Are Banks Changing How They Handle Fraud Reimbursement?

Business Week (link requires subscription) had a troubling sidebar piece a week ago that, despite its age, needs exposure. In effect, it claims that we can no longer automatically assume that banks will reimburse account holders for debit-card and other account-related fraud or unauthorized-use losses.

The money paras:

Banks still absolve consumers of any losses from the fraudulent use of credit cards — even months later. Most also now waive even that modest $50 payment. That’s not the case for business cards, though. Federal laws that limit user liability apply only to consumers — and most banks make corporate customers assume far more liability for cards issued to their employees. Their reasoning: Employees may not treat a business card with the same care as their own, since it isn’t their money.

What’s more, while many banks indemnify consumers from fraud involving debit-cards and electronic funds transfers, that’s far from universal. Under federal law, banks can hold consumers liable for the first $50 of losses from cases reported within two days, and up to $500 in losses going back 60 days. And consumers who wait more than two months after receiving a statement to report fraud may be out of luck. Banks are under no obligation to reimburse them.

Two thoughts:

1. This is one more reason, if you needed one, to check your bank balances and activity regularly, to review statements as soon as you get them, and to complain to your bank immediately if you see unauthorized transactions.

2. Banks had better be careful at how aggressive they are at denying reimbursement. Besides the likelihood that they’ll be sued (somebody written up in the article is doing so–the bank doesn’t want to pay because the person’s virus protection was inadequate!), nothing will keep people from transacting business online like the knowledge that they’re exposing themselves to unreimbursed losses that are less likely if they keep doing everything offline.