We hear a lot from readers who say their debit cards were charged for services they didn’t receive — whether by fraud or by ineptitude on the part of a merchant — and who are now waiting for their bank to please put back the money that was wrongfully taken from them.
We usually point these readers to the unfortunate language in the Electronic Fund Transfer Act that gives their bank up to 10 business days before even deciding whether to re-fund your account.
But one consumerist reader who works at a bank and handles these sort of claims wanted to help shed some light on this process and some other behind-the-scenes things you might not be aware of.
“One of the largest misconceptions I hear working for claims is that we can just put the money back on people’s say-so,” says W., who is employed by a regional bank with about 60 locations. “If I had my way, I’d refund every person their money as soon as they called us and told us what was wrong.”
But, explains W., the bank isn’t the one holding your money. When you made that debit card purchase, you transferred your money out of your account and into someone else’s. Your bank can’t always be expected to front you the money that Best Buy, Sears, or some scammer in Idaho still has in their account.
“So as much as we’d like to put the money back in, we can’t financially,” she tells Consumerist.
That being said, in some cases — especially with regard to alleged fraud or ID theft — the bank will credit your account while it goes through the process of investigating the claim.
Making The Right Kind Of Claim
As W. explains, there is a big difference between fraud and a payment dispute. And it’s important for consumers to be aware of the difference.
She gives the example of customers who make fraud claims when they find they are auto-renewed for a magazine or some other subscription service.
“It happens — a lot — and yes, it sucks,” says W. “But here’s the key — you had dealings with that company prior, so if we file a claim saying it’s unauthorized fraud and they come back with proof (your name/address/etc) that it was you? We’ve lost all our rights in trying to get back your money. It’s kind of like double jeopardy; you can’t file another claim for the same transaction.”
In that case, the customer needs to dispute the payment, rather than make a fraud claim with their bank.
“There are very specific types of claims we can file for this, and so any and all documentation you have will be helpful,” she explains. “Trust me on this. The more info, the better.”
Her rule of thumb is that if you’ve had any business relationship with the merchant in the past — given them your card number, allowed a family member or friend to use your to buy something from the company, signed up for a trial, etc. — then you should file a dispute, and not a fraud claim.
If your case truly is an incident of fraud, W. suggests contacting the police in addition to the bank. At the very least, it’s on the record with authorities.
So What Is Happening During Those Ten Days?
In fraud cases, the bank may need this time to gather disparate pieces of information associated with the claim, says W.
“There may be other issues involved, such as skimmed cards, or information that isn’t 100% available at the time of the claim,” she explains, saying that most of the claims involving larger amounts of money are decided on by folks above her on the totem poll.
“A big piece of it can be liability, too,” she adds. “If there’s $1,000 worth of fraud claimed by a customer who let their cousin use their card prior? And all the transactions that are fraud are ones signed up for by that cousin? That’s not really fraud in terms of Federal Regulation E. That’s someone who let their cousin use their card and now doesn’t want to deal with the problems their cousin has caused.
“I feel your pain for this in terms of the situation being less than great. But an issue between yourself and the cousin is not really the same as a random stranger stealing $1,000 from your account. We’re here to protect customers when something beyond the normal/outside their control happens, but we can’t protect them from their own situations.”
Can Things Ever Be Sped Up?
W. says that preparation on the customer’s side is key to moving the process along as quickly as possible. For fraud claims, that means filling out all the paperwork completely.
“Double-check it, call us, fax us, whatever you have to do so we don’t have to send it back to you and make the process longer,” she says. “I would rather get a thousand phone calls to double-check stuff than to have to return it to you and feel horrible that you’re getting your money back slower.”
In general, W. says that “Faster paperwork = faster returned moneys.” And this is especially true in cases where the alleged fraud happened weeks or months earlier and the customer is just noticing: “The clock is ticking, and if we don’t get your response/paperwork back soon, we may lose all rights to get that money.”
As for payment disputes, it’s best to have all the relevant information at your disposal. So if you canceled your cable and they charged you an extra month, W. says that whatever proof you can provide — a cancellation number, an e-mail, anything in writing — will bolster your case and make things move more rapidly.
“It makes things easier on your claim rep, easier on the financial institution, and (hopefully) easier to get your money back,” she tells Consumerist. “If we don’t have any proof, it’s your word against the merchant’s, and far more often than not, they’ll have the upper hand.”
When To Avoid Using Debit Altogether
Given that debit cards offer fewer consumer protections than credit cards, W. advises that there are situations where you might be best off paying with credit (and then paying the whole thing off at the end of the month, of course).
Tf you’re signing up for a trial service or membership, she says you should definitely put it on a credit card. Likewise, W. says that putting online purchases or booking travel arrangements on your credit card will also result in less problems later if there any issues arise.
“When you have disputes, it is SO MUCH EASIER to get transactions like these removed from a credit card rather than a debit card,” she explains.
Stay Away From Payday
It’s not just consumer advocates and U.S. senators that want to see an end to payday lending.
“Please, please, PLEASE don’t sign up for payday/fast cash loans,” writes W. “I know they can look like great short-term solutions, but the consequences of having them are so much more than what you gain by having them. Banks are INCREDIBLY limited in what they can do to help, because everything that happens afterwards is agreed to in the terms you signed up for with the loan–whether you’re approved for the loan or not. I hate having to tell people I can’t do anything for them.”

Editor's Note: This article originally appeared on Consumerist.