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A customer filed a timely report asserting fraudulent debit card transactions. The bank's investigation determined that the bank sent the customer a real-time fraud alert that the customer acknowledged and stated that the transactions were not fraudulent. Is the bank or customer liable for the transactions?

A customer filed a timely report asserting fraudulent debit card transactions, which she reported immediately after reviewing her account online. The bank's investigation determined that the bank sent the customer a real-time fraud alert concerning these transactions and that the customer acknowledged the alert and stated that the transactions were not fraudulent. Is the bank liable for these transactions under Regulation E (Electronic Fund Transfer Act) or does the liability fall on the customer who confirmed that she authorized these transactions at the time they were made?

The customer is liable. The bank may decline the claim because the consumer approved the transactions when the bank contacted her via a fraud alert, thereby making these authorized transactions. (August 2020)

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