As we understand, MasterCard is expanding its $0.00 card holder liability not only to cover PIN based and POS transactions, while still covering non-PIN transactions, but they are also implementing an adverse requirement that the consumer must “promptly” report the theft or loss after becoming aware of it. Also adversely, if the consumer fails to meet the $0.00 liability conditions (e.g. does not report the loss promptly) the current standard of $50.00 consumer liability is replaced with the standard Regulation E liability.

Can you provide us with the notice/ document that indicates the Reg E liability standards will apply if the customer does not report "promptly" , and also, will VISA be adhereing to these same standards?

There have been a few other threads on this:

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1940785

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1939725

MasterCard send out a Operations Bulletin dated May 27, 2014 to its U.S. Members. If you are a sponsored member you may need to ask your processor for a copy. If you have access to MasterCard Connect you can access previous bulletins online.

Previously, Zero Liability would not apply unless the cardholder did not exercise reasonable care in safeguarding the card, had reported 2 or more instances of fraud in the last 12 months and the account was in good standing. The old rule also limited cardholder liability to $50.00 regardless of the circumstances.

The new verbiage keeps the "reasonable care" clause and adds the "promptly" notify the financial institution of the loss or theft of the card. It also deletes the $50.00 liability cap so if Zero Liability does not apply because the cardholder does not report the loss or theft promptly, the Bank can elect to impose the higher liability schedule of 1005.6.

A popular forms vendor incorporated the MasterCard contractual language into their EFT disclosure. Since the new MasterCard terms will result in the potential of greater liability for the customer, it has been advising its clients to provide (and purchase from them) a Reg E change of notice at least 21 days prior to the new rule taking effect.

For institutions that have incorporated MasterCard language into their Reg E disclosure, I agree that a change in terms notice is appropriate. However, the Bank can provide this notice as a statement message if it would prefer not to spend money on vendor forms. It will need to update its debit card agreement to reflect the new MasterCard standards going forward.