With the changes effective 10/17/14, I have seen the various material referencing that PIN transactions will be covered by the zero liability requirements. However, the material is not specific as to whether this covers ALL transactions using a Visa or MC branded card, or ONLY those conducted over the Visa or MC networks.
Logically I would think zero liability should only apply to transactions on the networks, but I am hearing otherwise from my state association. While I normally don't second-guess them, this just feels wrong. Are Visa and MC dictating that transactions not over their networks, but conducted using a card with their logo on it, are subject to their rules?

No. If the transaction doesn't touch the Visa or MasterCard network, the Visa or MasterCard rules won't affect the transaction at all. Although MasterCard is making some related changes that affect liability for unauthorized EFTs via that network, the basis change in these rules is to bring under the zero liability requirement an unauthorized ATM/POS transaction initiated over the MC or Visa networks, when the transaction is PIN-authorized. That would include CIRRUS and PLUS networks, too. But the vast majority of ATM transactions that travel over regional or local networks (NYCE, Honor, Etc.), won't be affected by these changes.

In the interim here, John, I have been in contact with my state association, and they are sticking to their guns that non-Visa or -MC network transactions WILL be covered by zero liability. I can't find anything to confirm their stance or yours that has been issued by Visa or MC. Do you have any Visa or MC material you can point to that would help confirm non-Visa or -MC network transactions will not be covered by zero liability?

I can't speak to MasterCard, but there's an anouncement in the 06/26/14 Visa Business News. You should be able to access it through VisaOnline or contact your Visa Rep.

I'm not sure where your state association is coming from. This is not a regulatory change; Visa is updating their Operating Rules to exend their "Zero Liability" to cover transactions over ATM networks they own (Visa and Plus) If it were regulatory, other ATM networks such as Accel, MoneyPass, Star, etc. would also be updating their Operating Rules (yes, they have them too!)

Thanks, Betsy. My association is saying that MC is essentially saying, "Hey, if you want to use our cards, it's zero liability for all transactions using those cards, so customers can rest easy, even if those transactions aren't over the MC network." That just seems crazy that they would require such a thing...

ForceFull1: You should be able to obtain the actual wording of the revised MasterCard Zero Liability policy that will be going into effect (not the press release verbiage). Once you have that, read it carefully. I find it hard to believe that MasterCard would be attempting to dictate any liability provision for a transaction not handled over its networks. If you need to, run the actual updated policy by your legal counsel. I don't have access to it, since I am not a MasterCard card issuer.

I also received the same bulletin ForceFull received from the state banking association. While I am not Mastercard but if you look at the material BetsyS pointed out from VISA, the zero liability only affects VISA and Plus networks. It does not apply to other networks. We will be amending our disclosure to reflect that.

The exact verbiage from MasterCard's U.S. Operations Bulletin dated May 27, 2014.

"MasterCard is revising its “zero liability” rule in the U.S. region by simplifying the language and applying the rule to all MasterCard® branded POS and ATM transactions."

An Issuer must not hold a Cardholder liable for a Transaction that was not authorized by the Cardholder if the Cardholder exercised reasonable care in safeguarding the Card from risk of loss or theft and, upon becoming aware of such loss or theft, promptly reported the loss or theft to the Issuer.

This Rule shall not apply to a Transaction conducted with a Card that is:
a. issued to an entity other than a natural person;
b. issued for a commercial purpose; provided, the Rule shall apply to a Transaction conducted with Card for a “small business” program as described on www.mastercardbusiness.com (under “Small Business,” select the “Products” tab);
c. issued and/or sold to a person until such time as that person’s identity is registered by or on behalf of the Issuer in connection with such issuance and/or sale, which registration may include customer identification program requirements.

On the surface I can see how one could interpret this as being all transactions regardless of network since the rule does not specify, but we have to look to the definition of ATM Transaction in MasterCard Rules.

ATM Transaction
A cash withdrawal effected at an ATM Terminal with a Card and processed through the MasterCard ATM Network. An ATM Transaction is identified with MCC 6011 (Automated Cash
Disbursements—Customer Financial Institution).

I agree with John. MasterCard branded networks would be MasterCard, Maestro, & Cirrus. I don't see how this could extend to transactions processed using competing networks. That being said, I also wouldn't want to get hit with non-Compliance fines from MasterCard. Sounds like a good questions for the attorneys.

Bump.

Here is the language we are considering incorporating into our Reg E Disclosures for the change in Visa Liabiilty. Thoughts?

Most unauthorized PIN transactions will not be covered by Visa Zero Liability because transactions are covered ONLY if conducted over a VISA owned (ATM or Point of Sale) network. As previously disclosed, within the limits of Regulation E, we may reimburse you for some unauthorized PIN transactions that are not covered under VISA Zero Liability. See your banker if you think you have an unauthorized transaction.