Debit Card Security

Regulation Z and E

Regulation Z

Regulation Z is the federal law that standardizes the methods by which credit card issuers and other creditors disclose terms of credit, compute the cost of credit, and the procedures they are required to follow for resolving billing error disputes raised by cardholders. Lenders are required to respond to consumer complaints of billing errors on certain credit accounts within a specific period..

Regulation E

Regulation E is the federal law that establishes rights, liabilities, and responsibilities of parties in electronic fund transfers, which include both credit and debit card transactions. It also spells out certain consumer protections. Under Regulation E, there are different limits on liability depending upon how quickly the consumer notifies their financial institution. If the consumer notifies their financial institution within two days of learning of the loss or theft of the debit card, the consumer's liability for unauthorized transactions is no more than the amount of the unauthorized transaction -- up to a total of $50. Waiting longer can add to the consumer's liability, under Regulation E. If consumers notifies their financial institution of unauthorized transactions within 60 days of receiving a bank statement that contains the unauthorized transactions, their liability is limited to whichever is less: the amount of the unauthorized transactions or $500. After 60 days, the consumer faces liability for all unauthorized transfers up to the balance in the account.

Visa's Zero Liability policy took effect April 4, 2000, and is a great improvement on Regulations Z and E. With the new Zero Liability policy, you're no longer required to report fraudulent activity within two days and you're not responsible for any fraudulent transactions made over the Visa network. The Zero Liability policy covers all Visa credit and debit card transactions processed over the Visa network-online or off. The only transactions not covered under the Zero Liability policy are commercial card, ATM, and non-Visa-branded PIN transactions. For transactions on other networks, the liability decision is left to the financial institution that issued your card. The Issuer has the option of extending the same protections afforded by Visa's Zero Liability policy.