I've recently read a story that is about a year old concerning some changes by Visa and MC regarding customer liability if their card is lost or stolen. The article is not very clear but it refers to debit cards that are "co-branded" with Visa and MC. It says that if you offer a card to your customers that is co-branded the customer does not have ANY time limit on when they MUST notify the issuing bank if their card is lost or stolen. My questions are these: Most debit cards have a Visa or MC logo on them, does that make them a co-branded card? Also, if having the logo on the card does make it a co-branded card does the customer really have an unlimited amount of time to report the loss?

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Opinions stated are not necessarily that of my employer.

We offer a Visa Debit Card. I have not heard anything regarding notification rules changing. What we did change, however, was the $50 responsibility rule; our contract with VISA states that we cannot hold the customer liable for the first $50 when the card is lost or stolen. Other than that,I think all the Reg. E rules apply.

Reg. E will apply when the card is used one way, VISA/MC rules will apply when used another. As an additional twist, Reg. Z may apply.

My customer goes to an ATM and makes a withdrawal, that is E. Then he goes to a store and uses the debit feature, that is MC/VISA. Reg. Z can also apply if the card is using a credit feature.

Terry Fitz put together a Reg. E vs Reg. Z matrix that is available in the Reg. E section on my compliance page.

If it was easy, monkeys would be doing it.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

[This message has been edited by Andy Z (edited 08-16-2001).]

Leslie,

For VISA branded debit cards -- If a transaction is processed through the VISA system(where no PIN is used)the customer's liability is zero. The zero liability limit does not apply if you determine that the customer was grossly negligent or fraudulent in handing thier account. This went into effect in April 2000. You can review a Q & A at: www.visa.com/av/zero_liability/faq.html

For transactions that ARE NOT processed through the VISA system (VISA branded card used with a PIN at an ATM) you can use Reg E's rules. If you are a CA bank you have another set of rules to contend with. Refer to Civil Code 1748.30 which governs the use of debit cards and consumer liability.

Dolly Nugent
VP/Compliance Officer
Citizens Business Bank