Ok - I guess I'm just trying to figure out how MasterCard rules work with the Reg E 60 day rules. MasterCard states that:

Additional Limits on Liability for Mastercard®-branded Debit Card. You will not be liable for any unauthorized transactions using your Mastercard®-branded Debit Card if: (i) you can demonstrate that you have exercised reasonable care in safeguarding your card from the risk of loss or theft, and (ii) upon becoming aware of a loss or theft, you promptly report the loss or theft to us. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

We have a customer who notified us on 5/15/2024 that there were 4 transactions on her account that she did not do:

2/2/2024 - 7.99
3/2/2024 - 7.99
4/2/2024 - 7.99
5/2/2024 - 7.99

She noticed the transactions on 5/15/2024 and notified us on 5/15/2024. Her statement with the first error was mailed on 2/10/2024.

So - my understanding is: She notified us within 2 business days of noticing the error but after 60 days of the first statement containing the first error. So she would be responsible for the full $31.96.

However, we gave her back the first 3 transactions totaling $23.97 and made her responsible for $7.99.

My question is - even though she contacted us within 2 business days of learning of the loss, she could have notified us sooner if she would have looked at her statements. I know we gave her the $23.97 back because of the MasterCard zero liability rule, but could we have made her responsible for the the full amount since she was negligent in looking at her statements? Or does the MC zero liability only look at when the customer first notices the charges?

Obviously this claim is already resolved and closed. I'm just trying to understand for future claims.

Thanks! (sorry if this is confusing)

Actually, you gave the customer $23.97 back because of Reg E 1005.6(b)(3), not Mastercard Zero Liability.

As the name implies, had you provided Zero Liability protection, you would have reimbursed the customer for all four transactions making their liability Zero. However, since the customer did not exercise reasonable care in safeguarding their card from loss, you did not provide Zero Liability protection.

Instead, you looked at 1005.6(b)(3) which makes the customer liable for all the charges that occurred more than 60 days from the date of the first unauthorized charge. You cannot retroactively apply unlimited liability to transaction that occurred between 2/2/24 and 60 days after the February statement. Since the customer is likely still in possession of their card as I assume these are recurring card not present transactions, 1005.6(b)(1) and (2) would not apply to this scenario. 1005.6(b)(3) makes the bank liable for the early charges, and the customer liable for later charges. Based on this, I conclude that this claim was handled properly.

Thank you Brian! I swear I will never fully understand Reg E, no matter how hard I try!! There has to be a simpler way!! LOL

As always, I appreciate your help!

And it cost your bank a lot more than the $7.99 you withheld from your customer to do all the work to handle the claim.