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Consumer customers traveling to countries with high fraud risk have asked the bank to unblock their debit cards to allow transactions. Can the bank do this and have the customers sign a liability waiver stating that they will accept all risk?

My bank's debit card processor's fraud detection system blocks transactions in countries with high fraud risk such as China. Several consumer customers traveling to these countries have asked the bank to unblock their debit cards to allow transactions. Management is asking if the bank may do so and have the customers sign a liability waiver stating that they will accept all risk. May the bank this?

No. While the bank may block debit card use in foreign countries for fraud purposes, if it lifts the block and allows consumers to use their card in those countries, Regulation E protections apply. See the Commentary to Sec. 1005.6(b):

3. Limits on liability. The extent of the consumer's liability is determined solely by the consumer's promptness in reporting the loss or theft of an access device. Similarly, no agreement between the consumer and an institution may impose greater liability on the consumer for an unauthorized transfer than the limits provided in Regulation E. (Emphasis added.)

(June 2018)

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