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Path: utzoo!linus!philabs!cmcl2!acf4!kenner
From: kenner@acf4.UUCP
Newsgroups: net.consumers
Subject: Re: Choice Card Usability
Message-ID: <10500002@acf4.UUCP>
Date: Wed, 18-Apr-84 18:56:00 EST
Article-I.D.: acf4.10500002
Posted: Wed Apr 18 18:56:00 1984
Date-Received: Fri, 13-Apr-84 01:17:52 EST
References: <910@hao.UUCP>
Organization: New York University
Lines: 33
Nf-ID: #R:hao:-91000:acf4:10500002:000:1936
Nf-From: acf4!kenner    Apr 10 18:56:00 1984

I can't speak for all debit cards, but I know this is not true of the VISA
card you get with a Merill Lynch CMA account.

When I got my card (from Bank One of Columbus, Ohio), enclosed was a flyer
explaining the standard provisions of the consumer credit law. Specifically
mentioned was a limitation of liability to at most $50 if you did not notify
them before the illegal usage after a theft and nothing if you did (it is my
understanding, by the way, that Merill Lynch has insurance to protect
against even this $50 loss).  In general all provisions of the protection
applied to credit cards seemed to apply.  I confirmed the loss provisions
with the Account Executive.

When I saw the agreement with Bank One covering the VISA card, I noticed
something that I thought was strange at the time.  The way the CMA account
works is that you have an account at Merill Lynch which is basically a
standard margin securities account in which all cash balances are
automatically invested in a money-market fund.  As you write checks or incur
VISA charges, Bank One notifies Merill Lynch daily and your account is
debited (technically, shares in a money-market account are redeemed).  Thus
the authorization limit is the sum of all cash balance (momentary), the
funds in the money-market account, and the marginable portion of all
securities in the account.

What the Bank One agreement said was that Bank One reserved the right to
extend credit IN ADDITION to the authorization limit described above.  If
they did this, there would be a standard monthly charge.  At the time I read
this, I was wondering why Bank One which ever extend such credit.  Now I
think I understand.  The purpose of this provision was precisely to make the
card a credit card for the purposes of consumer protection.


As I said, I don't know about other debit cards in other arrangments.  But
you should read your agreement carefully and you may find such language.