If you have ever lost your credit, ATM or debit card, you know the sinking feeling in your stomach as you wonder how long it has been gone and what has been done without your knowledge. However, you should not panic too much, as federal laws place limits on your personal liability for unauthorized credit card charges, as well was unauthorized ATM withdrawals and debit purchases. The best advice, however, is to always notify your bank or other financial institution as soon as you realize that your card has been lost or stolen. This is perhaps the best way to limit your liability.
You get to the store, look in your wallet and your heart skips a beat as you wonder, "what happened to my credit card?" You start thinking of the damage that could have been done. Internet shopping and other unauthorized purchases can rack up quite a bill on a credit card in a flash. However, if you are able to let your credit card issuer know of your situation quickly (normally within 30 days), you will not be liable for charges made after you notify the credit card company. Additionally, if charges have already been made using your credit card, you may only be liable for $50. Even better, some credit card companies will often waive this $50.
If you have lost your ATM or debit card, or if it has been stolen, it is very important to notify your bank as soon as possible. By doing so, you will minimize the amount of liability you will have for any unauthorized use of these cards. In the case of ATM and debit cards, the Electronic Fund Transfer Act sets forth the rules. Under the EFTA, your liability for lost or stolen ATM or debit cards is:
If your bank or financial institution claims that you are liable for unauthorized charges or withdrawals that exceed $50, it must be able to show that the additional loss (past $50) would not have occurred if you had given timely notice of the missing card. However, the requirement for timely notice is sometimes extended due to extenuating circumstances. As an example, suppose that Bill was mugged on his way home and his debit card was stolen. Bill was hospitalized with severe injuries for 10 days before he could give notice to his bank about his stolen card. This could be considered extenuating circumstances for pushing back the notice requirement.
The Electronic Fund Transfer Act allows banks and other financial institutions to place their own, voluntary caps on liability for unauthorized credit card charges and use of ATM and debit cards. You should ask your financial institution about any voluntary liability caps that they abide by; it could save you a lot of money if your cards are ever lost or stolen.