Deny Dispute if PIN Verified and Chip Read?

Let me run a scenario past you. Customer writes PIN on the card. Not smart, but doesn't eliminate Reg E liability limits if customer notifies of loss or theft in a timely manner. So now, PIN is on the card and it is lost or stolen. Customer no longer has card in possession, but notifies the bank within 2 business days of learning of loss or theft. Customer's max liability is $50, regardless of the fact that the PIN was on the card.

OK, but what if the customer still has the card in their possession? You would have a stronger case that the transaction was not unauthorized, but what if someone took the card for the transaction in question, then replaced it in the customer's wallet after the transaction was done? Wouldn't that still be unauthorized?

Both of these scenarios may reflect negligence, and negligence may cancel any zero liability protections from Visa/MC, but negligence does not counteract Reg E liability limits.

So there is a premium on asking all the right questions at the time of the dispute that will give you the evidence you need beyond just the card chip and PIN being present. You need to ask if the customer still has the card in their possession. Did they write the PIN number on the card or anywhere else with the card? Was the card ever out of their possession or control? The answers to those questions along with the fact that the card chip and pin were present may give you enough evidence to conclude that the transaction in question was authorized.