Using a credit or debit card involves an Internet transaction. And the Internet is a dangerous place.
The list of organizations and businesses that have been hacked is huge, with the theft of credit and debit card data commonplace. What measures can you take to protect your sensitive information?
The first step is to know the laws governing credit or debit card theft and fraudulent use.
In the case of credit cards, federal law says you aren”™t responsible for fraudulent charges exceeding $50. If you report your card lost or stolen before any unauthorized purchases are made, or if your account number but not your actual card is stolen, you”™re not liable for any amount. In addition, check to see whether your credit card provider has a “zero liability” policy protecting you from all fraudulent purchases.
The law is different for debit cards. You aren”™t accountable if you report your card lost or stolen before any fraudulent activity occurs. If you report the card missing within two days of learning of its disappearance, you limit your responsibility to $50. Your loss caps at $500 if you inform your bank after two days of learning of the theft or disappearance but within 60 calendar days after your statement mailing date.
Otherwise, beyond those 60 days, your liability is unlimited, which would include the full amount taken from your debit account and any money linked to it. It”™s strongly in your interest to pay close attention to your statements to avoid this worst-case scenario.
If your debit card isn”™t lost or stolen, but your account number is used fraudulently, you won”™t be liable for any loss, as long as you report the transactions within 60 days of your bank statement mailing date. As with credit card providers, your debit card issuer may offer even more robust fraud protection, so be sure to check in with the company.
Maintaining the security of your personal information is mostly a matter of taking commonsense precautions. First, request a free credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion) once a year. Also ensure that you have text message alerts set up to warn you of fraud, and that emails from your credit or debit card provider don”™t go to your “spam” folder.
Additionally, financial institutions, credit reporting agencies and third-party companies generally offer various levels of credit monitoring and protection services. There are typically fees for these services, so research any prospective provider carefully.
There”™s an important distinction between credit card fraud and identity theft, especially regarding the damages they can cause you and the time and resources needed to resolve them.
Credit card fraud involves the use of your credit or debit card (or account number) to make unauthorized purchases. Identity theft means your personal information ”” such as name, account numbers or Social Security number ”” can be used to open new accounts or lines of credit; buy real estate or make investments; or claim a federal tax refund.
Any of these can wreak havoc on your credit rating, finances and reputation.
While credit card fraud can usually be resolved fairly simply, identity theft can be costly and take months or longer to fix. In cases of identity theft, state and federal laws also set limits on your potential liability and establish your rights in working with credit reporting agencies. This includes your rights to dispute inaccurate information and to keep fraudulent activity off your record.
There”™s no escaping the Internet ”” or its impact on our personal data security. But staying informed and proactively safeguarding your information can help keep your credit and debit card information more secure.
This has been a general discussion and is not intended as specific advice to anyone. If you are concerned about or suspect you have been the victim of credit card fraud, contact the appropriate authorities immediately.
Norm Grill, CPA, (N.Grill@GRILL1.com) is managing partner of Grill & Partners LLC, (www.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.
