I was just told by a vendor that VISA made a change to the wording of its "Zero Liability" by changing "grossly negligent" to just "negligent" and that this change requires a 21 day change in terms notice to our debit card holders.

Is this true and where can I find information about it?

It still says "gross negligence" on VISA's Zero Liability website.

https://www.visa.com/chip/personal/security/zero-liability.jsp

Important things to note:

If the unauthorized transaction involves your debit card or account, Visa's Zero Liability Policy requires issuers to replace any funds taken from your account as the result of an unauthorized debit transaction within 5 business days of notification.

In the event you experience unauthorized transactions:
Notify your financial institution immediately of any unauthorized use
Replacement funds are provided on a provisional basis and may be withheld, delayed, limited, or rescinded by your issuer based on the following:
Gross negligence or fraud
Delay in reporting unauthorized use
Investigation and verification of claim
Account standing and history
The transaction-at-issue must be posted to your account before replacement funds may be issued

For specific restrictions, limitations and other details, please consult your issuer.

I wonder if your vendor is trying to sell you some disclosures...

Is zero liability supposed to be disclosed? If so, where and how. I have been researching this and not coming up with anything yet.

It should be part of your cardholder agreement. Many forms vendors include the Reg E disclosure in with the cardholder agreement so a change to Zero Liability which adversely impacts the consumer would trigger a change in terms notice.

JoAnne's vendor's attorneys are likely trying to argue that the difference between "gross negligence" and simple "negligence" is a significant enough of an adverse change because it is "easier" to choose not to provide zero liability coverage. Or at least that is the argument the vendor is going to go with to try and make the bank buy change in terms notices.

I am not a lawyer, but I will quote a person who plays one on TV.

Col. Jessep: [refering to Santiago] I felt his life might be in danger.

Kaffee: Grave danger?

Col. Jessep: [sarcastically] Is there another kind?

Danger, Grave Danger, Negligence, Gross Negligence...I say "Save your money."

Ok, is it the standard Reg E model language or does it actually say zero fraud liability?

The Reg E model language can be found in Appendix A-2 and refers to the statutory requirements of $50/$500/unlimited liability. However, we are contractually obligated to provide VISA Zero Liability protections as a VISA Issuer so our card agreement should include this information including the qualifiers to retain these protections.

Brian - Are you able to reference in the Visa rules where we're instructed to disclose the information? I'm not saying we shouldn't. I will need documentary proof for the department managers I work with on credit card disclosures. Would this be true of Debit Card disclosures too?

So what is everyone doing on this? Are you going to change your disclosures to say ordinary negligence instead of grossly negligent? I'm not sure if it's mandatory or not.

Anyone????

I just got the call from form vendor wanting to 'help' us with our mass 30 day in advance notice of this 'adverse' change. About $6M worth of help. I think we will pass.

We got a call from a form vendor about this as well, this week.

I'm not sure I'm following the discussion. Is the question one of disclosing liability under zero liability rules or using the term "gross" in the negligence section?

As to liability, refer to 1005.7(b)(1) which describes, in part, the initial disclosures you must make under Reg E. "A summary of the consumer's liability, under Sec. 1005.6 or under state or other applicable law or agreement, for unauthorized electronic fund transfers" I've bolded why your Visa terms would apply as they are not law, but an agreement you have between the bank, Visa and the consumer.

And the .6 reference is to 1005.6(b)(6) which states "If state law or an agreement between the consumer and the financial institution imposes less liability than is provided by this section, the consumer's liability shall not exceed the amount imposed under the state law or agreement." so again we have "agreement" restrictions that should be disclosed.

My solution was to add zero as a tier of liability.

If the question is about using the "grossly negligent" standard, lets explore this.

First, the Visa Core Rules, https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules-public.pdf, removed the word "gross", see page CR-43, last April. (Rules section 1.4.6.1)

Next, what is the definitional difference between "grossly negligent" and "negligent?" I don't believe Visa defines this but I welcome Brian's comments. It would seem gross negligence is a really, really dumb thing, and negligent is just really dumb. Does your state define this? Regardless of how it is defined, I assume (it's a dangerous thing to do) that gross negligence is one standard, and negligence is a lower standard. This means that the consumer (Reg E) will have more liability for doing something really, really dumb which they didn't have before. This means liability is increasing and Reg E requires a change in terms notice if liability increases.

So, if your bank will use a lower standard of liability, changing to "negligent" vs "gross negligence" then under Reg E a 21 day notice is required. If your bank opts to enforce the rules as they have been, you are not making a change and no notice is required.

If you review claims for the last 6 to 12 months, how many times would you have reverted from zero liability using gross negligence to say $50 liability under Reg E's tier one or a greater liability amount? If you look and estimate the bank would have not paid $100 on claims, that's a pretty low savings. If your analysis says we would have held the customers to more liability, saving the bank $10,000, that's pretty high. If you say there would be no change in your claims liability, it's moot. Now you can judge if making this change would be cost effective by itself, or do we want to schedule this change with another Reg E (21 day notice) or Reg DD (30 day notice) change you will make at year end, as an example, when fees may go up on deposit accounts, or do you want to change it all.

Andy,

You are correct that no where does VISA define "gross negligence" vs. simply "negligence." Vague language seems to be the basis of a large majority of our judicial system. Also here we are over a year since the VISA Core Rules update, and the VISA Zero Liability website still says, "gross negligence."

The real issue here as far as deciding to provide the change in terms or not is determining the risk of being hauled into court for denying a claim. For example, We do not provide zero liability for one person who doesn't read their bank statements for 2 years and another for a person who leaves their card with the PIN written on it in an unlocked car. Are these both grossly negligent? Is only the unattended card grossly negligent because no one reads their mail anymore? These are type of questions we may ask to try and get a jury to side against the bank.

We are updating our Reg E disclosure...I want to make sure that we are still good using the term "gross negligence" for Visa Zero Liability....

I still don't see a change in their rulebook.....

https://usa.visa.com/pay-with-visa/visa-chip-technology-consumers/zero-liability-policy.html

Please let me know if this need to be changed to just "negligence"