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.
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Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
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