What is a financial institution's liability for unauthorized credit card use?
In Washington, a financial institution’s liability for unauthorized credit card use is limited by federal law. This law sets out how much money a financial institution is responsible for paying if a customer’s card is used without their authorization. The financial institution is only liable for up to $50 of the unauthorized charges. If it is determined that the customer’s card was used without their authorization, and they had taken reasonable steps to protect it, they may not have to pay the $50. If the customer’s card is lost or stolen, the financial institution can be held liable for up to $500 of any unauthorized charges. To receive this protection, the customer must report the incident as soon as they can. If a cardholder suspects that their card was used without authorization, they should notify their financial institution right away. The financial institution can then investigate the unauthorized charges and work to return any money taken. Generally, financial institutions are not liable for any unauthorized charges if the customer is found to be at fault for the incident. They can also be relieved of any liability if the customer fails to notify them of the incident within 60 days of receiving their statement. By understanding the law and taking steps to protect their credit card from unauthorized use, cardholders can ensure that any financial losses from its misuse are properly handled.
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