Is the Bank Obligated to Refund Stolen Money From My Debit Card?

Banks are typically obligated to refund money so long as the customer follows fraud reporting procedures.
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Debit cards offer consumers the convenience of paying for items immediately without having to carry cash. However, if thieves get a consumer's debit card number, they can wreak havoc with a customer's finances by draining his bank account through fraudulent purchases. In most cases, banks must refund the money as long as the customer follows fraud reporting procedures.


Risk When Using Debit Cards

Money is immediately withdrawn from the account when using a debit card.
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When using a debit card, the money is automatically and immediately withdrawn from your checking account. If you report a fraudulent transaction, the bank must replace the money; however, you may find yourself without funds until it does so. In contrast, if someone makes fraudulent charges on your credit card, you can dispute the charge prior to paying the bill.


Time Frame

Some banks complete an investigation to verify that charges are fraudulent before replacing your money.
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Privacy Rights says that banks may take up to two weeks to refund stolen money after you report the theft. The policy as to how quickly stolen money is replaced differs from bank to bank. Some banks may replace the money as soon as the theft is reported, while others wait until they have completed an investigation and verified that charges are fraudulent.


Liability for Fraudulent Charges

Your liability for fraudulent debit card purchases is $50.
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Federal law as of 2010 limits your liability for fraudulent charges using your debit card to $50. To take advantage of this law, you must report the fraudulent charges within two business days of the charge. After two business days, your liability goes up to $500. If you do not report the theft for more than 60 days after receiving your statement, the bank has no obligation to refund your money at all.


How to Limit Your Liability

Call the merchant if you do not recognize a charge on your account.
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Many banks allow you to check your balance online. Make a habit of doing so daily so that you can catch fraudulent charges immediately. If you do not recognize a charge on your online statement, call the merchant to try to find out more about the charge. If you do not recognize the charge after taking this step, call your bank's 800 number immediately and report the fraudulent charge. Ask your bank to cancel your debit card and issue you a new one to stop thieves from continuing to use your account.


When you sign up for a debit card, ask your bank about how to enroll in fraud protection programs. Some banks automatically freeze your account and require you to verify charges if you spend over a certain amount or spend money in an unusual location such as a different state.