Unauthorized Transfers: Prerequisites for Consumer Liability

C

Sure, I'd be happy to provide a detailed explanation of the answer to this question.

The correct answer is C. "Increased liability for the consumer" is not a prerequisite for consumer liability under 12 CFR 205.6 for unauthorized transfers.

Let me break down the other answer choices and explain why they are prerequisites for consumer liability:

A. If an access device was used, it must have been an accepted access device: An access device is any card, code, or other means of access to a consumer's account that can be used to initiate an electronic fund transfer. For example, a debit card is an access device. To hold a consumer liable for unauthorized transfers, the access device used must be an accepted access device, meaning it was issued by the financial institution or authorized by the consumer for use with their account.

B. Institution must have provided a means of identifying the consumer to whom the device was issued: This means that the financial institution must have taken steps to ensure that the consumer using the access device is actually the person to whom the device was issued. This can be done through electronic means such as requiring a Personal Identification Number (PIN), or by using other identifying information such as a photograph or fingerprint.

D. Institution must have provided the following in writing to the consumer: The financial institution must provide the consumer with certain information in writing regarding their liability for unauthorized transfers. This includes a summary of the consumer's liability, the telephone number and address of the person or office to be notified in case of an unauthorized transfer, and the institution's business days.

So, to summarize, in order for a financial institution to hold a consumer liable for unauthorized transfers under 12 CFR 205.6, the access device used must be accepted, the institution must have provided a means of identifying the consumer, and the institution must have provided certain information in writing to the consumer. However, increased liability for the consumer is not a prerequisite for consumer liability under this regulation.