Debit
Card Security
Regulation Z and E
Regulation Z
Regulation Z is the federal law that standardizes the methods by which credit
card issuers and other creditors disclose terms of credit, compute the cost
of credit, and the procedures they are required to follow for resolving billing
error disputes raised by cardholders. Lenders are required to respond to consumer
complaints of billing errors on certain credit accounts within a specific period..
Regulation E
Regulation E is the federal law that establishes rights, liabilities, and responsibilities
of parties in electronic fund transfers, which include both credit and debit
card transactions. It also spells out certain consumer protections. Under Regulation
E, there are different limits on liability depending upon how quickly the consumer
notifies their financial institution. If the consumer notifies their financial
institution within two days of learning of the loss or theft of the debit card,
the consumer's liability for unauthorized transactions is no more than the amount
of the unauthorized transaction -- up to a total of $50. Waiting longer can
add to the consumer's liability, under Regulation E. If consumers notifies their
financial institution of unauthorized transactions within 60 days of receiving
a bank statement that contains the unauthorized transactions, their liability
is limited to whichever is less: the amount of the unauthorized transactions
or $500. After 60 days, the consumer faces liability for all unauthorized transfers
up to the balance in the account.
Visa's Zero Liability policy took effect April 4, 2000, and is a great improvement
on Regulations Z and E. With the new Zero Liability policy, you're no longer
required to report fraudulent activity within two days and you're not responsible
for any fraudulent transactions made over the Visa network. The Zero Liability
policy covers all Visa credit and debit card transactions processed over the
Visa network-online or off. The only transactions not covered under the Zero
Liability policy are commercial card, ATM, and non-Visa-branded PIN transactions.
For transactions on other networks, the liability decision is left to the financial
institution that issued your card. The Issuer has the option of extending the
same protections afforded by Visa's Zero Liability policy.
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