I have kind of an odd question.

We have a customer who told us yesterday about 3 unauthorized ATM withdrawals. We pulled up the ATM footage, and it was a close friend of his who did all three transactions. By piecing together the dates and times, we determined that this friend (a roommate) was taking his card out of his wallet while he slept, and returning it back to the wallet right away.

Our customer never gave the PIN to the friend (we believe him, he has been very cooperative and forthwright in the situation, is a longtime customer, and is also the nephew of an employee), but the friend is always with him, and he believes the friend shoulder-surfed the PIN.

Here's the hard part. He has been friends with this person since childhood (they are in college now), and the friend has gotten into trouble as of late. Our customer doesn't want to enable the person, but does want to give the friend (or the friend's parents) an opportunity to make things right without have to turn all of this over to the police.

We've told the customer that once we refund the unauthorized funds, we'll file charges against the friend, since we'll be out the money at that time. He wants to know how long he has to make a claim for reimbursement (I think, wanting to know how long he has to work out the matter with his friend).

Under Reg E, what are his rights? Does he technically have 60 days from the statement date, or did the clock start ticking yesterday when we became aware it? At this point, we have not refunded anything yet. If the clock is ticking now, do we have to do something within 10 days?

Thanks for your help!

The clock started ticking when he notified you and provided you enough information to begin an investigation.

Tell him to tell his friend the cops will be banging on his door soon if this isn't resolved.

Yes, it stinks but you have to give him the provisional credit within the next 10 days. AND you can't make the credit contingent upon whether he'll further help in the investigation.

But you can press him though (sounds like he wants to do the right thing) and see if the friend or the parents will pay restitution. Give them a week to think it over. If after that time, you don't have restitution in your hot little hand, then make the police report.

That's just my opinion though...

Answering the question you asked -- Is there a time limit for this customer to file a claim with you? -- Yes and no.

The 60 day time limit in section 205.11 sets the limit past which you don't have to adhere to the 205.11 timeframes, provisional credit, and notice rules. But it does not cut off the consumer's claim of unauthorized transfers. The limits on that are in 205.6, and they only apply to the three tiers of customer liability (not on the time frame for the customer to make the claim). All of the three ATM withdrawals occurred before the customer learned that his card had been "compromised," so the customer would not be liable for any of those transfers, even it he files his claim three years from now.

As to your obligation here: If the customer documents for you (in writing) that he's withdrawing his claim, you can close the file without taking action (he can make the claim later, if he wants).

If he doesn't want to give you a written rescission of his claim, you've got a live claim that you have to follow up on. You may or may not have to give him provisional credit, depending on whether he filed the claim in writing and the other technical triggers in 205.11. You've already done the investigation and concluded that the "friend" stole the money, so your delay in finalizing the claim should be minimal. Then, I'd follow Swedish Chef's suggestions. As much as you might want to see this kid succeed at piecing back together his friendship with the roommate, that's not your concern.

Thank you everyone. Reg E is so confusing to me! I really appreciate your clarification and advice.