A debit card is quick and convenient to make purchases. They are valued highly by consumers as they do not allow you to spend money that you don’t have and they are safer than carrying around wads of cash in your wallet or purse. Just like anything else however they are not one hundred percent safe. If your debit card gets lost, stolen, or the valuable information gets taken off it then you can have a real problem on your hands. Luckily there are regulations and laws put into place by the government to protect consumers as well as by the holding company of your debit card.
Regulation E and your bank
The Electronic Funds Transfers regulation was put into play to protect consumers. It provides a detailed explanation of what consumers and banks need to do if there is an unauthorized purchase made from a debit card. If the individual reports the fraudulent transaction within sixty days of the day the statement was received then the rules must be followed by the bank. It is important to note that the sixty days does not begin from the day the transaction was made but from the day the statement was received. Statements occur commonly a month to month basis and as such the customer will have approximately two months to go through the charges and report any possible illegal activity.
If the error is reported within sixty days either orally or in writing to the bank then the consumer has limited liability. If the error is reported two days after receiving the statement then the consumer will not lose more than $50 or the amount of the fraudulent charge if it is less than that amount. Anything between three days and the sixty days however the customer can lose up to $500.
The bank has to investigate the claim in ten days from receiving it. The bank can only extend this time period after discussing the issue with the card holder and making arrangements to return the funds until the investigation is completed. The earlier the claim is made, the higher the chances to determine the source of the fraudulent purchase and recover the funds.
Zero liability and your card
Debit cards are usually issued by Visa or MasterCard. Luckily they can provide extra protection that your bank may not make available. A zero liability clause on your debit card will explain how you can go about getting all the funds back from the fraudulent charges regardless of the outcome of the investigation.
It can be different for each card holder and provider. It is important to know about what type of coverage you have on your debit card and if there is an opportunity to add coverage for perhaps a higher interest rate or monthly charge.
When you notice fraudulent charges
When you notice a charge on your statement that may be fraudulent be sure to do a little investigation of your own. Look at the statement as soon as possible after receiving it either online or in the mail. Inquire about the purchase with any other individuals that have access to the card before reporting the charge. Once you are sure the purchase is fraudulent it’s time to get the bank and card holding company involved.
The first step is to either call or visit your local bank. Explain the situation and discus what options you have to recoup the funds. After you find out what the bank can do for you ask them about the card holding company. They may offer better coverage for returning your funds quickly and hassle free. If they are unsure you can call the customer service number for the card provider on the back of the card or it will be available on their website. Do this as soon as possible just in case there is a grace period in which they will return all the funds versus a percentage or after an investigation.
Either the bank or the card holding company will cancel the card and issue you a new one. This new card will have a new number, new expiration date, and new security code on the back. The will make your old card useless to your account. If the individual who made the fraudulent purchase tries to use your now expired card it will not work and it will send up a red flag in the system and aid with the investigation.
I woke up one morning to a call from my card holding company. It was Visa and they alerted me of a suspicious purchase. It was a plane ticket from China to the United States. I told them the charge was not made by me and I went down to the bank and reported it. I had the funds replenished in my account by the end of the next business day and the rest of the investigation was done by the card holding company and required no more participation from me.
My father found out his debit card number had been stolen and used to buy tennis equipment. He alerted the bank and the card holding company immediately and they issued him a new card. When the individual who stole the number tried to use it to purchase something else they were taken into police custody and had to replenish the funds in my father’s account from the previous purchase.