WASHINGTON -- As some lawmakers pushed for a ban on unsolicited loan checks and a $50 cap on consumers' liability for stolen debit cards, a Federal Reserve governor said Wednesday such laws aren't needed.
But Laurence Meyer also put Visa and MasterCard on notice that consumers should be informed of the risks of increasingly popular debit cards.
"It is in everyone's best interest to assure that the public understands the new risks" in many debit card transactions, the central bank governor told a hearing of the House Banking subcommittee on financial institutions and consumer credit. Unlike automated teller machine cards, debit cards don't require use of a personal identification number unless they're being used in ATMs. Only the consumer's signature is needed for a purchase, so that a checking account could be drained quickly if a card is stolen. Recognizing that risk, several lawmakers have put forward measures that would cap consumers' liability for lost or stolen debit cards at $50 -- the ceiling for credit cards. "The reality is that millions of Americans are being issued debit cards and are carrying them around without realizing it, and are unaware of their potential liability in case of theft or loss," said Rep. Thomas Barrett, D-Wis., a principal sponsor of the legislation. The chairman of the Senate Banking Committee, Sen. Alfonse D'Amato, R-N.Y., proposed a similar bill Tuesday. Meyer said the concern raised by lawmakers "has already generated change in the marketplace" in the form of voluntary action by the credit-card companies, and that legislation isn't needed at this point. Visa USA and MasterCard International, which together account for nearly all U.S. debit cards, recently decided not to make card holders responsible for fraudulent transactions as long as they notify issuers within 24 hours when a card is lost or stolen. …