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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 liable for only a certain amount?

You need to become inimately 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 11/16/09

First published on 11/16/2009

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