The customer called and said that her card had been lost since Christmas. After Christmas, she had $414.02 of charges that she says is unauthorized. When she was questioned as to why she didn’t call and have the card statused lost/stolen, she said that she thought she would find it. She also said that she thought her son’s girlfriend had taken the card.

Our Debit Card Agreement says that if you know your card/code is lost/stolen and you do not notify us within 2 business days, you could lose as much as $500.00. It also says if we could prove that the losses would not have been incurred if you had called, you could lose as much as $500.00 (standard Reg E language). Then it states the $0 liability except where grossly negligent or engaged in fraud language.

Of course, if she would have called us, we would have blocked the card and none of the charges would have been approved.

Can this be considered gross negligence for $0 liability and therefore we then comply with the standard Reg E liability rules?

Thanks

Visa rules don't jump out, that I can see, and tell the bank that on a claim, this is what is defined as "grossly negligent." In one section of the operating manual it does say that liability may be increased if the customer is grossly negligent or there is fraud, which it then shows as an example, "(this includes protecting the Card, account, or PIN and reporting the loss or unauthorized transactions".

Based on that you may be safe. In one sense I'd reach out to Visa and ask for a clear definition but that may take awhile. If that is the case, personally I'd deny the zero liability and revert to Reg E and calculate liability based on the dates applicable to the claim.

Looking back at the title of the claim, I didn't recall zero liability being applicable to non-PIN transactions anyway. It isn't something I keep up with however. Brian Crow would know.

Guilty as charged, Andy.

From VISA's Zero Liability website

Covers U.S.-issued cards only. Does not apply to ATM transactions, certain commercial card transactions, PIN or other transactions not processed by Visa. You must notify your financial institution immediately of any unauthorized use. For specific restrictions, limitations and other details, please consult your issuer.

Note that Zero Liability covers signature based purchases and PIN purchases if they are processed by VISA. I think Andy's post may have it backwards. The issuer has some latitude to decide whether or not Zero Liability will apply since each issuer may have "restrictions, limitations...". Gross negligence can be one of the limitations.

As Andy suggests, you may wish to call VISA, but if I were processing the claim, I'd be denying Zero Liability as well.

The question for $500 liability is whether or not any of the transactions occurred more than 2 business days after the date she learned of the loss/theft of the access device.