What is Zero Liability Policy?
Zero liability policy refers to the provision or condition in the contracts of credit card that says the credit card holder is not accountable for unauthorised charges. The Zero liability policy, which is being offered by the issuers, states that a cardholder is not responsible to make payments for any unauthorised charges and a cardholder can’t be legally oppressed.
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Understanding Zero Liability Policy
The zero liability policy defines a provision or condition in the agreement of a credit or debit card which states that a card holder is not liable for any unauthorised transaction made in the card. The issuers of the credit cards provide protection to their cardholders and assure them that in case of any fraudulent charges that are detected by the issuer or reported will be removed from the cardholder’s account, and the account holder is not liable to pay for them. The issuers of credit cards offer zero-liability policies to attract the customers as they found risky to have a credit card and it reduces the revenues of the issuer of credit card.
Debit cards also provide with similar protections. A debit cardholder may suffer from some losses, if the cardholder is failed to report the unauthorised use of the debit card. However they are regulated under distinct federal regulation.
The providers of credit cards are largely accountable for managing and coping with the frauds of credit cards as per the federal law. The credit cardholder’s liability for losses is restricted to the maximum limit of $50 in case of potential for loss. Mostly credit and debit cards are issued with the restricted liability clause, but in case of debit cards, the issuer (bank) may make excuses for the losses due to lighter regulation of debit cards so a debit card holder should read the policy very well to ensure that a bank does not give any excuse at the time of losses.
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Frequently Asked Questions
How to implement Zero Liability Policy?
Zero Liability Policy is offered by the issuer of the credit cards and debit cards to attract individuals as they are risky. The provider of the credit card issues the card to an individual with zero liability policy for any misuse and fraud until the specified obligations have been completed. These include the credit card holder has to inform the issuer of the card as soon as any wrong and fraudulent transaction is detected and take best possible care to prevent the theft of the credit card. The cardholder is not liable for any unauthorised transactions made through a phone, app, online or in person. The zero liability policy in credit card is applied regardless of way of fraudulent transactions.
The issuer of credit card provides cards to customer with zero-liability policies because they may otherwise avoid using them as they do not want to involve them in high cost risks. Zero liability policies may not applicable to the transactions of all commercial credit cards or to all foreign transactions. The obligations and policies are clearly mentioned in the agreement of the cardholder.
What are the risks associated with Zero Liability Policy?
There are several risks around the zero liability policy. Some of them are:
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