Debit Card Protections
The Electronic Fund Transfer Act of 1978 protects consumers during all electronic fund transfers, according to the Federal Deposit Insurance Corporation (FDIC). These protections include being notified of and agreeing to charges like overdraft fees and ATM fees. Protections entitle consumers to a refund when a merchant makes a mistake and overcharges a card, and they provide added security when a consumer writes a check and a merchant uses electronic means to immediately remove the money from the account (also known as an electronic check conversion). A refund on a debit card can be a long process, depending on the type of refund needed. While the Electronic Fund Transfer Act protects consumers, it also provides guidelines that protect financial institutions. One of these guidelines is that banks have up to 10 days to begin processing a debit card refund, which means it can take longer than 10 days to actually see the money back in a personal account.
The Process of Returning Money
Many people feel that money is removed from an account immediately when a purchase is made with a debit card, so they also believe that refunds should happen quickly. However, when a debit card is used for a purchase, the money is sent to the merchant's financial institution. A refund request from a merchant is actually a refund request from the merchant's financial institution. That institution has up to 10 days to process a refund request, so it may be close to two weeks before the money appears back in a consumer's bank account. Because each merchant is different, a consumer may receive a refund on a debit card purchase within just a few days, or it may take longer than a week. When requesting a refund from an online merchant, processing a return can add additional time to the refund request.
Online hackers and stolen identities are all risks taken when using a debit card online or at a retailer. In the event that unauthorized charges appear on a bank statement, it's important to notify the financial institution immediately so it can turn off the card and begin the process of investigating. The FDIC regulates liability for consumers when it comes to fraudulent use of a card, but it's actually the bank's policy that determines if a consumer will be responsible for any fraudulent charges. Consumers may be liable for up to $50 of fraudulent charges if the bank is notified within two days of noticing the charges, or up to $500 if notification happens after two days of being made aware of the fraudulent use. In some instances, a consumer will receive no refund if more than two months have passed, assuming that bank statements are made available to the consumer during that time, as stated by the FDIC.
In many cases of fraud, a bank will front the stolen money to the consumer while it investigates the fraud. It may require the consumer to fill out an online form or paperwork at the bank. If a consumer files a financial dispute rather than a fraud claim, it may take until the bank finishes investigating for the consumer to receive money back on a debit card. An example of that would be a utility company overcharging or a company charging a subscription rate after a confirmed cancellation.Learn more about Personal Banking