When you return an item, or find a debit card charge on your account you didn’t authorize, you want the money returned to your bank account immediately. Unfortunately, it doesn’t work that way with debit cards. The Electronic Fund Transfer Act allows banks up to 10 business days to decide whether or not to issue a refund to your bank account. This means funds you’re relying on to pay your bills may be delayed.
When you make a debit card purchase, the money is transferred out of your bank account to the merchant. The bank cannot issue an immediate refund to your debit card because the process is instant, and your money is no longer there.
If you need a refund, you must contact the merchant to process the request for a refund. The merchant then will issue a refund to the card used in the transaction, if your request is not denied. This must be done this first, before the bank can credit any funds to your account, and can take a few business days to process.
If you feel you are owed a refund, but the merchant refuses to give you one, you may need to file a dispute with your bank.
Dispute vs. Fraud
Unanticipated charges on your debit card can be very frustrating, but there’s a big difference between filing a dispute regarding charges made with your debit card and claiming fraud.
If you know the person to whom you made the transaction on your debit card, if you signed up for a free trial with a company or if you voluntarily loaned your card to someone, it’s typically not considered fraud. A charge is usually only categorized as fraudulent if you’ve never done business with the merchant or you don’t know the person who used your debit card.
In some cases, a bank will credit your account the amount being disputed while the fraud investigation is underway. However, some bank policies may hold the consumer liable for up to $50 of fraudulent charges if the bank is notified within two days after noticing the charges. If the bank is notified more than two days after noticing the charges, this liability can go up to $500.
Speeding the Process Up
To move the refund process for fraud or disputes along faster, it’s important to be properly prepared. If you’re filing a fraud claim, double-check the forms to make sure you’ve filled everything out correctly. When paperwork has to be sent back because it’s incorrect, it takes longer to process.
For payment disputes, provide the bank with all the relevant information you have to back up your claim, including a cancellation number, e-mail or anything else you have in writing.
Purchases Not for Debit
Using a debit card for purchases from certain merchants provides a greater risk than others. Sometimes it’s safer to use other forms of payment such as PayPal, cash or a credit card to safeguard your bank account from fraud. At establishments such as gas stations, restaurants and online stores, it’s best not to use your debit card.
- Consumerist: Bank Employee Explains Why It Takes So Dang Long To Process Debit Card Fraud Claims and Disputes… And Other Fun Stuff
- Bankrate: 4 Risky Places to Swipe Your Debit Card
- Washington State Department of Financial Institutions: Debit Cards Frequently Asked Questions
- Reference: Is It a Long Process to Refund a Debit Card?
- Consumer.gov. "Using Debit Cards." Accessed July 16, 2020.
- Federal Trade Commission. "When a Company Blocks Your Credit or Debit Card." Accessed July 16, 2020.
- Element Federal Credit Union. "Debit Card Holds and Issues Explained." Accessed July 16, 2020.
- Consumer Financial Protection Bureau. "A Closer Look: Overdraft and the Impact of Opting-In," Page 1. Accessed July 16, 2020.
- MyFICO. "What Is Amounts Owed?" Accessed July 16, 2020.
- Federal Trade Commission. "Lost or Stolen Credit, ATM, and Debit Cards." Accessed July 16, 2020.
Laura Woods is a Los Angeles-based writer with more than six years of marketing experience. She has a Bachelor of Arts in communications from the University of Pittsburgh and an MBA from Robert Morris University.