Slashdot Mirror

Credit cards are limited by U.S. law to a maximum of $50 liability to the cardholder. Debit cards losses are usually covered by the bank, but they are under no legal obligation to do so.

That simply isn't true. See Regulation E.

IAABG (I am a banking geek).

The rules for provisional credit on debit cards is very well established. They fall under Regulation E, section 205.11. The bank has ten days to get you a provisional refund, and can take up to 45 days in certain circumstances to complete their investigation and finalize the credit.

Make sure you get them a notice in writing! Once you do, they have ten days to credit you, and many banks will do it much faster. If the bank drags their feet, just tell them "I want provisional credit within the mandated timeline per Regualtion E".

Here's more on this topic:
http://www.bankersonline.com/technology/guru2008/gurus_tech022508c.html
http://usa.visa.com/personal/security/visa_security_program/zero_liability.html
http://finsolinc.com/Reg%20E%20EFTA%20Error%20Resolution%20Flowchart.pdf

The protection for misuse of debit cards is strong, you just need to know what to do. If your bank isn't responsive, Move Your Money to a smaller institution that cares.

IAABG (I am a banking geek).

The rules for provisional credit on debit cards is very well established. They fall under Regulation E, section 205.11. The bank has ten days to get you a provisional refund, and can take up to 45 days in certain circumstances to complete their investigation and finalize the credit.

Make sure you get them a notice in writing! Once you do, they have ten days to credit you, and many banks will do it much faster. If the bank drags their feet, just tell them "I want provisional credit within the mandated timeline per Regualtion E".

Here's more on this topic:
http://www.bankersonline.com/technology/guru2008/gurus_tech022508c.html
http://usa.visa.com/personal/security/visa_security_program/zero_liability.html
http://finsolinc.com/Reg%20E%20EFTA%20Error%20Resolution%20Flowchart.pdf

The protection for misuse of debit cards is strong, you just need to know what to do. If your bank isn't responsive, Move Your Money to a smaller institution that cares.

Are you serious???! An ACH transaction can be reversed up to 60 days after the next bank statement, if the customer reports it as an unauthorized electronic transfer.

Maybe for personal banking... not for business banking, as far as I'm aware. The initial deadline for disputing the charges is 2 business days to get the dispute back to the ODFI via ACH.

There are exceptions to this (such as when a check is used as authorization for the ACH), but this situation doesn't meet the exception criteria.

Here's a little reading on the subject.

Please keep in mind commercial accounts are handled differently from personal accounts.

It's usually more like $10k per violation. Which is a lot more believable. Although there's a lot of scare mongering out there about $90k to $150k per violation fines. Your boss is more likely to believe the former number, but disregard the latter numbers as pure FUD.

$950,000 BSA Violation Fine (about $8900 per)
U.S. Companies Fined for Using Illegal Software ($70-$110k total fines)

So, as in all things legal, YMMV. At least with the above two links, you can offer concrete evidence of the actual fine amounts rather then some hypothetical amounts.

Very interesting post. I have one question though. You say that "If you accidentally sign up to pay your car insurance with automatic reoccurring payments, and the INS. company takes 2x payment 1 month, the bank will not help you." It was my understanding under Regulation E, specifically Sec. 205.6, that the bank is required to limit your liability for an "unauthorized electronic fund transfer", with certain (somewhat strict) limitations.

How does it actually work in practice?

Very interesting post. I have one question though. You say that "If you accidentally sign up to pay your car insurance with automatic reoccurring payments, and the INS. company takes 2x payment 1 month, the bank will not help you." It was my understanding under Regulation E, specifically Sec. 205.6, that the bank is required to limit your liability for an "unauthorized electronic fund transfer", with certain (somewhat strict) limitations.

How does it actually work in practice?

Er, no. Regulation E pertains to Electronic transactions.

http://www.bankersonline.com/regs/205/205.html

In recent years, information technology has expanded rapidly throughout the corporate structure of financial institutions. It includes operations such as central computer processing, distributed processing, end user computing, local area networking, and nationwide telecommunications. These operations often represent critical services to institutions and their customers. The loss or extended disruption of these business operations poses substantial risk of financial loss and could lead to the failure of an institution. As a result, contingency planning now requires an institution-wide emphasis, as opposed merely focusing on centralized computer operations.

The language of Regulation E and its commentary specifically require that compliance with the error resolution procedures in 205.11 must put the customer back in the same position as he/she would have been in had the transaction in question not occurred. That means refunding any and all fees or service charges, or anything else that were caused by the transaction or that would not have posted if the transaction didn't happen. And crediting of interest, if interest is paid on the account. And, if the transaction resulted in a dip into the customer's OD line, a reversal of any fee or interest paid by the customer there. This assumes, of course, the bank is either doing a provisional credit or a final credit. If provisional, and you decide later that the transaction posted properly (denying the claim), you can undo all that you did.

The language of Regulation E and its commentary specifically require that compliance with the error resolution procedures in 205.11 must put the customer back in the same position as he/she would have been in had the transaction in question not occurred. That means refunding any and all fees or service charges, or anything else that were caused by the transaction or that would not have posted if the transaction didn't happen. And crediting of interest, if interest is paid on the account. And, if the transaction resulted in a dip into the customer's OD line, a reversal of any fee or interest paid by the customer there. This assumes, of course, the bank is either doing a provisional credit or a final credit. If provisional, and you decide later that the transaction posted properly (denying the claim), you can undo all that you did.

I humbly apologize to the community: I meant Regulation P, of course, not Reg E. The definition of affitiate I gave was, however, correct: it requires at least enough common ownership to constitute control. Amazon's "affiliates" are not Reg P affiliates.

I humbly apologize to the community: I meant Regulation P, of course, not Reg E. The definition of affitiate I gave was, however, correct: it requires at least enough common ownership to constitute control. Amazon's "affiliates" are not Reg P affiliates.