The law is on your side if your debit card ends up in the wrong hands.

One reason you may be so comfortable using plastic is that you don’t have to carry cash. But what happens if you lose your debit card or it’s stolen?

PROTECTING YOUR MONEY

The danger is that if someone uses your debit card without your permission, they can withdraw your entire balance, plus the full amount of your overdraft line of credit.

But all is not lost. You can get back almost everything that’s taken from your account—if you act reasonably quickly.

That’s because all electronic fund transfers, or EFTs, are governed by the Federal Reserve Board’s Regulation E (Reg E), which spells out in specific detail what your rights are and how they must be protected. The bottom line is that if you notify your bank that your card is missing, or that money you didn’t take is gone from your account, within the time frame Reg E specifies, the money must be restored to your account.

THE TICKING CLOCK

Reg E spells out two lines of defense for protecting your account from electronic theft.

If you report a lost or stolen card within two days of discovering that it’s gone, the most you can end up losing is $50, no matter how much is missing from your account. In fact, in some cases, you may not lose any money at all, even if someone uses your card. Remember, too, that Reg E doesn’t require that the report be within two days of the actual loss, since it’s possible you may not discover it’s gone right away.

If you don’t realize your card is gone until you get a bank statement reporting withdrawals or purchases you didn’t make, you still have 60 days from the date on the statement to report the loss or misuse. As long as you’re within that time limit, you still won’t lose more than $50.

But if you miss the 60-day deadline, you could lose all the money that’s taken from your account after the 60-day period ends— provided there’s anything left—plus up to $500 of what was taken during the 60-day period.

Since it’s so easy to keep track of your account activity online, you can be aware almost immediately of withdrawals you didn’t make. So check regularly and notify your bank the instant you see a problem.

THE HASSLES

The bigger issue with a stolen card, of course, is the hassle. If someone has used your card before you realize it’s gone, your account could be bled dry. That may mean bounced checks, overdraft fees, angry creditors, late fees, and a host of other problems.

Your bank initially has ten days to investigate your report and refund any money that it agrees was withdrawn without your permission—potentially minus $50. If it wishes, the bank can extend its investigation for up to 45 days. But if you’ve filed a written report, it must put the disputed amount back into your account within ten business days so you won’t be left high and dry.

DEBITING A LEMON

The one situation where you’re not covered with a debit card is if you buy defective merchandise. While most credit cards don’t make you pay for purchases of poor quality, if you buy a piece of junk with a debit card, the money you spent is gone as far as the bank is concerned.

The bank has more flexibility with accounts open less than 30 days. It can take 20 days to finish an initial inquiry and refund your money, and up to 90 days for an extended investigation.

Debit card problems are typically resolved quickly. But if the bank questions your report or believes the evidence doesn’t support your claims, getting a loss resolved can be time-consuming and potentially expensive.

SAFETY PINS

Sooner or later you’re likely to lose a debit card or have it stolen.

As long as your PIN isn’t written on the card or some other obvious place, a thief has to figure it out to get far at an ATM or with a card reader. Some ATM machines even swallow a card if someone has typed in three incorrect PINs in a row. But it can happen.

Protecting a debit card that can be activated with a signature is harder, since retailers don’t always check closely. But be sure to sign the back anyway. That way there’s always a chance someone will discover the forgery and refuse the sale.

THE WRITTEN WORD

Whether you report a lost card within two days or 60, your bank can ask for a written report of your loss within ten business days. Do it. And do it on time.

In fact, it’s always smart to write a letter about any dispute that involves money and save a copy for your files.

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