In a major consumer initiative this morning VISA announced it is waiving all liability for fraudulent transactions on all its consumer card products if reported promptly, banning unsolicted VISA Check Cards and requiring issuers to issue provisional credits for fraudulent transactions within five days. The zero liability limit applies to cards reported lost, stolen or unauthorized use, within two days otherwise the liability is limited to $50. The liability modification applies to all VISA’s consumer card products including VISA credit cards, VISA Check Cards and Interlink cards.. VISA Check Card issuers will be required to have an activation trigger, verifying receipt of the card as well as having the cardholder personally activate the Check Card. Under federal Regulation E debit card issuers are required to issue a provisional credit within twenty days if a cardholder suffers a loss through fraudulent use. VISA will now require issuers to issue such a provisonal credit in five days on all its consumer card products. VISA says the changes will become effective this fall. At mid-year, VISA had 277.4 million cards in the US of which 46.6 million were VISA check cards.
In a groundbreaking move to enhance the value and cardholder security of Visa products, Visa U.S.A. today announced a zero liability policy for Visa cardholders who report loss, theft or unauthorized use of cards in two business days. After the two-day period, the cardholder will be liable for a maximum of $50. The new policy will apply to Visa credit, Visa check cards and Interlink cards, and commences this fall.
“Visa and its member banks are committed to providing consumers with the most secure, convenient and accepted payment products in the marketplace,” said Carl Pascarella, President and CEO of Visa U.S.A. “This establishes a new level of cardholder security for our newest and fastest growing product, the Visa check card, and also enhances the value of our credit card line. At the same time, this new policy rewards consumers who are vigilant and prompt in reporting the loss, theft or unauthorized use of their cards by waiving all financial liability.”
The new Visa initiatives go well beyond government regulations limiting cardholder liability. Under Regulation E, which governs debit card transactions, consumers are liable for a maximum of $50 if the debit card is reported lost or stolen within two days of discovery, increasing to $500 if the lost or stolen debit card is reported within 60 days. After 60 days, cardholder liability may be unlimited under certain circumstances. Regulation Z limits the liability of credit cardholders to $50 for unauthorized transactions, regardless of when loss or theft is reported.
In addition to the cap on consumer liability, Visa’s consumer protection initiative also includes these actions affecting Visa check card:
* New card activation: Every Visa check card issuer will include an activation feature into every unsolicited check card issued, so that the cards cannot be used without first being personally activated by the cardholder.
* Provisional credit: All Visa members will give customers provisional credit within five business days of notification for lost funds due to unauthorized transactions. Under Regulation E, debit card issuers have up to 20 business days to provide provisional credit of losses.
“We applaud these steps to make the Visa check card even better for consumers. The check card is one of the most popular new banking products in years and these new consumer protection features can only increase its popularity with our customers,” said Philip G. Heasley, vice chairman of U.S. Bancorp.
“The latest move to limited liability provides a consistent and extremely high level of customer confidence and convenience across all Visa products,” said Michael Beindorff, executive vice president, marketing and product management, Visa U.S.A. “This is a very strong statement from Visa’s member banks about how much importance they place on providing customers with the most secure, convenient products available.”
Visa also announced today an alliance with the National Consumers League to produce and distribute a free debit consumer education brochure. National Consumer League’s Linda Golodner said, “We are pleased to work with Visa to provide clear, concise information about the safe use of debit cards. With these new consumer protections, debit cards are an attractive alternative to cash and checks.” Consumers are urged to call 800-355-9NCL to reserve a copy of the new brochure which will be available in the fall.
Visa is the preferred payment brand and the largest consumer payment system worldwide. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders, and the global economy. Visa is the only consumer payment system to facilitate $1 trillion worth of purchases of goods and services in a fiscal year. Visa’s nearly 600 million cards are accepted at more than 14 million worldwide locations, including 370,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is http://www.visa.com.