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Bank's Obligation Per Reg E for Debit Card Dispute

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What is the bank's obligation per Reg E when a cardholder has initiated a debit card dispute, the merchant has produced a signed contract with the cardholder's signature, but that signature is a forgery and the cardholder knows who committed the forgery?

If the bank knows that the authorization was fraudulent, it's not an authorization by the cardholder and the bank must determine that the transaction was unauthorized and proceed accordingly. The bank can certainly request the cardholder's assistance in identifying the forger, and may even be able to compel the cardholder to provide that information in court later, but it cannot refuse to complete its investigation and provide the cardholder credit.

First published on 1/9/12

First published on 01/09/2012

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