BY NORMAN G. GRILL
Credit and debit card fraud no longer strike only the careless. Recent high-profile data breaches, such as those suffered by retail giants Target and Home Depot, have made this clear. Even if you guard your cards as carefully as possible, hackers can get your sensitive data. Here are some basics on what to do if that happens.
If your credit card is used without your permission, you may be responsible for up to $50 in charges, according to the Federal Trade Commission. But if your card is lost or stolen and you report the loss before your card is used in a fraudulent transaction, you can”™t be held responsible for any unauthorized charges. Some card issuers have decided to absolve their customers of liability for any fraudulent charges regardless of when they notify the card company.
When reporting a card loss or fraudulent transaction, contact the card company by phone ”” many provide toll-free numbers that are answered around the clock. In addition, the FTC advises following up with a letter or email. When doing so, include your account number, the date you noticed the card was missing and the date you initially reported the card loss or fraudulent transaction.
The liability if your debit card is used without your permission will vary depending on whether the card was lost or stolen or is still in your possession, the type of transaction and when you reported the loss or unauthorized transaction.
According to the FTC, if you report a missing debit card before any unauthorized transactions are made, you aren”™t responsible for the unauthorized transactions. If you report a card loss within two business days after you learn of the loss, your maximum liability for unauthorized transactions is $50.
If you report the card loss after that time but within 60 calendar days of the date your statement showing an unauthorized transaction was mailed, liability can jump to $500. Finally, if you report the card loss more than 60 calendar days after your statement showing unauthorized transactions was mailed, you could be held liable for all the funds taken from your account. If you notice an unauthorized debit card transaction on your statement, but your card is in your possession, you have 60 calendar days after the statement showing the unauthorized transaction is mailed to report it and still avoid liability.
While the lower protections required on debit cards may make you wonder if you”™re safer using a credit card, some debit card companies offer protections that go above what the law requires. For instance, some don”™t hold customers responsible for unauthorized charges. Others don”™t hold customers responsible for transactions completed with a signature, but do hold them responsible, according to the time frames outlined above, when a personal identification number, or PIN number, is used.
Most of the tried-and-true ways of protecting credit and debit cards still hold true. Carry only the cards you need and destroy old cards before discarding them. Don”™t provide your card number over the phone or online unless you”™ve initiated the contact, and don”™t choose personal identification numbers that are obvious (such as “1234” or your date of birth).
What”™s most important is reviewing your account activity at least monthly. Review your transactions on your provider”™s website regularly or, at the very least, read your monthly statement if you still get a paper version.
In addition, keep an eye on the latest threats. Set up a news alert on your favorite search engine using terms such as “data breach” and “credit card fraud.” That way, if a breach does take place, you”™ll know right away.
One could arguably forgo credit and debit cards and take a cash-only approach to life. But most of us will continue to use them for convenience and because the data trail left by our transactions is useful for record keeping. Credit and debit card fraud is a huge and growing problem. A bit of vigilance can keep you safer and reduce the damage if it strikes you.
Norm Grill (N.Grill@GRILL1.com) is managing partner of Grill & Partners LLC, (GRILL1.com) certified public accountants and advisers to closely held companies and high-net-worth individuals, with offices in Fairfield and Darien; 203-254-3880.
