Under Reg E, how is the liability determined if unauthorized transactions would not have occurred if the access device had been reported lost earlier?

Under Reg E, how is the liability determined if unauthorized transactions would not have occurred if the access device had been reported lost earlier?

• A. Liability is always limited to $50
• B. Liability increases to $100
• C. Liability can exceed $50
• D. Liability is waived

Answer: (C)

The correct answer reflects that liability for unauthorized transactions can exceed $50 under Regulation E, provided that the access device—such as a debit card or ATM card—was not reported lost or stolen in a timely manner. Regulation E sets specific timelines for notifying the financial institution in the event of loss or theft. If an access device is lost or stolen and the consumer fails to report it, they may be held liable for all unauthorized transactions that occur after the device’s loss and before the report is made. The maximum liability for unauthorized transactions can escalate to $500 or more, depending on the circumstances and timing of the notice. This framework acknowledges that the consumer has a responsibility to safeguard their access devices and report any loss promptly to minimize their potential liability. In this context, it is important for consumers to understand the significance of timely reporting to limit their financial exposure.

The correct answer reflects that liability for unauthorized transactions can exceed $50 under Regulation E, provided that the access device—such as a debit card or ATM card—was not reported lost or stolen in a timely manner. Regulation E sets specific timelines for notifying the financial institution in the event of loss or theft.

If an access device is lost or stolen and the consumer fails to report it, they may be held liable for all unauthorized transactions that occur after the device’s loss and before the report is made. The maximum liability for unauthorized transactions can escalate to $500 or more, depending on the circumstances and timing of the notice.

This framework acknowledges that the consumer has a responsibility to safeguard their access devices and report any loss promptly to minimize their potential liability. In this context, it is important for consumers to understand the significance of timely reporting to limit their financial exposure.