Question:

Hi Heather,

Our member is disputing a PIN-based debit card transaction. The member told us that he wrote his PIN on the back of the card that was stolen. Do we still have to refund the charges?

Great Question!

Unfortunately, the answer is yes. The transaction you describe is an unauthorized electronic funds transfer (EFT) covered by the error resolution procedures in Regulation E (Reg E). Reg E does not precondition consumer liability for unauthorized EFTs on carelessness or negligence. If the transactions meets the definition of an unauthorized EFT, the credit union will be liable.

Frustrating? You bet. Is there anything the credit union can do to protect itself? Yes, some risk mitigation is possible. If you want to learn more about this situation and other card-based disputes, join us for a free virtual class on Thursday, February 20th.