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Credit Card Fraud
 Protect yourself

April 2003 Issue

Credit Card Fraud

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With the advent of 24-hour banking, debit cards and online bill paying, the handling of our finances has forever changed. Bank tellers are becoming an increasingly rare breed, and in some instances, personalized bank visits will cost you money. The day is fast approaching when we will be able to live in a cashless society with nothing more than a bankcard swipe or PIN number necessary for every transaction.

The creation of electronic funds transfer has also opened up security issues concerning credit card fraud and identity theft. Losing your wallet or purse used to mean a few quick calls to the two or three credit card companies you dealt with to cancel the cards. Now, you can have tons of cards from major companies to department store cards, gas cards, and more. The most important addition, however, is the ATM card, which gives immediate access to your bank account—your hard-earned money.

With credit cards, your potential loss from fraud is typically limited should the card become lost or its security compromised. According to the Federal Trade Commission1, your maximum liability under federal law for unauthorized use of your credit card is $50.00. If you report your credit card loss before it is used by another individual, the Fair Credit Billing Act (FCBA) says the card issuer cannot hold you responsible for any unauthorized charges. If the thief uses the card before you can report it missing, the most you will owe for unauthorized use would be $50.00 per card. If the loss involves use of the credit card number only but not the card itself, you have no liability for the unauthorized use.

Debit and ATM card fraud protection varies somewhat. If you report a loss within two business days after you realize the card is missing, you will be responsible for no more than $50.00 for unauthorized use. If the loss isn’t reported within two days of the discovery, you could lose up to $500.00 because of an unauthorized transfer. If you fail to report an unauthorized transfer within 60 days after the bank statement containing the unauthorized charge is mailed to you, you could lose all the money in your account and any unused portion of your line of credit used for overdraft protection.

Here are some tips to help prevent and protect you from fraudulent use of your cards:

Know where your cards are at all times and keep them secure.

If traveling, keep only essential cards with you—don’t let a thief potentially hit the jackpot.

Keep a list of all your credit card accounts complete with the toll-free customer service number for each card you carry. When traveling, keep a copy of this information separate from your wallet or purse so you can contact each card company immediately in event of theft. Also leave a copy with a trusted family member just in case something happens to your copy.

In the event of theft or compromised security (online), call the card issuer, explain the situation and cancel the card immediately. Most companies will transfer the account to a new card and often send you a card to arrive the next day.

Memorize your Personal Identification Numbers (PIN). Do not write them down on anything that coordinates with the specific card and don’t carry them in your purse or wallet.

If carbons are produced when making a credit card purchase, ask for the carbons so you may destroy them yourself. People have been known to obtain carbons (complete with your credit card number) from the trash giving them the ability to make unauthorized charges.

The FTC recommends that you not use your address, birth date, social security number or phone number as your PIN number.

Never give your account number over the phone unless it is to a known, reputable company.

On charge slips or debit slips, draw lines through any empty lines so the totals cannot be changed after you provide your signature.

Never sign blank charge or debit slips.

Make sure that the credit slip you are signing is actually yours.

When new credit cards are issued, immediately destroy your old card by cutting through the account number and dispose of the pieces properly.

Open your monthly statements immediately upon arrival and compare the charges for accuracy.

If you receive an email message saying that your credit card security on an automatic billing system has been compromised (i.e., for ongoing internet service, etc.), contact the company’s customer service immediately at the number given on their website or billing statements. Never reply via the email you received. Recently, fraudulent email messages duplicating a national Internet service provider’s style and appearance were sent mimicking the company’s color scheme and logos making them unidentifiable as fraudulent. The fake email provided “links” to the proper page to change credit card information, thus giving them access to a new credit card.

1Federal Trade Commission. Avoiding Credit and Charge Card Fraud.
ONLINE. 2004. Available:
[9 Mar. 2004].

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