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Debit Card Reported Stolen - FI's Responsibility

Answered by: 
John Burnett

Question: 
If a debit card holder has his or her card stolen and PIN based withdrawals are made on the debit card by the culprits, what is the responsibility of the financial institution from which the debit card was issued? Assuming that the theft was reported timely under Reg E requirements.
Answer: 

The issuing institution must accept the customer's claim that the transactions were unauthorized, evaluate the claim, determine whether the card holder authorized the transactions (for example, by giving permission for the card to be used) and otherwise conforming to the requirements of section 205.11 of Reg E. The fact that the culprits used a PIN to effect transactions doesn't mean the transactions were authorized. Remember, the Commentary to the regulation makes it clear that even when the customer writes the PIN on the card the unauthorized use of the card is not the card holder's responsibility, assuming timely notification.

First published on BankersOnline.com 10/22/07

First published on 10/22/2007

Filed under: 
Technology
Filed under technology as: 
IT

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