Answer:
I cannot imagine that there is much case law out there where the bank may have prevailed in such a frivolous lawsuit. Regulation E clearly states that customer negligence has no bearing on the customer's ultimate liability. Refer to the regulatory commentary:
12 CFR 205.6(b) Limitations on Amount of Liability
2. Consumer negligence. Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. Thus, consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer's liability for unauthorized transfers. (However, refer to comment 2(m)-2 regarding termination of the authority of given by the consumer to another person.)
Of course, if the argument is that the customer gave away the card and the PIN to the kid, the regulation also addresses that as referenced in the above paragraph:
2(m) Unauthorized Electronic Fund Transfer
2. Authority. If a consumer furnishes an access device and grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given, the consumer is fully liable for the transfers unless the consumer has notified the financial institution that transfers by that person are no longer authorized.
This must be a large amount for a bank to bother with a lawsuit against a depositor or we don't have the whole story.
First published on BankersOnline.com 8/24/09
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