No, we do not believe you are required to take action when a customer initiates a mobile peer-to-peer (P2P) transaction that turns out to be fraudulent. Regulation E defines an “unauthorized electronic fund transfer” as “an electronic fund transfer from a consumer’s account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit.” Here, your customer initiated the electronic fund transfer, so it does not appear to have been unauthorized.

We also are not aware of any Illinois law that requires a bank to reimburse customers who are victims of fraud, although the fraudsters would be in violation of the Illinois Criminal Code. Consequently, we believe your customer’s only recourse to recover the funds would be to contact their local law enforcement agency and to potentially file a civil action against the fraudster.

For resources related to our guidance, please see:

• Regulation E, 12 CFR 1005.2(m) (“‘Unauthorized electronic fund transfer’ means an electronic fund transfer from a consumer’s account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. The term does not include an electronic fund transfer initiated: (1) By a person who was furnished the access device to the consumer’s account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized; (2) With fraudulent intent by the consumer or any person acting in concert with the consumer; or (3) By the financial institution or its employee.”)

• Illinois Criminal Code, 720 ILCS 5/16-1(a)(2) (“A person commits theft when he or she knowingly . . . Obtains by deception control over property of the owner . . .”)