Am I liable for unauthorized transactions on my debit card?
It depends. Federal law provides consumers with protection against most unauthorized credit- and debit-card transactions.
Under federal law, consumer liability for unauthorized credit-card transactions is limited to $50. However, many banks and credit-card companies offer even more protection for credit cards in the form of “zero liability” for unauthorized transactions.
For unauthorized debit, rather than credit, transactions, the rules get a bit trickier. For the most part, you won’t be held responsible for any unauthorized debit-card withdrawals if you report the lost card before it’s used. Otherwise, the extent of your liability depends on how quickly you report your lost card. If you report your lost debit card within two business days after you notice your card is missing, you’ll be held liable for up to $50 of unauthorized withdrawals. If you fail to report your lost debit card within two days after you notice your card is missing, you can be held responsible for up to $500 of unauthorized withdrawals. And if you fail to report an unauthorized transfer or withdrawal that’s posted on your bank statement within 60 days after the statement is mailed to you, you risk unlimited liability.
The good news is that some banks and credit-card companies are offering the same “zero liability” protection to debit-card users that they offer to their credit-card users. This zero liability protection, however, does come with exceptions. In order to have zero liability for unauthorized debit-card transactions, consumers may be required to report the loss of their card “promptly” (typically, no more than two days after they learn of the card loss or theft). In addition, a consumer may need to exercise “reasonable care” to safeguard his or her debit-card information. For example, an individual who gives someone else his or her debit card and PIN could be held responsible for any unauthorized transactions.
It’s important to remember that, unlike credit cards, debit cards directly link to your financial accounts. As a result, you should act quickly and call your bank or credit-card company as soon as you learn of any unauthorized transactions on your account.
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