IBA Compliance Connection

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We have a Visa Business Cardholder who has reported several unauthorized transactions. Does the Visa Zero Liability Rule apply to ATM transactions or other purchases that did not go through the Visa network, such as Pulse, Mac/Star? Can we deny reimbursement for such unauthorized transactions? We believe that our disclosure permits us to deny such reimbursement claims.

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No, according to Visa’s website, Visa’s Zero Liability does not apply to ATM transactions, or PIN transactions not processed by Visa, or certain commercial card transactions. In addition, because this is a business customer, Regulation E’s unauthorized transaction requirements do not apply. However, before denying reimbursement for the unauthorized transactions, we do recommend reviewing your card agreement with the customer to confirm that your bank does not offer its own form of a “zero liability” for such transactions.

For resources related to our guidance, please see:

  • Visa Website, How Visa Protects You (“Visa’s Zero Liability policy covers U.S.-issued cards only and does not apply to ATM transactions, PIN transactions not processed by Visa, or certain commercial card transactions.”) 
  • Regulation E, 12 CFR 1005.3(a) (“This part applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer’s account.”)
  • Regulation E, 12 CFR 1005.2(b)(1) (The term “account” is defined as “a demand deposit (checking), savings, or other consumer asset account . . . established primarily for personal, family, or household purposes.”)