What Are The Federal Laws Concerning Lost or Stolen Debit Cards?
Debit cards have become a popular method of payment, as they are convenient and widely accepted. However, they can also be vulnerable to loss or theft, which can lead to fraudulent transactions and financial loss. The good news is there are federal laws in place that provide consumer protections in the event of a lost or stolen debit card. This article will explore these laws and what they mean for cardholders.
The EFTA and Regulation E
The Electronic Fund Transfer Act (EFTA) and Regulation E establish the rules and requirements for electronic fund transfers (EFTs), which include debit cards. These laws provide protection for consumers in the case of unauthorized transactions or errors.
Within two business days of discovering an unauthorized transaction, the cardholder must report the loss or theft to the issuing financial institution. Once the institution receives the notice, it must investigate and resolve the issue within 10 business days. This can involve canceling the card, refunding the money, and providing a new card to the cardholder.
The liability for unauthorized transactions is limited to $50 if the cardholder reports the loss or theft within two business days. If the cardholder waits longer to report the loss, the liability can increase up to $500. If the loss or theft is not reported within 60 days, the cardholder can be responsible for all losses.
The Fair Credit Billing Act
The Fair Credit Billing Act (FCBA) applies to credit card transactions and provides protections for billing errors and fraudulent charges. This law requires that the cardholder first attempt to resolve the issue with the issuer before filing a complaint with the Federal Trade Commission (FTC).
The FCBA also provides protection for cardholders in the event of unauthorized transactions. If a lost or stolen credit card is used for an unauthorized transaction, the liability for the cardholder is limited to $50.
The Liability of Financial Institutions
Financial institutions that issue debit cards are responsible for protecting their customers from fraud and unauthorized transactions. If the institution fails to investigate or resolve an issue within the regulatory timeframes, they can be held liable for any losses incurred by the cardholder.
Conclusion
Federal laws provide important consumer protections for cardholders who have lost or stolen debit cards. The EFTA and Regulation E establish the rules and requirements for electronic fund transfers, including debit cards. The Fair Credit Billing Act provides additional protections for credit card transactions. Cardholders are required to report the loss or theft of their debit card within two business days to limit their liability. Financial institutions are responsible for investigating and resolving any unauthorized transactions. By being aware of these laws, cardholders can take the necessary steps to protect themselves in the event of a lost or stolen debit card.
Federal Laws Concerning Lost or Stolen Debit/Credit Cards
The ease and convenience offered by a credit or debit card enable consumers to make seamless and hassle-free purchases. That being said, when a credit or debit card is lost or stolen, there are potential consequences that an individual must be made aware of. The Fair Credit Billing Act and the Electronic Fund Transfer Act affirmed various procedures that must be followed in the event of a lost or stolen card.
Limiting your Financial Loss after the Card is Lost or Stolen:
After you have noticed that your card has gone missing, you must immediately report your credit or debit cards as lost or stolen to the issuing agency. The majority of issuers offer toll-free numbers and 24-hour customer service departments to deal with such emergencies. Additionally, it’s also a prudent move to follow up calls with a letter or email to affirm that the card has been lost or stolen. Be sure to include your account number and the date of the expected loss, when you report that your card is missing.
The maximum liability under federal law for unauthorized use of a credit card is $50. If you report the loss before your credit card is accessed, the Federal Credit Billing Act states that the card issuer cannot hold you responsible for any unauthorized charges. If a thief accesses and uses your card before they are reported missing, the most you will owe for the unauthorized charges is $50 per card. Additionally, if the loss involves just your credit card number (and not the card itself) you possess no liability for unauthorized use.
Liability under federal law for the unauthorized use of your debit card is dependent on the timeframe in which you report the card missing. If you report an ATM or debit card missing before it used without authorization, the Electronic Fund Transfer Act states that the card issues cannot hold you responsible for unauthorized transfers.
If unauthorized use is present before you report the card missing, your liability under law is dependent on how quickly you report the loss. For example, if you report the unauthorized use within two business days after you realize the card was missing, you will not be responsible for more than $50 of unauthorized use. However, if you do not report the loss within two business days after you realize the card as lost, you could lose up $500 of the unauthorized use or transfer.
Additionally, you will risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing the unauthorized use is mailed to you. This unfortunate situation means that you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts. For unauthorized transfers involving your debit card number (and not the card) you are liable for only the transfers that take place following 60 days from the mailing of your bank statement that contains the unauthorized use.
