Unauthorized Use of a Credit Or Debit Card
October 20th, 2010 | 
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Electronic payments made with a credit or debit card have become the norm in many people’s lives. With the convenience they offer and no need to carry large amounts of cash, many consumers use a card for nearly every purchase. Financial institutions that offer electronic payment options and credit card companies that provide the funding are vigilant in their attempt to keep ahead of security threats and out-and-out thieves.
We all understand that stolen or lost cash is pretty much good as gone. But what about unauthorized use of our personal credit or debit accounts. Even with all that they have going for them, electronic payments are still vulnerable to theft and fraud. The furtive, protective glances around to ensure that the amount of money you’re carrying isn’t observed by a thief when paying with cash are replaced with defensive glances to shield the identification of your PIN. What is the consumer responsible for, if someone steals from them using electronic payments?
Liability for Fraudulent Credit Card Activity
The Fair Credit Billing Act (FCBA) offers legislative protections in the case of credit or debit card loss or theft. The Electronic Fund Transfer Act (EFTA) states that the consumer’s maximum liability limit for unauthorized charges on a credit card of $50, if you report it to the financial institution or card issuer within 90 days of the first credit card statement that reflected the fraudulent charges. There is no liability when only an account number is stolen.
Call the customer service department number located on the back of the card; this number can also be found on your account statement, if your card is not in your possession. If you report the loss before the card is used, then you will have no liability for fraudulently incurred charges
Liability for Unauthorized Debit Card Activity
Losing a debit or ATM card has the potential of being more costly and a bit trickier to resolve. With all the funds coming directly from your personal bank account, huge losses can be incurred, if you don’t move quickly. Just like a credit card, however, if you report the loss before your card is used, you will have no liability for unauthorized charges.
With debit cards having either a Visa or MasterCard logo, a legitimate question is whether their zero-liability policy applies to debit cards. Simply stated, it depends. If the fraudulent transaction went through the Visa or MasterCard’s network, a point-of-sale transaction, then you are generally covered. But if the unauthorized transaction was made at an ATM machine, then you are not covered by the Visa or MasterCard $0 liability policy. If unauthorized activity did NOT take place with an “approved access device”, like an ATM, then you should not have any liability. For example, if a criminal got your card number and created a bogus card and used that–you should NOT be held liable for those transactions.
A quick response is the key to limiting fraud losses. The most important first step is to contact the credit card issuer or financial institution by phone to report your suspicions. If you report unauthorized activity within two days of discovering the fraud, your liability will be no more than $50. If you file a missing card or unauthorized transaction report after two days but before 60 days have past, your maximum liability will be $500.
If you fail to report your suspicion before 60 days, your liability will be unlimited. And if the bank can prove that you delayed to report the activity or were negligent, you can be left holding the bag and taking the entire loss. Your loss could be as much as all the cash in your bank account, as well as your overdraft line-of-credit, if you don’t report the unauthorized use within 60 days of receiving your account statement in the mail.
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