April 03, 2014

Warner, Kirk propose $50 liability cap for debit

April 4, 2014 – A bill introduced by Sens. Mark Warner, D-Va., and Mark Kirk, R-Ill., would reduce a consumer's personal liability for fraudulent charges on a debit card from $500 to $50 and give financial institutions less time to re-credit an account following a disputed transaction.

Warner and Kirk led a Senate Banking subcommittee hearing in February that focused on the Target breach and highlighted the disparity in consumer protections for credit cards vs. debit cards. The proposed reduction in personal liability on fraudulent transactions – from $500 to $50 – would make debit card protections equal to credit card protections in that respect.

In announcing S. 2200, the "Consumer Debit Card Protection Act of 2014," the senators pointed to Fed data showing there were 47 billion debit card transactions in 2012, nearly double the 26 billion in credit card transactions that year.

Consumer protections are set under the Truth in Lending Act for credit cards and under the Electronic Funds Transfer Act for debit cards.

Besides reducing consumer liability, S. 2200 would shorten the time to re-credit a consumer's account following a disputed debit card transaction.That time would decrease from 10 business days after the financial institution receives notice of the dispute to seven business days.

S. 2200 awaits action of the Senate Banking Committee. NAFCU is monitoring the bill.