Visa USA on Wednesday announced the latest and most broad-reaching action to protect consumers against losses due to debit card fraud. But consumer groups reacted coolly, saying that the move does not go far enough and that too many debit cardholders remain confused about their use.
Visa's new policy, which affects 75% of debit cardholders in the U.S., eliminates customer liability for unauthorized use of both debit and credit cards, but only if consumers report the loss within two business days of learning of the problem. After two days, Visa credit and debit cardholders will face a maximum liability of $50.
Previously, Visa credit cardholders could legally be held responsible for up to $50 if a thief stole and used the cards, regardless of when consumers notified the issuing bank. And for those with Visa debit cards--which deduct funds directly from holders' checking accounts--the potential customer liability ranged from $50 to $500 or more, depending on when the fraudulent use was reported.
Visa's new policy, which takes effect in November, covers about 300 million credit and 47 million debit cardholders.
But consumer groups said that Visa's action, while better than MasterCard International's policy change last month, isn't as strong as Bank of America's move last week to waive all debit cardholder liability for fraud loss regardless of when it is reported. Even though Visa cardholders could be free of liability if they report the loss promptly, consumer advocates said, the burden still is on consumers to prove that they acted swiftly.
Moreover, consumer groups said neither San Francisco-based Visa nor MasterCard has adequately addressed the fundamental concern about debit cards that makes them inherently more risky than credit cards.
"Unlike a credit card, a loss with an unsecure debit card is instantly drained from your checking account," said Gail Hillebrand, a senior attorney for Consumers Union in San Francisco. "Consumers may find themselves without a penny in their account and may face enormous bounced-check penalties as a result of theft, fraud or error."
Visa executives, however, said they have made a major improvement in this area. Under Visa's new policy, customers will be given provisional credit within five business days of notification for lost funds caused by unauthorized transactions. Previously, customers had to wait up to 20 days before receiving provisional credit.
