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Stolen Debit Card and Complying with Reg E

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Question: 
We have a customer whose boyfriend stole her debit card from her purse and used it at an ATM. The amount is $1,198.00 and our investigation company (Fiserv) said we are not entitled to chargeback, due to the fact that these transaction were PIN-based. Can the bank take back the provisional credit and still remain within the guidelines of the Reg E policy?
Answer: 

Your error resolution requirement is that you provide the provisional credit if the consumer steps through some low-difficulty hurdles at the front end of the claim. If you determine that the transaction was not authorized by your customer, you can't take back the provisional credit. You would have to conclude that the customer authorized the ATM use, which she apparently did not, unless you can document that she gave her boyfriend the card with authority to use it.

Put another way, your obligation to reimburse your customer for an unauthorized EFT under Regulation E has nothing to do with your ability to recoup the funds from another institution or a merchant.

First published on BankersOnline.com 10/18/10

First published on 10/18/2010

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