(Reg E) How to minimize increasing loss to bank.

Hello everyone,

I have dealt with BSA complaince for the better part of my career and now I am also dealing with the consumer compliance side. The institution that I work for is experiencing increased losses due to fraud with fake bank cards. How have some of you who are experienced with Reg E have dealt with this issue to minimize the loss to the bank. If you can provide guidance to the interpretation of the reg would be appreciated as well as any guidance towards policies and procedures to implement would be greatly appreciated.

I will give this a shot for you. The short version in plain english is something like this:
1. Reg E was passed to protect consumers in the new world (new when the law passed) of electronic transactions
For example the Commentary on Reg E regarding Limitations on Amount of Liability of the consumer says


2. In order for Visa, MasterCard, etc to sell their product their operating rules favor them & their merchants & consumers. For example $zero consumer liability rather than $50 that is in Reg E,

Concerning Counterfeit Cards that you mentioned. For the consumer it is an unauthorized transaction = Reg E protects them.
For the merchant they have a signed receipt and got an authorization through the network = Visa rules protect them.
Even if it is as ridiculous as your customer is John Smith & the signed receipt says Antonio Ribaldi.

SO - net result, because Congress wants to protect consumers & banks want customers to use debit cards (we get interchange income & less cost to process -vs- paper check) & Visa etal want their cards accepted . . . The Banks Always Pay

Thanks ktac Mitch,

So basically, the only way the bank wins is if;
1) the customer does not alert the bank within the specified time identified in 205.6, or in an appropriate time, and
2) The bank takes into consideration whether or not reissuing a bank card if the fraud seems to keep happening to the same customer,

So do banks just have to bend and take it?

Now you've got it. It stinks, but there it is.