Answer:
It's my opinion that once the card is returned to the rightful cardholder's control, the authorization to use the card has ended. Any further use of the card, "borrowed" from the cardholder's wallet, would be unauthorized unless the cardholder clearly told the daughter to take the card and use it as needed. There's more information on where to draw the line on unauthorized transfers in the Official Staff Interpretations Comments in section 205.2(m).
The issuing institution would be within its rights to inform the cardholder that the institution intends to pursue the daughter for fraudulent use of the card. If the cardholder pursues the claim, the bank should pursue the wrongdoer.
First published on BankersOnline.com 1/04/10
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