Reducing Check Card Losses

Answered by:

Question:

Our Lost/Stolen Check card transactions are increasing. Our current interpretation of Reg-E, is that the Issuer accepts all liability for these transactions, without the right to insist on Affidavits or Police Reports from the consumer. It also appears the Issuer has no rights under Reg-E to question any customer's claims that the transactions are not theirs (due to a lost/stolen check card), even if the story does not add up. Is this the correct interpretation? What are other Institutions doing with Lost/Stolen card transactions? Are they simply taking the losses and moving forward? Do you have any suggestions on technology or techniques that are working for other institutions to help reduce losses due to lost/stolen check card activity?

Answer:

You emphasize that PINs should not be written on or stored with the card.

"E" is a consumer reg. Your investigation and interview with the consumer should reveal if they did the transaction, authorized it or received benefit of it. If none of these are the case, invoke the liability you are allowed and which you feel is appropriate, pay the claim and do not issue another card.

You may look at parts of "E" that say a user, granted PIN access by the consumer, has evergreen access until you are notified otherwise. This is where some claims arise. (OSC 2(m)2)

You may also need to have formal training on interviewing techniques to assist in the investigation.

First published on BankersOnline.com 05/19/03