Unauthorized Use of a Debit Card

Unauthorized use of a debit card is a fairly common problem for consumers and bankers.  The rules governing who pays for mistakes with the improper use of a debit card depends on who and how the debit card account was accessed and when the problem was altered to the financial institution.

Money withdrawn using a debit card is very different from unauthorized spending using a credit card.  Unlike a credit card, when a debit card is used, the money spent is taken directly out of your bank account.  The costs for unauthorized debit card use can, be very costly when not caught or reported in a timely manner.

Any charges that were not authorized should be reported to the bank or the card issuer as quickly as possible.  The laws that cover debit card use have very clear rules to follow for the consumer who was been harmed or has incurred a loss due to the unapproved withdrawals or account spending.  Responding quickly to unauthorized use is the first step to limit liability.

Liability for an unauthorized withdrawal with a debit card can vary.  The loss is limited to $50.00 if the account holder notifies the financial institution within two business days after learning of loss or theft.

The bank account holder could lose as much as $500.00 if the card issuer is not notified within two business days after learning of loss or theft.   If the account holder does not report an unauthorized transfer that appears on their financial statement within 60 days after the statement is mailed to the account holder, there is the risk of substantial or unlimited losses on the account.

Once the debut card holder reports the loss caused by the use of the debit card to the issuing institution, federal law limits any liability for unauthorized financial transfers that take place after the notification.

Keep in mind, if the debit card account number, PIN code, or the card itself is used without authorization, the bank should be notified following the same steps to avoid responsibility for the unauthorized use.

If at any time, the debit card issuer determines that the transactions were not fraudulent or authorized, the institution must notify the account holder in writing before taking any funds out of the account that were involved in the alleged fraudulent activity.

More information about unauthorized debit card use by a family member or other party can be found at SelectCDrates.com.

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What Happens if a Family Member Uses My Debit Card without My Permission