Memorandum Components

California’s laws on individual liability for unauthorized charges on a lost or stolen credit and debit cards mirror the federal laws on the issue. Federal laws cap individual liability on for unauthorized use of one’s credit card at $50, whereas one’s liability for unauthorized use of one’s debit/check card depends on how quickly the loss card is reported to the bank. If the debit/check card is reported loss prior to it being used without the owner’s permission, then the card issuer cannot hold the owner liable for any unauthorized purchases or transfers.

If an unauthorized use occurs before it is reported lost, then one’s liability depends on how fast the card is reported lost to the card issuer. The potential liability on unauthorized use of debit/check cards is limitless. Conclusion: This paper examined the differentiation between an individual’s liabilities for unauthorized charges on lost or stolen credit cards versus debit cards under California laws. Herein both federal and state laws were reviewed.

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As state laws are often modeled after federal law, California is not exception and thus, a thorough review of both state and federal laws was necessary. Commencing with an examination of applicable federal laws, it was determined that federal laws differentiate between the unauthorized use of credit cards and debit cards. Such laws limit one’s liability to fifty dollars if one’s credit is stolen and used without permission. The FBCA does not allow credit issuers to hold owners responsible for any unauthorized charges that may occur on the credit after the card is reported stolen.

Unfortunately, if the credit card remains in the owner’s possession and only the credit card number is used, then the owner of the card is not afforded is protection and may be held responsible for any unauthorized purchases or transfers. Conversely, debit/check cards are treated differently. Under federal law, liability for any unauthorized use of a debit/check card depends on how quickly the credit issuer is notified of the card being lost.

The EFTA provides that if a debit/check card is reported missing prior to an unauthorized use, then a card issuer cannot hold the owner of the card responsible for any unauthorized charges or transfers. Should an unauthorized use occur before being reported lost, then one’s liability depends on how quickly the card is reported lost. Next the paper examined California laws on the question presented. Although many consumer articles focus on the question at hand, California laws are focused more on criminal and civil codes rather than liability on behalf of the victim.

The statutes are more heavily geared towards determining credit card fraud as a felony and the penalties for committing such fraud. California laws consider credit card fraud to be a felony. Title 1. 3 of the California Statutes mirrors federal laws in that is caps an individual’s maximum liability for unauthorized use of one’s credit card at $50. California statues are silent as to individual liability with respect to debt/check cards, yet the legal trend seems to fall in line with the federal laws and differentiate between credit and debit cards in a similar manner.

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