Answer:
Remember that the regulation addresses not cards, but access devices, and a card number itself can be an access device. In some cases, a customer may be the innocent victim of a card-skimming scam in which both the customer's card number and the associated PIN are compromised, without the card leaving the customer's control.
You are correct when you say that Regulation E doesn't directly address situations of the type you describe. What it does do is require you to assess each claim that a consumer transaction was unauthorized and decide, within the time constraints of Section 205.11, whether the customer's claim is correct (the transaction was not authorized) or incorrect (the transaction was authorized).
You are permitted to review all of the pertinent information at your disposal to arrive at your determination. That can include the customer's transaction patterns, proximity of the location where the transaction in question took place to the cardholder's residence or place of work, prior transactions at the same merchant by the cardholder, etc. Also, you can and probably should try to get photos of the individual completing the transaction(s). If, after reviewing all the information, you determine that the claim in not valid, deny it, offer to provide the customer copies of pertinent records, revoke any provisional credit and move on. On the other hand, if you decide that the customer's claim seems valid, proceed accordingly.
If a photo reveals that a member of the cardholder's family completed the transaction, share that information with the cardholder. That may or may not result in withdrawal of the claim. If the cardholder does not withdraw the claim (Oh, I must have let my daughter use the card), you can certainly tell the cardholder that the bank will take legal action against the relative if the bank sustains a loss as a result of the claim.
First published on BankersOnline.com 11/01/10
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