Topic: Credit Card Network Rules
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Does the Illinois Electronic Fund Transfer Act (EFTA) require that the logos of the ATM networks we participate in be included on our ATMs?
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No, we do not believe that the Illinois EFTA requires you to place the logos of the networks you participate in on your ATMs, provided that you are in compliance with the federal EFTA requirements. However, the networks themselves may require such signage as part of your agreements with them. The Illinois EFTA contains a…
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Is there an Illinois law requiring signage on ATMs regarding the networks in which a bank participates? If so, what are the requirements?
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We are not aware of any Illinois law or regulation requiring signage on ATMs indicating the networks in which a bank participates. However, the networks themselves may require such signage as part of your agreement with them. For example, the Mastercard Rules provide that the “Mastercard, Maestro, and Cirrus Marks must be displayed on an…
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Are we permitted to accept loan payments made through debit or credit card? We currently accept loan payments made through Visa, Mastercard, and Discover cards. If yes, can we accept loan payments as point of sale (POS) transactions? Additionally, our system allows us to run payments only as “card present,” but most of our payments are made over the phone (unless the customer has a deposit account with us). What are the risks of running a loan payment as “card present” when it is truly not present?
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We are not aware of any limitations under federal or Illinois law on accepting loan payments made with a credit or debit card, but we recommend checking your agreements with the relevant credit and debit card networks regarding this practice. The publicly available Visa Product and Service Rules prohibit the use of a credit card…
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A customer purchased a vacation package from an online booking company for a trip in April 2020 that the company canceled in March 2020. In April 2020, the customer notified us that the company had gone out of business and not provided a refund. At the time, we determined that the transaction did not meet the definition of an unauthorized transfer under Regulation E and advised the customer to seek a refund from the company. The customer later informed us that the airline involved in the transaction offered them travel credit, which they declined. The airline eventually refunded the cost of the flight in March 2021, but the refund went to the booking company, not the customer, since the flight had been booked on the booking company’s credit card. Do the Mastercard rules require us to credit the customer, and should we forward a chargeback to Mastercard?
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It is likely too late to forward a chargeback to Mastercard; however, we recommend crediting your customer since you would have been required to do so under Mastercard’s rules if you had forwarded the chargeback in the required timeframe. The transaction may not have been an “unauthorized electronic fund transfer” under Regulation E since the…
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Can a bank charge non-customers transaction fees when cashing an economic impact payment (EIP) Visa prepaid card or an EIP check?
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We do not believe that the Visa rules permit you to charge fees for manually cashing an EIP debit card, although you may be able to charge certain ATM fees if the card is cashed at an out-of-network ATM. As for cashing an EIP check, we believe that the same rules under the Uniform Commercial…
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Individuals have been coming to our bank and asking for cash advances on debit cards issued by the Illinois Department of Employment Security (IDES) for unemployment benefits. Can we charge a fee for providing these cash advances? Mastercard charges us a fee for these transactions.
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If your bank is a MasterCard member or participating bank, we believe that MasterCard’s rules would prohibit you from charging a fee when providing a cash advance on an IDES debit card when the cardholder is making the first such request in a calendar month. IDES issues unemployment insurance benefits on debit Mastercards issued by…
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A customer notified us on a Saturday that on the preceding Wednesday, she became aware that she lost her wallet with her debit card inside. Two transactions at a retail store using the debit card PIN occurred before the customer discovered she lost the wallet. One transaction exceeded $300, and another transaction the following day exceeded $200. When we questioned the customer, she said that the PIN was written on a piece of paper kept in her wallet. Are we obligated to credit the customer for these transactions? The Visa rules state that a cardholder’s negligence can increase their liability for an unauthorized transaction, but the commentary to Regulation E states that negligence cannot be used as a basis for imposing greater liability than permissible under the regulation.
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Yes, we believe your bank may be required to provisionally credit and refund your customer for some of the unauthorized transactions. Regulation E Regulation E’s Official Interpretations state that a consumer’s liability for unauthorized electronic fund transfers (including debit card transactions) “is determined solely by the consumer’s promptness in reporting the loss or theft of…
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We issue Mastercard debit cards and want to know if we can set the purchase limit to zero on some cards, effectively making them ATM cards. We have some customers who only have savings accounts, and if we issue debit cards for these accounts, the customers may use them for purchases and exceed the monthly six-transaction limit.
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We recommend reviewing the terms of your agreement with Mastercard to determine if this is allowable. The publicly available Mastercard Transaction Processing Rules indicate that transaction limits must be set at or above Mastercard’s default limits, which may be found in the Stand-In Processing—Accumulative Global Parameters (Form 041f). Consequently, you may be prohibited from decreasing…
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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…
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We have heard that Visa is changing its Zero Liability policy to reflect a different standard of care for zero liability protection for unauthorized transactions. Previously, a cardholder had zero liability for unauthorized transactions unless they were “grossly negligent.” Under the new policy, the cardholder will have zero liability for unauthorized transactions unless they were “negligent.” Does this change trigger a change in terms notice under Regulation E?
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Yes, we believe that this change to Visa’s Zero Liability policy triggers a change in terms notice under Regulation E. A Regulation E change in terms notice is required at least 21 days before the effective date of any change that will result in increased liability for the customer. In this case, Visa has changed…