What should you do if you believe your debit or credit card has been compromised?  Yes, there are consumer protection regulations that can help.  For example, the Electronic Funds Transfer Act (EFTA) and the Consumer Financial Protection Bureau’s (CFPB’s) “Regulation E” limit your liability for losses from unauthorized transactions.

If your debit or credit card number is used to make an unauthorized withdrawal from a checking or savings account, minimize your losses by contacting your bank as soon as possible.  Your maximum liability under EFTA is $50 if you notify your bank within two business days after learning of the loss.  If you wait longer, you could lose more, according to the law.

If your credit card number is used without your authorization, your liability is normally capped by the Truth in Lending Act (TILA) and the CFPB’s “Regulation Z” at $50 for all unauthorized transactions, and remaining credit card losses are typically absorbed by the card issuer.  Some other worthwhile precautions you can take include:

• Do not use ATMs in remote places, especially if the area is not well lit.
• Go elsewhere if you see a sign directing you to only one of multiple ATMs in a location.
• Shield the keypad with your hand when typing your PIN at the ATM or a retailer’s checkout area.
• Regularly check your bank and credit card accounts for unauthorized transactions, even small transactions that you might think might not be worth reporting to your bank.

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Teaching Suggestions

• Ask students to summarize the major provisions of the Electronic Funds Transfer Act (EFTA).
• Why is it important to notify your bank as soon as possible when your account has been compromised?
• Let students debate the issue, “Use cash, why use a debit card?

Discussion Questions

1. What is the Truth and Lending Act and how does it protect you if your debit/credit card is compromised?
2. How can you determine if an ATM has a false cover or it has been tampered?