What is the law when a bank allows an unauthorized transaction to go through on a debit card that is locked?

Question from Walker, What is the law when a bank allows an unauthorized transaction to go through on a debit card that is locked?

Answer from AI:

Understanding Unauthorized Transactions

When a bank allows an unauthorized transaction to go through on a debit card that is supposed to be locked, it can be a concerning situation. In the United States, several laws and regulations protect consumers in such cases. The primary law governing unauthorized transactions on debit cards is the Electronic Fund Transfer Act (EFTA), which is implemented by Regulation E.

Electronic Fund Transfer Act (EFTA)

The EFTA provides a framework for the rights and responsibilities of consumers and financial institutions regarding electronic fund transfers, including debit card transactions. Here are some key points:

• Liability Limits: Under the EFTA, your liability for unauthorized transactions depends on how quickly you report the issue to your bank. If you report the unauthorized transaction within two business days of discovering it, your liability is limited to $50. If you report it after two business days but within 60 days, your liability can be up to $500. If you wait longer than 60 days, you could be responsible for all unauthorized transactions.
• Bank’s Responsibility: The bank is required to investigate and resolve the issue within 10 business days of receiving your report. If the bank needs more time, it can take up to 45 days, but it must provisionally credit your account within 10 business days.

Steps to Take if You Notice an Unauthorized Transaction

If you notice an unauthorized transaction on your locked debit card, follow these steps:

1. Contact Your Bank Immediately: Report the unauthorized transaction to your bank as soon as possible. Use the bank’s customer service number or visit a local branch.
2. Document Everything: Keep records of all communications with your bank, including dates, times, and the names of representatives you speak with.
3. Follow Up in Writing: Send a written notice to your bank detailing the unauthorized transaction. Include your account number, the date and amount of the transaction, and any other relevant information.
4. Monitor Your Account: Keep an eye on your account for any further unauthorized transactions and report them immediately.

When to Seek Legal Advice

If your bank does not resolve the issue to your satisfaction, or if you face significant financial loss, it may be necessary to seek legal advice. A legal professional can help you understand your rights and options under the EFTA and other relevant laws.

Additional Resources

For more information, you can refer to the following resources:

• Consumer Financial Protection Bureau – Regulation E
• FDIC – Electronic Fund Transfer Act

Remember, while this information provides a general overview, it is always best to consult with a legal professional for personalized advice tailored to your specific situation.