And, while both laws shift full liability onto the consumer if 60 days has elapsed, the EFTA also permits banks to charge cardholders for any overdraft fees or penalties that may have resulted from the fraudulent charges. This is a big problem, according to Identity Theft Risk Management Specialist Denise Richardson, since many people pay their bills through their checking account.
“If someone gets a hold of your card, you need to notify all of the people who receive automated payments from your account since they will need to know if a check is going to bounce,” Richardson says, adding that “suddenly, a small thing can turn into a major headache.”
Of course, most big banks (as well as debit card endorsers Visa and Mastercard) tout zero-liability policies that say they will refund your money and all incurred fees if the charge is found to be fraudulent. While this is comforting, most consumers don’t realize that the EFTA gives banks 10 days to do so.
As Doug Johnson of the American Bankers Association explained: “Under [the EFTA], the customer must report an unauthorized electronic fund transfer from their debit account within 60 days of getting their statement. The notice can be oral, but the bank can request a written confirmation within 10 days of the oral notice. The bank will begin its investigation after receiving the oral notice. It will generally not wait for the written confirmation because it must give the customer provisional credit within 10 days of when the oral notice was received if it has not completed its investigation.”
This provisional credit is where a certain debit card urban legend originates. You may have heard stories of full refunds being issued for all incorrect charges almost immediately. According to Richardson, banks will remove disputed charges and begin an investigation “right away” when the charges have been made on credit cards. When it comes to debit cards, it’s a different story. Banks will conduct similar investigations, but it typically takes one to two business days to issue a credit (something that was confirmed by representatives from Wells Fargo, Bank of America and Chase) … or longer, depending on the circumstances.