MasterCard Zero Liability Protection For Credit/Debit?

Posted by CreditCardGuru

May 2014 update: MasterCard has changed and expanded its zero liability policies. Read about MasterCard’s new zero liability protections for debit cards here. The article below will remain for historical reference.

Q: The “Zero Liability” MasterCard protection means what exactly? I hear it advertised all the time but is there any fine print that comes along with it?

A: To be perfectly honest with you, the “zero liability” commercials are largely a marketing gimmick. Truth be told, federal law caps your personal liability for fraud at $50 anyway. Almost every major credit card in the U.S. will absorb that $50 deductible for you, so what you end up with is practically all major and reputable credit cards (not just MasterCard) offering $0 liability for fraud.

But there is some fine print…

The MasterCard zero liability policy does list some stipulations in the fine print that you should be aware of:

  • You have protected your account with “reasonable care”
  • During the preceding 12 months you have not had 2 or more unauthorized events
  • Your account must be in good standing, so if you are delinquent and behind on payments don’t count be on being covered with 100% zero liability.

But even with these stipulations, remember the federal law which limits your liability to $50. Also, I have heard of people having 2 or more occurrences within a year and they were protected 100% for all of them, so even though that aspect is mentioned in the fine print, I doubt it is always enforced.

Using a debit card? Then read this!

If you think a MasterCard debit card (or any debit card for that matter) is given the same protections as a credit card, then think again. Payments can be processed two different ways:

Debit Transactions: These are the transactions where you have to enter your PIN.
Credit Transactions: These are transactions where you swipe and sign, WITHOUT entering your PIN.

The MasterCard debit zero liability policy only applies to credit transactions. So if you use your debit card and have to enter your PIN then you are not covered under this policy. In fact, the legal protections for PIN-based fraud are few and far between. So keep this in mind if you use a debit card for purchases!

Last updated for Jan 2013

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