Who's liable after October 1st?

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dragon452
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Who's liable after October 1st?

Postby dragon452 » Fri Aug 21, 2015 4:02 pm

Attached is a paragraph from a "Bankrate" article I saw recently: "That's why the major card networks will stage a "liability shift" to prod merchants into upgrading to EMV. After Oct. 1, if a counterfeit debit card purchase happens with a chip debit card because a merchant failed to upgrade, the merchant, not the bank, will be responsible, ABA's Johnson says."

That's just over five weeks away now. Needless to say, I believe that MOST (not some) people will still not have EMV chipped credit or debit cards by then (unless they demanded a replacement). So the obvious legal question is: if a fradulent credit/debit card transaction occurs after October 1st (possibly due to skimming the magnetic stripe), and you have not been issued an EMV card by your bank, is the bank still legally reponsible for your reimbursement (assuming that you reported the fraud quickly), or can the bank try to shift the blame onto the merchant anyway, saying that their old-style card readers are faulty, go complain to them?


whit
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Re: Who's liable after October 1st?

Postby whit » Fri Aug 21, 2015 10:17 pm

Banks have been scrambling around to change all cards to chip

The smart ones have done so AND disabled the current ones without a chip so they won't grt caught with their pants down so to speak :)

Whatamuji
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Re: Who's liable after October 1st?

Postby Whatamuji » Sat Aug 22, 2015 12:25 am

My bank still hasn't issued EMV cards yet nor has the local credit unions. I do get the occasional customer using an older card without EMV.
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augiedog
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Re: Who's liable after October 1st?

Postby augiedog » Sat Aug 22, 2015 12:37 am

Whatamuji wrote:My bank still hasn't issued EMV cards yet nor has the local credit unions. I do get the occasional customer using an older card without EMV.


Being this close to the liability shift I would have thought Amex would have sent me a new BCE with a chip, but they never did until I requested a contactless (Expresspay) card last week.
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lobbythis
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Re: Who's liable after October 1st?

Postby lobbythis » Sat Aug 22, 2015 2:35 am

My last bank is finally issuing the cards. Everything else I have is already EMV

flan
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Re: Who's liable after October 1st?

Postby flan » Sat Aug 22, 2015 10:32 am

dragon452 wrote:Attached is a paragraph from a "Bankrate" article I saw recently: "That's why the major card networks will stage a "liability shift" to prod merchants into upgrading to EMV. After Oct. 1, if a counterfeit debit card purchase happens with a chip debit card because a merchant failed to upgrade, the merchant, not the bank, will be responsible, ABA's Johnson says."

That's just over five weeks away now. Needless to say, I believe that MOST (not some) people will still not have EMV chipped credit or debit cards by then (unless they demanded a replacement). So the obvious legal question is: if a fradulent credit/debit card transaction occurs after October 1st (possibly due to skimming the magnetic stripe), and you have not been issued an EMV card by your bank, is the bank still legally reponsible for your reimbursement (assuming that you reported the fraud quickly), or can the bank try to shift the blame onto the merchant anyway, saying that their old-style card readers are faulty, go complain to them?


Following the liability shift, the party without EMV support is liable for card present fraud. So a merchant with with a chip terminal (with the reader enabled....) is not liable for a fake card with only a magnetic stripe. A merchant without a chip reader who takes a fake card that should have been chipped, whether the fake actually is, or not, is liable for the fraud. If neither or both parties support EMV, the fraud risk remains with the bank. There are special rules for automated fuel dispensers, and some other classes of terminal. Also, some card processors who don't provide an upgraded terminal to their customers may be on the hook, and not the merchant.

EDIT to clarify: one of the the things that doing online verification will do will tell a chip enabled terminal that the swiped card is supposed to have a chip, and refuse to approve the transaction, except through the chip reader.

The customer continues to have their liability limited by federal law, there's no change there.

dragon452
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Re: Who's liable after October 1st?

Postby dragon452 » Mon Aug 24, 2015 9:39 pm

Thank you Flan, for that informative answer, it is appreciated. An update on my post: I was speaking to my savings bank today about another matter, and I brought up the question of when EMV chipped debit cards will be issued by the bank. The customer service rep. told me that they have not even STARTED to mail out those cards as yet. I called my other bank where I maintain a checking account (a VERY large nationally known bank). The answer was basically "we're in the process of sending them out" (no arrival time given, even approximately). I live in South Florida, one of the premier credit card fraud/bad check centers of the country, and it seems that the banks are in no hurry to get these new cards out by October 1st (assuming you didn't already demand a new one from them). Thanks again!



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