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Reg E & Visa Rules On Liability-Delayed Report

Answered by: 
Brian Crow

Question: 
I have a customer that today (12/27/2013) reported unauthorized charges have been occurring since 02/04/2012. This is a Visa debit card and the device was not lost or stolen, no PIN was involved. I am trying to determine if I am following Reg E or Visa rules or both. If I understand it correctly by Reg E, our institution is still liable for the February 2012 (the fraud didn't happen again until November 2012). However, because of delayed notification (with no clear reason from customer as to why it took so long), isn't she liable for everything from November 2011 until yesterday (12/2013)? She wants all the money back since February 2012
Answer: 

As a VISA issuer, you are obligated to follow both Reg E and VISA rules. Based on the information provided you have correctly determined that Reg E would hold the cardholder liable for any transactions that occurred more than 60 days from the delivery date of the statement that contained the February 2012 charges. At question is whether or not VISA Zero Liability will trump Reg E in this case.

VISA's Zero Liability page states the following: Covers U.S.-issued cards only. Does not apply to ATM transactions, certain commercial card transactions, PIN or other transactions not processed by Visa. You must notify your financial institution immediately of any unauthorized use. For specific restrictions, limitations and other details, please consult your issuer.

If you have imposed limitations in your cardholder agreement on VISA Zero Liability coverage (such as not providing Zero Liability coverage in cases on consumer negligence or failure to review statements) then you can hold the cardholder liabile for all transactions that occurred more than 60 days after the February 2012 statement.

First published on 02/17/2014

Filed under: 
Compliance
Filed under compliance as: 
Debit Cards

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