The scenario is reminiscent of a Halloween nightmare: Someone steals your credit card, and unauthorized charges appear on your statement.
What's your liability? Are you responsible for paying for unauthorized transactions made on your card?What if you lose your banking card? (A banking card is also called a "debit card" because the money is deducted directly from your checking account.) How much can you be held liable for if someone makes unauthorized transactions using it?
Here, for your own protection, is a refresher course in Banking 101.
Federal regulations define a consumer's liability in both instances.
If your credit card is lost or stolen, your liability for unauthorized charges is limited to $50. Report the loss to the issuing bank (or other credit institution) as soon as you discover the loss.
If you lose your banking (debit) card, there are three possible scenarios. (Here, again, the sooner you report the loss, the better. Directions on how to report a loss are usually included on your monthly statements.)
1. If you report a lost or stolen banking card within two business days, your liability is limited to $50. For example, if the unauthorized transactions total $25, you'd be liable for $25. If they total any amount over $50, you'd be liable for $50.
2. Your liability is the sum of the unauthorized transactions that occurred during the first two business days (a maximum of $50), plus the transfers that occurred after the second business day and before you notified the bank of the loss, if notification of the bank within the first two business days could have prevented those transactions. Your total liability under this scenario can't exceed $500.
3. If you fail to report an unauthorized transaction that appears on your periodic statement (if the issuer of the card is a bank, the transaction appears on your monthly bank statement) within 60 days of when that statement was issued, your liability is a maximum of $50 plus the sum of transactions made after the 60-day period but before you notified the card issuer of the loss.
How do you avoid getting into such a situation?
Grant Snow, corporate compliance officer for First Security Corp., advises you to reconcile your monthly bank statements, paying special attention to the debit card transactions. Report unauthorized transactions to your bank immediately. "People need to check their account statements and make sure they have a receipt for every item that appears there," he said.
"We're moving toward Point of Sales (POS), where you use your debit card (to purchase something). You enter your PIN and the transaction comes directly out of your checking account. The more we enter the electronic world, the greater the potential for your number to be stolen or for an input error to be made. It becomes very important to reconcile your statement to limit your liability."
Company recalls Christmas candlestick holders
In cooperation with the U.S. Consumer Product Safety Commission (CPSC), Raz Imports Inc., of Fort Worth, Tex., is recalling approximately 3,750 Christmas angel candlestick holders. The holders are made of acrylic that could ignite and burn when exposed to a direct flame.
The holder is 91/2 inches high and is shaped like an angel. It was sold nationwide in small retail and specialty stores from May to October of 1995. It came in two models: 954265 made of clear acrylic and model 954266 of frosted acrylic. The name Raz Imports Inc. is printed on a white label on the bottom of the holder under the angel's skirt.
If you have the holders, return them to the store where you bought them for a refund. For more information call the company at 1-800-443-3540.