Report! Report! Report! The GOOD NEWS is that you are not financially responsible for any fraudulent purchases AFTER reporting the theft or loss of your card. This is why it is so important to call the credit card company ASAP. Upon notification, your account will be immediately closed and then transferred to the fraud investigation department. All unauthorized charges then will be investigated. The stores and merchants where any charges were approved will be contacted and an investigation will determine whether someone other than the authorized card holder was responsible for the purchases or related transactions. PLEASE NOTE. Many times it is the cardholder who commits fraud by reporting that the charges were not authorized! Do not pretend that your credit card was stolen and the purchases made by someone else. Fraud investigators are VERY GOOD and you will most likely get caught AND prosecuted. It's like cheating on a mid-term exam. The consequences are far more severe than the potential benefits! But, you ask, what about my financial liability before contacting the credit card companies? Well, the answer depends on whether the account is a credit/charge card or a check cashing/debit card. For major credit and charge cards, federal law limits your financial liability is now zero, you are not liable for any unauthorized charges. PERIOD. Regardless of whether your account is a Visa, MasterCard, Discover or American Express, you are not responsible for fraudulent transactions, as long as you notify company, no matter how much has been billed to your account. Now, won't you sleep better knowing that a fraudulent shopping spree with your credit card at Abercrombie and Fitch is not YOUR problem? Does this policy change your opinion about federal regulation? It certainly has motivated the credit card companies to develop more sophisticated fraud protection and investigation policies! Amazing isn't it? As for check-cashing/debit cards, federal law limits your financial responsibility to $50 only if you notify your financial institution within two (2) business days. After 2 business days and up to 60 business days, your liability rises to $500. THIS INCLUDES WITHDRAWALS AND ACCOUNT TRANSFERS! But, that's not all, it can still get worse, much worse. If you wait to contact your bank more than 60 business days later, you can lose all of the money in your checking or debit account PLUS up to the limit of your overdraft protection. Let's look at this in terms of real world examples So, the bottom line is to ERR WITH CAUTION, especially with cash checking and debit cards. Call immediately. The longer you wait, the greater your potential financial loss. Table 2 shows the federal limits of your potential losses. Also, some banks and other financial institutions support self-imposed industry limits on customer liability due to fraudulent use of check cashing and debit cards. Make sure that you find out YOUR maximum liability since it depends on the policy of individual financial institutions. Table 2: FINANCIAL LIABILITY BY TYPE OF CARD TIME TO CALL CHARGE CREDIT CHECK* DEBIT* Immediately $0 $0 $0 $0 2 Business Days $0 $0 $50 $50 2 to 60 Days $0 $0 $500 $500 More than 60 Days $0 $0 ALL MONEY & OVERDRAFT *Self-imposed imposed industry guidelines may limit consumer liability to zero within the first 2 days and $50 thereafter. On to information management Return to Introduction   On to Part I   Copyright Newtonian Finances Ltd. © 2000-2024 (disclaimer)