Compliance Blog

Dec 18, 2007
Categories: Accounts

Unauthorized EFT?

This is why I love my job.  A member called with an interesting issue.  We don't know the answer, and we don't know that there is an answer.  But it is fascinating, in a compliance kind of way.

The situation. A member opens a joint account with her minor child.  The credit union has a policy whereby they will not issue a debit card to a minor.  Therefore, they issue a debit card just to the mother.  The mother now reports that the daughter has withdrawn $500 at an ATM, and she'd like the credit union to reimburse her via Regulation E's unauthorized EFT provisions.  Regulation E does not really address this situation.

Here are some observations:

  • The daughter is joint, so she has a right to all the money.  So where is the harm?
  • Is the joint relationship an implicit authority for the daughter to use the card?
  • The account is a joint account, not a UTMA.
  • The mother is adamant that the transaction was unauthorized.
  • How did the daughter get the PIN?

So what's a credit union to do?  I'd love to hear your thoughts.