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When zero liability is worth exactly that – zero!

by Neal O'Farrell on March 10th, 2010

I’m sure you’ve heard about zero liability – the promise by banks, credit card companies and other financial institutions to not make you liable for losses to your accounts as a result of fraud, identity theft and other crimes or errors.

This promise is actually a law, driven by a set of Federal regulations called FACTA. But don’t expect it to automatically come to your assistance the next time someone empties your bank account or goes on a spending spree with one of your credit cards.

The Huffington Post recently highlighted the case of a 78-year-old New Yorker who ordered a debit card from his bank Chase. The card never arrived (which is not uncommon – happened to me), but someone got their hands on the card and PIN and quickly ran up charges of $6,200. In fact, the “someone” made more than a dozen purchases on the same day at stores like Macys, Saks, and Juicy Couture, as well as three ATM withdrawals.

When the victim complained and tried to have the charges reversed, zero liability quickly abandoned him. Chase made it clear that they believed the mystery shopper was actually the victim (although there was no proof), the charges were legitimate, case closed.

Only when the victim brought the incident to the attention of the Huffington Post, and start stirring up some negative publicity for Chase did the bank relent. And of course if you have a business account, it’s not covered by FACTA and you don’t have zero liability protections anyway.

So if you’re at all complacent about your bank account or credit card security, and are confident that your bank will take care of everything, think again. It all depends on whether the bank believes you or not. Read the full story here.

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