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Joint Account Affidavit of Unauthorized Activity

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We have a joint account (mother/daughter) who have a customer who just filed an Affidavit of Unauthorized Activity for 82 ATM withdraws out of NY, NY dating all the way back to April 2011. The daughter is in NY and the mother gets the statements. The mother does review the statements monthly but never questioned the ATM withdrawals due to the small amounts of each. Now 8 months later, she is claiming they are fraudulent and wants the money back. What regulations/rules apply here and how much money, if any, do we have to give her back. I say that it is gross negligence on the mother’s part and she should be entitled to nothing. Any insights? My FI is located in New Jersey.

You are required to follow the liability schedule as found in Section 1005.6 of Reg E. There is different liability for the customer depending on whether or not the daughter's card was lost/stolen or skimmed and duplicated. If the daughter knew that the card was missing and failed to report it, the customer's liability is $50.00 for transactions on the first 2 business days after she noticed the card was missing. The customer's liability increases to $500.00 for transactions between days 3-60 after the customer noticed the card was missing, and for transactions after day 60 the customer's liability is unlimited.

If the card was not stolen, the first two tiers of liability do not apply, but you can hold the customer fully liable for any transactions that occur after the 60th date of the first statement where the charges began. So if the first statement was mailed on April 25th, the cardholder would be liabile for any transactions after June 24th.

Finally, since the cardholder failed to provide timely notice to the bank about the unauthorized charges, Section 1005.11 relieves the bank of its obligation to provide provisional credit in 10 business days or complete the investigation in 45 days. You still must investigate and reimburse for your customer for any transactions that you conclude to be unauthorized. Reg E does not permit consumer negligence to be used as a reason for denying a customer's claim.

Editor's Note: The BOL Bankers Tool page has a free tool to assist you in calculating the liability of these types of claims.

First published on 5/28/12

First published on 05/28/2012

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