Fraud claims and chip cards/mobile wallets

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Question:

I have two questions. While I understand that fraud claims cannot be denied for chip-present transactions, I have a scenario where I'm seeking clarification. If a member fills out a fraud claim form indicating that their card was in their possession at all times, but the network data confirms that the chip was present during the fraudulent transaction, can we deny the claim in this instance, considering the card was in their possession during the fraudulent transactions where the card was present? Additionally, for token transactions, if a member claims fraud on transactions made using a mobile wallet (e.g., Apple Wallet), and I can see multiple other transactions were made on the same token associated with the Apple Wallet, are we able to deny the claim? I was under the impression that a token is unique to a specific device or digital wallet and cannot be used on another device or wallet. Please confirm if this is correct, and whether we would be able to deny a claim based on this scenario.

Answer:

In both of these cases, you must consider the potential of a person such as a family member, roommate, caregiver, etc. gaining unauthorized access to the chip card or the mobile device and performing transactions without the consumer's knowledge and then returning the card/mobile device back before the consumer recognizes that they have been taken.

Denying a claim solely on the basis of circumstantial evidence that does not directly tie the consumer to disputed transaction could open the institution up to regulatory criticism if we have a patten or practice of denying claims without hard evidence. Reg E is not a courtroom and does not require proof beyond a reasonable doubt to deny a claim, but institutions should avoid sweeping policies or procedures for denying claims based on these types of circumstances and investigate each claim based on its own merits.