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Liability for unauthortized credit and debit card transactions

What if someone steals your credit or debit card information -- or your card -- and runs up a bunch of charges against your account? A stolen card can result in an enormous balance you didn't intend, and thieves can drain your bank account in a day with unauthorized ATM withdrawals or purchases. Luckily, federal law provides some protection against such charges.

Taking advantage of this protection does require that you provide timely notice that your data or card has been stolen. Generally, timely notice is considered to be within 30 days of the theft or event, but that requirement can be extended depending on circumstance. If you provide timely notice, federal law states you are not liable for charges that occur on your credit card account following the notice. You should also not be liable for anything more than $50 in charges that occurred prior to the notice, since you may not have been aware the card or information was compromised until charges occurred.

ATM and debit cards come with different protections, as afforded by the Electronic Fund Transfer Act. The act states that you are liable for nothing if you report a card loss immediately and the card wasn't yet used. You are liable for up to $50 if you report the loss within two business days; you are liable for up to $500 if you report the loss within 60 days of receiving a bank statement that shows the card was used in an unauthorized manner.

If you do report the loss within the time set forth in the act, or you report the loss quickly to your credit card agency, and you are still held accountable for unauthorized charges above the amounts listed above, you might have a legal case. Understanding how to fight credit card charges that you don't believe you owe is a good step toward financial stability and freedom.

Source: FindLaw, "Are You Liable for Unauthorized Credit Card Charges?," accessed July 10, 2015

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