(a) Conditions for liability. A consumer may be held liable, within
the limitations described in paragraph (b) of this section, for an
unauthorized electronic fund transfer involving the consumer’s account
only if the financial institution has provided the disclosures required
by section 205.7(b)(1), (2), and (3). If the unauthorized transfer
involved an access device, it must be an accepted access device and
the financial institution must have provided a means to identify the
consumer to whom it was issued.
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(b) Limitations on amount of liability. A consumer’s
liability for an unauthorized electronic fund transfer or a series
of related unauthorized transfers shall be determined as follows:
(1) Timely notice given. If the consumer notifies the financial
institution within two business days after learning of the loss or
theft of the access device, the consumer’s liability shall not exceed
the lesser of $50 or the amount of unauthorized transfers that occur
before notice to the financial institution.
(2) Timely notice
not given. If the consumer fails to notify the financial institution
within two business days after learning of the loss or theft of the
access device, the consumer’s liability shall not exceed the lesser
of $500 or the sum of—
(i) $50 or the amount of unauthorized
transfers that occur within the two business days, whichever is less;
and
(ii) the amount
of unauthorized transfers that occur after the close of two business
days and before notice to the institution, provided the institution
establishes that these transfers would not have occurred had the consumer
notified the institution within that two-day period.
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(3) Periodic statement; timely notice not given. A consumer must
report an unauthorized electronic fund transfer that appears on a
periodic statement within 60 days of the financial institution’s transmittal
of the statement to avoid liability for subsequent transfers. If the
consumer fails to do so, the consumer’s liability shall not exceed
the amount of the unauthorized transfers that occur after the close
of the 60 days and before notice to the institution, and that the
institution establishes would not have occurred had the consumer notified the
institution within the 60-day period. When an access device is involved
in the unauthorized transfer, the consumer may be liable for other
amounts set forth in paragraphs (b)(1) or (b)(2) of this section,
as applicable.
(4) Extension of time limits. If the consumer’s
delay in notifying the financial institution was due to extenuating
circumstances, the institution shall extend the times specified above
to a reasonable period.
(5) Notice to financial institution.
(i) Notice to a financial institution is given when a
consumer takes steps reasonably necessary to provide the institution
with the pertinent information, whether or not a particular employee
or agent of the institution actually receives the information.
(ii) The consumer may
notify the institution in person, by telephone, or in writing.
(iii) Written notice
is considered given at the time the consumer mails the notice or delivers
it for transmission to the institution by any other usual means. Notice
may be considered constructively given when the institution becomes
aware of circumstances leading to the reasonable belief that an unauthorized
transfer to or from the consumer’s account has been or may be made.
(6) Liability under state law or agreement. If state law or an agreement between the consumer and the financial
institution imposes less liability than is provided by this section,
the consumer’s liability shall not exceed the amount imposed under
the state law or agreement.
