Thomas McCutcheon

If your debit or credit card is lost or stolen and someone makes unauthorized charges are you responsible for payment?

The answer is that you might be. When the laws concerning financial responsibility were created, they mainly dealt with writing checks. However, the vast majority people today use a debit or credit card for their day to day purchases.

The law regarding an unauthorized use of a paper check placed a burden on the bank paying the check to recognize their customer’s signature.

That same law placed a burden on the check holder to discover and report an unauthorized signature. In other words, if the account holder did not look at their statement from the bank within a certain amount of time, they would have to pay the amount stolen. If they promptly reported the check as forged or altered, they did not owe the money. These rules were made years ago before the electronic transfer of funds by debit card.

Under the terms of the Electronic Fund Transfer Act there are specific periods of time to report the loss or theft of a debit card. If a card is reported lost or stolen before any fraudulent or unauthorized charges are made the consumer owes no money. Otherwise, you have two business days after learning about the loss to report unauthorized transfers to limit your liability to $50.00. After two days but less than 60 days your liability increases to $500.00. After 60 days, your liability is unlimited. Use your online banking app frequently, and report any suspicious activity immediately.

Credit cards are treated differently at law. Credit cards fall under the Fair Credit Billing Act which limits liability to $50.00. Although that sounds good, it may not be. In order to enforce your rights with credit card fraud you have to agree to prosecute the person that was the unauthorized user. That’s not a problem if someone breaks into your car but if it’s your grandmother it’s a different story. Nobody wants to send grandma to jail.

Pay attention to the statements that you receive and the charges that are made whether they are credit or debit. If something suspicious is going on, report it. You must take action to protect yourself if you are going to protect yourself.

Buckle up, drive safely and as always your referrals are appreciated! 256-764-0112


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