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Unauthorized ATM Withdrawal Liability

Answered by: 
Andy Zavoina

Question: 
Our Customer uses an Debit card in our drive up ATM and withdraws $100.00. Customer leaves card in machine and drives away leaving the transaction live. The next person in line continues the live transaction and withdraws $300.00 from the previous customer's account and keeps the money and drives away. Our customer is claiming their debit card was stolen and want us to reimburse them the $300.00 since they did not do the transaction. Have you had similar situations like this. Are we obligated to give the $300.00 back?
Answer: 

Reg. E liability limits will apply here. The customer may have liability, based on when they notified you of the loss and when they knew the access device was lost. Under 205.6 the customer can claim an unauthorized withdrawal. To assist you in calculating the liability for the bank and the customer, there is an Excel tool available at http://www.vvm.com/~zavoina/cmpl.html which will also assist you with your timeline requirement on completing the investigation.

First published on BankersOnline.com 5/7/01

First published on 05/07/2001

Filed under: 
Security
Filed under security as: 
ATM

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