A few weeks ago, $250 was mysteriously deducted from my checking account, leaving me with $34 to my name. In a panic, I called the 1-800 number on the back of my Wachovia debit card and, after being put on hold for about 15 minutes (and accidentally hung up on twice), I was told that someone named Hakeen Simpson had walked into a Newark, N.J., bank and withdrawn the cash from my account.
“That’s nice,” I said, then added, “You do realize that’s not my name.”
Almost immediately, the customer service representative on the other line asked, “But do you know a Hakeen Simpson?”
I’ll spare you the rest of the details of this exchange, because, lucky for me (and perhaps my bank), Hakeen Simpson wasn’t trying to steal my money or my identity. Turns out someone in Newark had just made a clerical error in his favor. Also lucky for me (and perhaps my bank), I had no major bills to pay. In fact, I got paid the very next day. Which meant that I could literally afford to wait out the 48 hours it took to reverse the charge. But what would have happened if that Newark bank teller’s timing hadn’t been so good? The truth, I discovered, is that I would have had to pay the price for someone else’s mistake.
The Fraud Claims Process
“You have to realize that, first of all, the money you are using [with your debit card] is your money. It’s the cash in your account. When that’s gone, there’s nothing,” Bruce McClary of ClearPoint Credit Counseling Solutions, explained to me, adding that a thief can clean out your funds in seconds. “With a credit card, someone could go on a shopping spree, but, the good news is, it wasn’t with your money to begin with.”
Because of this distinction, different federal laws apply to each payment method. Under the Fair Credit Billing Act, the maximum liability for credit cardholders who report a fraudulent charge within 60 days of its appearance is $50. Conversely, under the Electronic Funds Transfer Act, the law that regulates debit card transactions, a cardholder can be held liable for up to $500 if they fail to report the charge within two days of its appearance. (The $50 liability still applies to debit cardholders who dispute a charge within 48 hours. In fact, the only way you guarantee that you won’t have to pay anything out of pocket is to report the card, whether debit or credit, as stolen before a fraudulent charge is made.)