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Lost/Stolen Debit Cards - Bank’s Liability

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At our credit union, we offer visa debit cards. If a member loses the card or it gets stolen, are we liable for returning all fraudulent funds back to the cardholder, or are we liable for only a certain amount?

You need to become intimately familiar with Regulation E - 12 CFR 205. Pay special attention to Section 205.6 - Liability of consumer for unauthorized transfers and to Section 205.11 - Procedures for resolving errors. Also pay attention to the definitions, espcially definitions of "unauthorized transfer" (205.2(m)) and "error"(205.11(a)).

The answer to your question depends on a number of variables including when the consumer discovered the loss or theft, when he notified you, when the unauthorized transfers took place, and how much was taken at what times; but very possibly you could be liable for returning all the funds to the consumer.

First published on 11/09/09

First published on 11/09/2009

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