Rights Not to Cancel a Debit Card

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Question:

When a cardholders card if flagged for fraud and they refuse to close it until a new card arrives can we deny any claims of fraud for that card after they were made aware of their card being compromises? Ex: bank calls customer on July10 to tell him his card had attempted fraud and he insists he needs the card left open. Then on July 17 he had multiple transactions post to the card, and he now wants to dispute them. Had we closed the card none of this fraud would have happened.

Answer:

If you read the back of the card I am willing to bet dollars to donuts that it says something like “This card is the property of XYZ Bank (issuer) and must be surrendered upon demand.”

The bank owns the card and has the right to cancel that cards use.

Further, because the fraud was reported to you and the bank opted not to cancel that card, the bank is liable for any valid claims occurring after that notice. Neither the EFTA (the law) or Reg E empower the bank to impose any additional liability on the consumer than the Reg provides so when the bank failed to force-close that card, you accepted the possibility of future losses.

Hopefully this will be a lesson learned and save you more in the future than this lesson costs you.