It's important to be accurate about the law here. Once upon a time, there was much greater liability with a debit card, but under federal law, as a practical matter, there is no longer, if you take timely action, much as with credit cards. Here is a quote from a discussion of the issue on the American Bar Association website (and yes, I am a lawyer, but not in this field.):
"...if you are the victim of debit card fraud, your bank will protect you. The Electronic Funds Transfer Act (EFTA) protects consumers from losses due to debit card fraud artists if you report fraud in a timely fashion. Visa and MasterCard have taken the protection a step further for all debit cards that bear their logos, by instituting a zero liability policy. This policy states consumers will not have to pay for any purchases made fraudulently using Visa and MasterCard debit cards, regardless of the time it takes to report the incident."
First, you have the protection of the EFTA, which is retroactive if you timely report the loss, and then as a practical matter, most cards now have a VISA or MC logo. For those that do not, the issuing bank may well have a position offering protection from liability for fraudulent transactions. You can check with your bank.
For anyone who is really interested, here is the FTC's statement about debit card liability under EFTA, which addresses what is timely reporting. You are really pretty well covered, even apart from the VISA or MC protection.
"ATM or Debit Card Loss or Fraudulent Transfers (EFTA). Your liability under federal law for unauthorized use of your ATM or debit card depends on how quickly you report the loss. If you report an ATM or debit card missing before it's used without your permission, the EFTA says the card issuer cannot hold you responsible for any unauthorized transfers. If unauthorized use occurs before you report it, your liability under federal law depends on how quickly you report the loss.
For example, if you report the loss within two business days after you realize your card is missing, you will not be responsible for more than $50 for unauthorized use. However, if you don't report the loss within two business days after you discover the loss, you could lose up to $500 because of an unauthorized transfer. You also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing unauthorized use is mailed to you. That means you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts. However, for unauthorized transfers involving only your debit card number (not the loss of the card), you are liable only for transfers that occur after 60 days following the mailing of your bank statement containing the unauthorized use and before you report the loss.
If unauthorized transfers show up on your bank statement, report them to the card issuer as quickly as possible. Once you've reported the loss of your ATM or debit card, you cannot be held liable for additional unauthorized transfers that occur after that time."
So to sum it up....if you don't have a VISA or MC debit card (which have 0 fraud liability), you're only liable for $50 if you lose your card and call it in within 2 days after you realize you lost it. If someone steals your card number (and possibly your PIN) and uses it, you're only liable for transfers that occur after 60 days following the mailing of the bank statement showing the use and before you report the situation. So if you get a statement showing fraudulent activity and you call in within 60 days, you have no liability. Doesn't sound so bad to me.
Anyway, I don't lose sleep carrying and occasionally using my VISA debit card, that gives rewards just like my favorite CC.
A little research can bring some peace of mind.
Trulyb
Message Edited by trulyb on 07-31-2009 07:58 PM
Message Edited by trulyb on 07-31-2009 08:18 PM
