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Case Law & Debit Card Owner Negligence

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Any idea where I can find case law, past lawsuits, that have narrowed down the definition of "negligence" on the depositors’ part in giving or writing down debit card PINs in Reg E disputes? We have a case where a client is being sued by the bank's attorney and our client was a victim of theft by a kid, with previous fraud on his record. Our client has stated in a deposition that he did not give the kid the PIN. The bank's attorney is trying to sue and recover the provisional credit given by the bank and this attorney is quoting "negligence" cases under Reg E/12CFR205 . We cannot find those cases. Any help would be appreciated.

I cannot imagine that there is much case law out there where the bank may have prevailed in such a frivolous lawsuit. Regulation E clearly states that customer negligence has no bearing on the customer's ultimate liability. Refer to the regulatory commentary:

12 CFR 205.6(b) Limitations on Amount of Liability

2. Consumer negligence. Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. Thus, consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer's liability for unauthorized transfers. (However, refer to comment 2(m)-2 regarding termination of the authority of given by the consumer to another person.)

Of course, if the argument is that the customer gave away the card and the PIN to the kid, the regulation also addresses that as referenced in the above paragraph:

2(m) Unauthorized Electronic Fund Transfer

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.

This must be a large amount for a bank to bother with a lawsuit against a depositor or we don't have the whole story.

First published on 8/24/09

First published on 08/24/2009

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