Lost/Stolen Debit Cards - Bank’s Liability

You need to become intimately familiar with Regulation E - 12 CFR 205. Pay special attention to Section 205.6 - Liability of consumer for unauthorized transfers and to Section 205.11 - Procedures for resolving errors. Also pay attention to the definitions, espcially definitions of "unauthorized transfer" (205.2(m)) and "error"(205.11(a)).

The answer to your question depends on a number of variables including when the consumer discovered the loss or theft, when he notified you, when the unauthorized transfers took place, and how much was taken at what times; but very possibly you could be liable for returning all the funds to the consumer.

First published on BankersOnline.com 11/09/09