Reg E Unauthorized Transaction w/PIN Issue

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Question:

REG E, if a consumer has given his or her PIN to a friend, the friend later steals the card [and uses it without authority], are we required to give them their money back under Reg E?

Answer:

The operative word in your question is "steals." Although the "friend" may have had authorization to use the card and PIN at some time in the past, when the card has been returned to the control of the cardholder and is subsequently stolen and used without authority by that same "friend," the transaction is unauthorized and refundable to the cardholder. Determine the amount to be reimbursed to the cardholder by applying the rules in section 1005.6 of Regulation E.