Credit Card Basics: Zero Fraud Liability

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There are several terms that are commonly found in credit card cardmember agreements that you might overlook. One of those terms is Zero Fraud Liability. But what exactly is $0 Fraud Liability, what does it cover, and how does it work? Here is everything you need to know about Zero Fraud Liability:

What is Zero Fraud Liability?

“Zero Fraud Liability” is a term frequently seen on credit card agreements, but what does it actually mean? A Zero Fraud Liability, or $0 Fraud Liability clause is a policy in a credit or debit card agreement that protects the account holder from fraudulent or unauthorized charges.

Federal law ensures that credit card issuers are largely responsible for credit card fraud. The cardholder should promptly report suspected fraudulent activity – with “prompt” defined as up to two days after the fraud occurred. The same federal law mandates that the maximum fraud liability is $50 per loss – if the fraud is reported promptly. However, should the cardholder fail to act promptly, they may be liable for the entire fraudulent charge.

Zero Fraud Liability, however, waives this $50 maximum. This means that cardholders who promptly report fraudulent activity on their card will have no liability for any of the suspect charges. This basic coverage is provided by all four major payment networks: American Express, Discover, Mastercard, and Visa.

Does $0 Fraud Liability Apply to Debit Cards?

While the four major credit card issuers offer $0 Fraud Liability, that doesn’t mean every type of payment card is protected. Some Visa commercial cards, for example, do not offer Zero Fraud Liability coverage.

Similarly, not all debit or prepaid cards that feature the Visa, Mastercard, or American Express logo offer fraud coverage. Before you use your new debit or prepaid card, always consult the cardmember agreement to ensure your card is protected in the event of fraud.

How to Report Credit Card Fraud

As mentioned, immediately reporting credit card fraud is essential. Since Zero Fraud Liability only applies if the cardholder acts within a two-day window, if you suspect fraud or notice unauthorized charges on your account, do the following:

  • Contact your credit card issuer as soon as possible
  • Issue fraud alerts with the three major credit bureaus (Equifax, Experian, and TransUnion)
  • Update passwords and recurring payments
  • Monitor your credit report

Related Article: Freezing Your Credit: What You Should Know

Featured image by mohamed_hassan/PixaBay

About: Cory
Cory Santos

Cory is's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. Cory holds academic degrees in both the U.S. and U.K. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.

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