![]() Banks often look to the merchant for reimbursements, since the bank is immediately out of the cash and can sometimes point to security issues with the merchant that allowed the fraud to take place. If the merchant delivers products on fraudulent orders, they may have lost the product with a difficult road to getting it back. Merchants carry a significant burden when it comes to credit card fraud. As breaches of financial information often impact millions of payment cards, merchants often face class-action lawsuits and steep legal fees for having technological failures and unsecured data. After the massive Target data breach in 2013, the company was responsible for paying upwards of $162 million to its customers. In many cases, banks have to issue new credit cards, which can be a significant expense when made in large numbers.ĭuring large cyber-security breaches, corporations are often responsible for paying millions of dollars in damages. Banks may point to poor security or technological issues that allowed the merchant to be compromised. In the short term, the banks are out real money, and they will very likely turn to the merchant to be made whole. Legal cases could take months or years to complete. Under most circumstances, the individuals or groups that committed the fraud are typically not going to pay, unless convicted in a court of law. The first institution to lose money is the bank, since the cash to make the purchase comes from banks, and they must reimburse the individual cardholders who were the victims of fraud. Since credit cardholders have very limited liability under federal law, it is the banks and merchants that must shoulder most of the burden. If you report after 60 calendar days, you could be liable for the entire amount stolen. If you report after two business days, but less than 60 calendar days, you could owe as much as $500. If you report within two business days of learning about the theft, you may be liable only for $50. Depending on how fast you report your stolen debit card, you could owe various amounts of money. However, if someone uses your debit card before you report it stolen, the protections are not as generous. If your debit card is found to be missing and you report it stolen before the thief can use it, you will not be liable for any potential charges. Although credit cardholders have very little liability in the event of a theft, the story can be much different for those that own debit cards.
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