My friend told me this weekend that he faced the situation described in this US News and World Report article.  After not tracking his checking account for a few weeks, he went back and found unauthorized $3 charges which eventually grew to $300.  He worked with his bank and the matter was ultimately resolved to his satisfaction…but it did take time.  Here is the danger:

But you shouldn’t be too worried, right? Sure, the money’s gone, but it won’t be for long. Once you report the fraudulent charges, the bank should replace the funds the same day and then look into what happened. Meanwhile, all will return to normal.

Think again.

For one, there’s no guarantee that your money will ever be replaced – especially if you wait too long to report the fraud. Federal law says you are only liable for $50 in fraudulent charges if you tell your bank within two business days of learning about them. Wait more than those two days, but fewer than 60 calendar days after you receive your statement, and you can be liable for up to $500 in losses. Beyond that length of time, there are no limits.

That’s not all. Even if you do get all your money back, it probably won’t happen that same day. It might not even be that week.

Generally, after you tell the bank about a fraudulent transaction, it has 10 business days to look into it. If the investigation determines that the transaction was, in fact, fraudulent, the bank must replace the funds within one business day of making that determination. (It can have more time if needed, but the law requires the disputed amount be put back into your account after 10 business days have passed – minus a charge of up to $50 – as the investigation continues.)

That means you could end up waiting 11 business days, or more than two weeks, to get your money back.

Contrast this with credit card fraud that you discover…

“Say that one day, when routinely checking your credit card statement online, you notice several strange charges: $200 at Target, $25 at Chipotle and $40 at the local Chevron station. Alarmed, you immediately call and tell your card issuer that you didn’t make the purchases. Typically, you will be asked a few questions, and then the charges will be temporarily removed from your statement until the investigation is resolved, your card canceled and a new one mailed to you.”

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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