Answer:
Start by considering the fact that Regulation E and the Electronic Fund Transfer Act are all about consumer protection. I think that if “push comes to shove” in a court of law, a judge might be readily convinced that dispensing counterfeit currency is the equivalent of a dispenser failure, since the consumer doesn't get the amount of [legal] currency the consumer is charged for.
On the other hand, if the ATM involved is operated by a bank that uses counterfeit-detecting currency counters, the bank might be able to rebut the claim of bogus cash. A strong argument for this result is a comparison with the parallel scenario of a customer leaving a bank lobby with cash and coming back, even moments later, alleging that the cash is counterfeit. There's no proof that the funny money came from the bank teller.
First published on BankersOnline.com 2/28/11
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