Did you know that disputing fraudulent charges on a debit card is different from disputing them on a credit card? Knowing the differences between consumer protection laws can keep your accounts safe from identity theft.
If you need to dispute a fraudulent debit card charge, the funds you lost are yours alone. If you use a credit card fraudulently, the card issuer loses the money they extended to you through the credit line.
Managing credit card fraud is easier than managing debit card fraud, since the credit card issuer has a vested interest in protecting its finances, while the bank only holds the money you already have.
If you frequently use your debit card online, you might want to reconsider. You’ll face more liability for fraudulent charges if you use your debit card rather than your credit card. Remember: for more tips on how to improve the quality of your life, visit www.credithealing.org.
Consumer Protection for Debit Card Transactions
Debit card users are protected by the Electronic Funds Transfer Act (EFTA).
In this law, the consumer is liable for the following:
A lost or stolen debit card must be reported to the financial institution before any fraudulent purchases can be made.
When a lost or stolen debit card is reported within 48 hours, the consumer is only liable for $50 in fraudulent charges.
If the consumer reports a lost or stolen debit card after 48 hours but within 60 days, they are only liable for $500.
If a lost or stolen debit card is not reported within 60 days, the consumer is responsible for any and all fraudulent charges. This includes all money taken from the debit card account, any overdraft fees, and any money taken from other accounts linked to the debit card account.
If a debit card number is stolen and used for fraudulent purposes, but the card is not lost or stolen, the consumer has 60 days to report the charge without incurring any liability. Consumers have 60 days from the date they receive their statement with the fraudulent transaction.
How to Dispute Fraudulent Debit Card Charges
Notify the business where the unauthorized transaction occurred as soon as possible, and tell them that the charge was unauthorized. Merchants want their customers to be happy, so it’s worth asking if they will refund you for the charge. If necessary, they may assist you in investigating the fraud and generating a police report.
Call the customer service number on the back of your card and let them know what happened. You’ll likely be referred to the fraud department, which will investigate and may request additional information. They will advise you on what to do next. You should also get everything in writing-the Federal Trade Commission offers a sample letter you can use.
Make sure none of your other accounts have been compromised. Keep an eye on your accounts and change your PINs and online banking passwords.
Consumer Protections for Credit Card Transactions
Fair Credit Billing Act (FCBA) protects credit card users. Similar to the EFTA, this law protects consumers who report their credit cards stolen or lost from liability for any subsequent fraudulent charges.
However, the FCBA also states that a consumer’s liability cannot exceed $50 for a fraudulent credit card transaction. If the physical card was not lost, but the numbers were stolen and used, the consumer is not responsible. In addition, many financial institutions offer credit cards with no liability for fraudulent transactions.
The FCBA also protects consumers in the following situations:
- An item ordered online or otherwise for delivery never arrives
- An item that was purchased is faulty or not the same as what was ordered
- Any case in which the consumer was charged too much for a product.
How to Dispute Fraudulent Credit Card Charges
In the event that your card number has been compromised and you notice an unauthorized charge, report it to the business that made the charge. Then report it immediately to your bank to ensure that you aren’t liable for up to $50.
A new credit card with a new number will be sent to you and the credit card issuer will investigate the disputed charges immediately. Make sure no other accounts have been compromised, and change all PINs and banking passwords as soon as possible.
Obtain your credit report to ensure no additional fraud has occurred, such as the opening of credit cards in your name. File a police report if you notice any fraudulent activity or billing discrepancies.
Once you’ve filed with the police, contact the three major credit bureaus to request a credit freeze and fraud alert. Consider subscribing to credit monitoring and setting up fraud alerts with your bank.
The Bottom Line
Fraud should be reported as soon as possible in cases of unauthorized credit card charges. Before the next billing cycle, you’ll receive a credit on your statement.
With debit card fraud, the money is completely lost. Investigation may take weeks at your financial institution. To avoid financial fraud, it’s safer to use credit cards online in order to avoid a situation that could negatively impact your ability to pay your debts.
Is your personal information on the dark web? Make sure your identity isn’t at risk!