The Direct Express® card offers a fast, convenient, and secure way for people to receive their federal benefit payments. An important security feature of the card is that it provides limited liability for cardholders in the event of unauthorized use.  This protection is provided through a federal regulation known as “Regulation E”.

Regulation E (12 CFR 1005) (“Reg E”) was enacted to implement the federal Electronic Funds Transfer Act and is intended to protect  bank account customers from fraudulent use of stolen ATM and debit cards, unauthorized transfers from consumer accounts and from errors such as the consumer’s receipt of an incorrect amount of money from an ATM.

Direct Express® cardholders are protected by Reg E which shields them from unauthorized card use and establishes cardholder responsibilities for reporting unauthorized Electronic Funds Transfer (EFT) activity, typically involving a stolen or missing card.

Much of Reg E outlines the procedures consumers must follow in reporting errors with EFTs such as those made with Direct Express® card, as well as the steps a bank must take to provide recourse. Direct Express® cardholder liability for unauthorized transactions is limited if a card is reported as lost or stolen in a timely manner. Cardholders can do this by calling the Direct Express® card toll free Customer Service Department number on the back of the card.

In Case of Missing Card/Unauthorized Transactions

Under Regulation E, cardholders who report a card lost or stolen within 2 business days of learning of the loss or theft cannot be held liable for more than $50, and unauthorized transactions identified in transaction history of other card transaction information must be reported within 120 days from date the credit or debit was posted to the card account. Failure to do so may mean that cardholders do not get their money back (though this varies in some states).

It is important to note that Regulation E only applies in cases where unauthorized EFTs have been detected, generally when a card has been lost or stolen and has been used without cardholder authorization. It does not apply in cases where mistakes have been made in making a transaction, where merchants receiving cardholder transactions fail to meet expectations, or where confusion between a cardholder and, say, their representative payee, has resulted in transactions that are not in keeping with the cardholders wishes.

Additional Protections

In addition to consumer protections required by Reg E, funds remitted to individual’s Direct Express® card are FDIC-insured up to the maximum legal limit. In addition, MasterCard® Zero Liability (exceptions may apply), provides additional protection against unauthorized use of a Direct Express ® card. Finally, if a Direct Express® card is lost or stolen, it is replaced upon request.