The following article covers the liabilities of fraudulent activities for credit cards, ATM cards and debit cards.
Many people find it easy and convenient to use credit cards and ATM or
debit cards. The Fair Credit Billing Act (FCBA) and the Electronic Fund
Transfer Act (EFTA) offer procedures for you to use if your cards are
lost or stolen.
Limiting Your Financial Loss
It is faster and easier to process financial transactions today than
ever before. Thanks to the electronic age, check cards, debit cards,
and ATM cards give us instant access to funds on deposit at the local
bank or a financial institution miles away. This also provides an
avenue of opportunity for thieves and scam artists to rapidly deplete
our financial reserves as well.
There are laws in place that provide a measure of protection from total
financial ruination, but you need to be aware of your rights and
responsibilities should your cards be stolen or appropriated for
mischief. The Fair Credit Billing Act (FCBA) and the Electronic Fund
Transfer Act (EFTA) are two laws implemented on a federal level that
can assist individuals targeted by the criminal element. For the laws
to work properly, however, you need to invoke the protective measures
by doing certain things if your cards are lost or stolen such as
reporting the loss or theft promptly to the issuers.
Limit Your Financial Loss
As soon as you discover the loss or possible theft of your credit cards
and your ATM or debit cards you must immediately notify the companies
that issued the cards so they will have that fact on record and can
monitor the cards for unusual activities. You can usually find
toll-free numbers for the 24 hour help line on the back of the card or
on your billing statement. It is a good idea to make a list of your
cards, along with the account identification and the toll-free numbers,
for reporting their loss. When you travel be sure to keep this
information separate from the cards so you will have access to the
information should you have a need to make a report while away from
home.
Keep a record of the companies you notified. Follow up the phone call
with a letter that includes all of the pertinent information such as
account number, when you noticed your card was missing, and the date
you first reported the loss.
As a side note, you might want to check your homeowner’s insurance
policy to see if it covers the liability amount you are responsible for
in the case of theft. If you do not currently have such coverage, you
might want to contact your insurer to include this protection in your
policy.
Under the Credit Card Loss or Fraudulent Charges (FCBA) act, the
maximum liability for illegal use of your credit card is $50 per card.
If you report the loss before any unauthorized charges are posted you
cannot be held liable for any of the charges. If the charges are made
using your account number, but not the card itself, you will not be
held responsible for any of the charges. The FCBA specifically says the
card issuer cannot hold you responsible for any unauthorized charges
and limits your loss to $50 of the charges made on the cards prior to
you reporting them lost or stolen.
You should always review your card billing statements for errors, but
following the loss or theft of the cards you should be even more
diligent. If you notice anything amiss in the statement, send a letter
to the card issuer along with a description of the questionable charge.
Remind them of the phone call you made and the letter you previously
sent notifying them of the loss or theft of the cards. There is usually
a separate address on the statement to which you will direct billing
errors. Do not send the letter along with your payment unless you are
directed to do so by the card company.
The Electronic Fraudulent Transfer Act (EFTA) also protects you from
fraudulent use of your bankcards. Federal protection from loss due to
unauthorized use of your ATM or debit card depends on how quickly you
report the loss. For example, if you report the loss before the card is
used, the EFTA protects you from any loss. If the report is made within
two business days after noticing the loss you will not be responsible
for more than $50 on each card.
If you fail to make a report within two business days after you
discover the loss, you could be held responsible for up to $500. If you
wait more than 60 days after you receive a billing statement reflecting
fraudulent activity to make a report, you risk unlimited loss. For
example, if you do not file a timely report on the theft of the cards,
you could lose not only all of the money in the account, but also be
held liable for the amount of overdraft protection you are granted. You
must report unauthorized use, loss, or theft of the cards within 60
days of the mailing of your card statement or face unlimited loss. You
are liable for charges made between the date of loss and the date the
loss was reported. If the thief only uses your account number and not
the card itself, however, you will not be held accountable for those
charges.
Protecting Your Cards
To protect yourself against fraudulent use of your cards, you should
know where they are at all times and keep them safe and secure. If your
card requires a password or personal identification number (PIN), don’t
write the number down so the thieves will get the code along with your
cards. Do not use your address, birth date, phone or Social Security
number as the PIN. Commit the pass code to memory and don’t share the
information with anyone.
In addition, the following suggestions may help you protect your credit card and ATM or debit card accounts.
For Credit and ATM or Debit Cards:
* Do not reveal your account number over the phone unless you know you're dealing with a reputable company.
* Never put your account number on the outside of an envelope or on a postcard.
* Draw a line through blank spaces on charge or debit slips above the total so the amount cannot be changed.
* Don't sign a blank charge or debit slip.
* Tear up carbons and save your receipts to check against your monthly statements.
* Cut up old cards - cutting through the account number - before disposing of them.
* Open monthly statements promptly and compare them with your receipts.
Report mistakes or discrepancies as soon as possible to the special
address listed on your statement for inquiries. (For more information
on the federal laws regarding FCBA and EFTA, click here)
* Keep a record - in a safe place separate from your cards - of your
account numbers, expiration dates, and the telephone numbers of each
card issuer so you can report a loss quickly.
* Carry with you only those cards that you anticipate you'll need.
For ATM or debit cards:
* Don't carry your PIN in your wallet or purse or write it on your ATM or debit card.
* Never write your PIN on the outside of a deposit slip, an envelope, or other papers that could be easily lost or seen.
* Carefully check ATM or debit card transactions before you enter the
PIN or before you sign the receipt; the funds for this item will be
fairly quickly transferred out of your checking or other deposit
account.
* Periodically check your account activity. This is particularly
important if you bank online. Compare the current balance and recent
withdrawals or transfers to those you've recorded, including your
current ATM and debit card withdrawals and purchases and your recent
checks. If you notice transactions you didn't make, or if your balance
has dropped suddenly without activity by you, immediately report the
problem to your card issuer. Someone may have co-opted your account
information to commit fraud.
Paying For A Registration Service
There are service providers who, for an annual fee, will contact all of
your credit card and ATM bank card issuers in the case of theft or loss
of your cards. This service will notify the issuers and request new
cards for you, but other than allowing you to make one phone call and
saving you from making numerous phone calls yourself, you do not need
this service.
The FCBA and the EFTA allows you to contact your card issuers’ customer
service department directly to notify them of the theft, loss or
unauthorized use of your cards. If however, you would enjoy the
convenience of a notification service to make the calls for you, be
sure to compare the companies’ offer versus the fees they charge. Be
sure your card issuer will work with such a service and find out if the
service pays any fees if they fail to notify the card company in a
timely manner and you incur charges on your card.
If you decide to purchase service from a registration company, compare
offers. Carefully read the contract to determine the company's
obligations and your liability. For example, will the company reimburse
you if it fails to notify card issuers promptly once you've called in
the loss to the service? If not, you could be liable for unauthorized
charges or transfers.
