When is the Consumer Liable for the Loss?
Banks like to tell consumers that an unauthorized transfer happened because you allowed your information to be given out. They’ll blame you for a crook stealing your information and then your money. You could have to bear some loss of the funds if the bank can prove a certain amount of consumer neglect. This gets very tricky. But what is important to note is that the bank or financial institution bears the burden of proving it.
- First, if a bank can prove that the person that stole the money actually possessed the authorized card or access to the account that was given by the bank, then you can be liable for the lesser of $50 or the amount of money obtained by the transfer before the bank or financial institution is notified of the theft. In other words, if you notify the bank immediately after noticing that your debit card was stolen or someone has your account passwords, you will be responsible for no more than $50.
- However, the bank does not have to give back money that it proves would not have been lost but for your failure to notify them of the loss within 60 days of receiving your bank statement that contains the loss. This is very difficult to prove. They have to prove that the only reason money was lost was because you failed to notify them of the theft within 60 days.
- If your card gets lost or stolen, and you know about it, and you don’t do anything about it for more than 2 days, the bank can refuse to cover any losses if they prove that there was no good reason for you to fail to notify them of the theft of your card. A “good reason” can be hospitalization or extended travel.
- Even if a bank or financial institution establishes that you were too neglectful to report your theft, our liability is still limited to $500 or the amount of money that was stolen up to 2 business days after the consumer learns of the loss.