Avoid Escalating Loss Liability on Electronic Funds Fraud by Understanding Time Limits

Identity theft and fraud aren’t limited to paper documents with personal information and plastic credit cards. “Paperless” electronic transfer fraud has fast become a concern for individuals and for the federal government. Identity theft and fraud laws now include consumer protection for fraudulent electronic withdrawals. The key to limiting liability is acting quickly to report the unauthorized activity on your account.

The Electronic Fund Transfer Act limits liability to $50 for loss due to fraudulent transactions made using electronic funds transfers and ATM or debit card account and personal identification numbers. Your report of unauthorized transactions must be in writing, and be delivered to your banking institution within 60 days of the mailing date of the bank statement you received reflecting the unauthorized withdrawals.

However, consumer protection against liability differs dramatically for ATM transactions involving a lost or stolen card. You must report your lost or stolen card within two business days of the discovery to keep your loss limit capped at $50. Here’s the liability breakdown:

If you report the loss or theft of your ATM or debit card…

… before any unauthorized charges are made, you will not be responsible for any unauthorized withdrawals from your account.

… within two business days, your liability is limited to $50.

… after two days, but within 60 days of the unauthorized withdrawals appearing on your statement, you could lose up to $500 of the unauthorized withdrawal amount.

… beyond 60 days, you may be liable for all unauthorized withdrawals made after the end of the 60 days time restriction.