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#1979417 - 11/26/14 05:48 PM Visa Zero Liability and business debit cards
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Joined: Apr 2013
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My financial institution issues Business debit cards with the Visa logo. A small business customer had his card compromised with fraudulent transactions occurring in September and October. Customer notified us within 60 days of 1st statement showing fraud. Visa indicates we have no chargeback rights. Our business debit card agreement states customer is liable for unauthorized transactions if we can prove we authorized the transactions in good faith. Can we hold the customer liable or does Visa zero liability overrule our debit card agreement?

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eBanking / Technology
#1979455 - 11/26/14 06:45 PM Re: Visa Zero Liability and business debit cards Twins Fan
BrianC Offline
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Posts: 6,322
No, you cannot hold the customer liable. You are contractually obligated as a VISA issuer to provide all of the protections offered by VISA. Zero Liability – US Region (Updated)
In the US Region, an Issuer must limit the Cardholder’s liability to zero upon receipt of notification from its Cardholder of an unauthorized Visa Consumer Card or Visa Business Card Transaction.

The Issuer may increase the amount of the Cardholder’s liability for unauthorized Visa Transactions only if the Issuer reasonably determines, based on substantial evidence, that the Cardholder was grossly negligent in the handling of the Account or the Card.
A Visa Business Card Issuer may require the notification of unauthorized Visa Transactions to be received within 60 calendar days of the mailing date of the first statement showing unauthorized Visa Transactions.
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!

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#1979470 - 11/26/14 07:11 PM Re: Visa Zero Liability and business debit cards BrianC
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Thanks for the response.

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#1983115 - 12/15/14 07:06 PM Re: Visa Zero Liability and business debit cards Twins Fan
travelgirl Offline
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Joined: Mar 2004
Posts: 223
Still a small biz account here - What if the customer's purse was stolen and fraudulent / unathorized transactions were made from a stolen access device at both ATM and POS terminals. Customer readily admitted her PIN number was in her purse. Purse was stolen at a restaurant on Saturday night the 13th, she called us today.

Is this enough evidence to show gross negligence? I know it doesn't under Reg E, but that's not covered here.

I think I need to see if the transactions were made through the PLUS network to help determine liability too.
Last edited by travelgirl; 12/15/14 07:35 PM.
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#1983329 - 12/16/14 04:00 PM Re: Visa Zero Liability and business debit cards Twins Fan
John Burnett Offline
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Cape Cod
I think it depends on what your business debit card agreement says about negligence. Simply saying that the customer remains liable when "gross negligence" is involved just begs for a customer to argue about whether carrying the PIN with the card is grossly negligent. If you have included some explanation of "gross negligence" in your card agreement ("...gross negligence, including actions such as carrying the PIN for the card on or with the card, failure to notify us of the loss or theft of the card within _____________ days after __________, allowing any other individual to use the card, and others.")

I don't think that you HAVE to include examples in the agreement; it just helps define expectations.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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