Question

John's debit card was stolen on Wednesday and used to purchase $700 worth of merchandise. John notified his financial institution on Thursday. What is his liability?

Answer 1

Answer:

The liability of John is $50.

Explanation:

When the ATM, credit, or debit cards of a customer are stolen or lost, both the Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) come into action to give protection to the customer.

Specifically, if the credit or debit card is stolen or lost, the FCBA provides that maximum amount of liability that the customer will bear for any unauthorized use is $50.

The EFTA provides that if the stolen card is reported within 2 business days, the maximum liability for any authorised transaction is $50.

Therefore, since John notified his financial institution on Thursday which is still within 2 business days, his liability is still $50 based on the provisions of the EFTA and also the FCBA.