Dealing with credit and debit card theft
Bethany M. Griffith
Unfortunately, the increasing prevalence of using “plastic” over cash for daily transactions has been accompanied by a rise in credit and debit card fraud. Fraud takes many different forms and anyone can be susceptible. Savvy consumers can take actions to reduce their risk of credit card fraud and know how to be prepared if fraud occurs.
Protecting Yourself from Fraud
Having credit cards or credit card information stolen is a common form of fraud. This kind of theft can happen in a variety of ways: credit card statements with your account information could be pulled from your trash, a retail website could be hacked, or your wallet could be taken. Although it would be impossible to protect yourself from all forms of fraud, it is prudent to be diligent in safeguarding your credit and debit card information by following a few simple guidelines:
- Shred any documents containing banking or credit card information or sign up for e-delivery of statements to minimize the risk of misplaced paper documents.
- Shred expired credit or debit cards, making sure to cut through the card number.
- Carry only the cards that you use on a regular basis.
- Do not provide account information over the phone unless you initiated the call.
- Total up charge slips before you sign them, and never leave blank lines on a receipt.
- Use caution when you access banking or credit card websites with unsecured Wi-Fi.
- Take advantage of email or text alerts that your card issuer provides notifying you of unusual account behavior or low balances.
- Review your monthly statements as soon as they are available.
- Annually review your three free credit reports provided at www.annualcreditreport.com.
What to Do if Fraud Occurs
Despite your best efforts at protecting your personal information, credit and debit card theft can occur. The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) limit consumer’s liability for unauthorized charges that have been placed on your credit or debit card. The protection provided by federal law depends upon the type of card compromised and how quickly you report the loss. Visit your bank or credit card website to familiarize yourself with the appropriate contact information and any specific procedures the company may have for reporting fraudulent transactions.
Under the Fair Credit Billing Act (FCBA), the maximum liability for fraudulent credit card charges is $50, regardless of how long it may take you to recognize and report the loss. If you report the loss of a credit card prior to any charges being placed on the card, you are not liable for any fraudulent charges.
Under the Electronic Fund Transfer Act (EFTA), the maximum liability for fraudulent debit card charges is entirely dependent on how quickly you report the loss. As with the FCBA, if you report the loss of a debit card before the thief makes charges, you are not liable for any fraudulent charges. If you report the loss within two business days of receiving the statement showing unauthorized purchases, you are only liable for $50 of fraudulent transactions. If you report the loss between two and 60 days after receipt of the statement reflecting the unauthorized purchases, you are liable for up to $500 of fraudulent transactions. Finally, if you do not report the loss within 60 days of receipt of the statement, you are liable for the full amount of fraudulent transactions — which could be your entire bank account balance!
After you have called to report the credit or debit card fraud, write a follow-up letter to the card issuer. Include your account number, the date and time you first became aware of the fraud, and when you reported the fraud. Because fraud resolution can be a lengthy process, it is important to keep records of any communication you have with the card issuer regarding the resolution. Close the compromised account and transfer the entire account balance to a new account. Once you have closed the account, destroy all cards and checks associated with the old account.
The use of credit and debit cards for daily transactions has added both convenience and new risks to our financial lives. Consumers should weigh the pros and cons of each payment option and arm themselves with the necessary information to prevent the associated fraud. Additionally, consumers should be prepared to act if they become victims of credit or debit card debt. Remember: diligence is key to protecting yourself from any kind of credit/debit card theft.
www.ftc.gov and visit your personal bank and credit card websites to obtain the necessary contact information in case of theft.
Bethany M. Griffith, CFP® is a 2010 graduate of the University of South Carolina with a B.A. in Business Administration and a double major in Finance and Economics. She was awarded the CFP® certification in February 2012. Ms. Griffith began her Abacus career in 2007 while a student at USC and continued working part-time until she graduated. She joined Abacus as a full time employee in August 2010. As a member of the Financial Planning Team, Ms. Griffith works closely with clients to understand their objectives in order to develop and implement a comprehensive financial plan to achieve those goals.
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