So I am at a loss. The customer gave her physical card to someone else but there was no verbal authorization. I don't have a way to determine if the PIN was written on the envelope since the account was opened early this year. Anybody have opinions on this situation?
Posted By: rlcarey

Re: Debit Card Dispute Customer in Jail - 12/24/20 03:42 PM

How much is the "substantial sum"? You know that while I know that Regulation E is totally to protect the consumer, at some point of time I really think that a bank needs to call "bull merde" on some of these situations. Were the ATM transactions the only transactions conducted with the card over this time period that the BF was "holding" the card for her? Do you have any ATM photos yet? Is she aware that you will press charges against the boyfriend and sue him to recover your monies? I think there are number of unanswered questions that need to be answered during the investigation.
Posted By: Skittles

Re: Debit Card Dispute Customer in Jail - 12/24/20 03:43 PM

'bull merde' - crack me up Randy!
Posted By: CompliantOkie

Re: Debit Card Dispute Customer in Jail - 12/24/20 04:31 PM

It's just over $16K. The ATM transactions are the only trans on the account. We can't get any of the ATM owners to cooperate which is becoming more and more common unfortunately. We have called her to ask additional questions but haven't heard back from her yet. The bf is an ex-bf now so I'm not sure the threat of legal trouble would sway her but we will still try. This is just a case where I'm trying to determine if giving him the card to hold with the PIN is implicit authorization. I'm about 50/50 on it.

And bull merde is exactly what I'd like to tell this future former customer.
Posted By: RockChucker, CAMS

Re: Debit Card Dispute Customer in Jail - 12/24/20 04:57 PM

I recommend double checking to make sure the unemployment transaction(s) is intended for her and not a fraudulent one in someone else's name like the many that have been popping up.
Posted By: CompliantOkie

Re: Debit Card Dispute Customer in Jail - 12/24/20 05:23 PM

They're legit. They all came in her name and did not come in a lump sum. The look like legitimate back unemployment pay.
Posted By: bande

Re: Debit Card Dispute Customer in Jail - 12/29/20 09:48 PM

Thanks to everyone for your input. We did cut the card off when notified there were unauthorized charges. I know from the ATM footage that the brother had control of the card in October and November. The online charges are all unauthorized for those two months. We are working to clarify what authority was given to whom and when as the customer in his letter stated it two different ways. We have sent a letter to the customer in jail to have him clarify some questions, such as his exact instructions to the woman, who authorized the inmate sales charges (he marked authorized but those are normally not initiated by the inmate as they do not have the card). We will need to see those answers before making a decision about August and September charges. If he does not respond, we will proceed based on the information I have. Thanks again.
Posted By: Valley girl

Re: Debit Card Dispute Customer in Jail - 12/29/20 10:35 PM

Thank you for the update bande!