Consumer law: Credit card fraud & what you can do about it

 

Having your credit card stolen or misused, along with identity theft, are huge problems today, costing credit card companies $50 billion dollars annually, not to mention the costs to you – the consumer. Today we examine ways to protect ourselves from fraud.

Skimming is making illegal and unauthorized copies of credit or bank cards using small reading devices that “skim” the information from the original. This can happen via dishonest businesses or, for example, when you give your credit card to someone to pay for goods or services, as when you give your card to a server at a restaurant. The information can then be used to charge items or pay for things over the Internet. It’s a good idea to always watch carefully when you give your card to anyone, and especially when that individual must walk away from you in order to complete the transaction. These skimming devices have even been known to be disguised as cell phones. Additionally, when you are handed back your card, make sure it is indeed your card.

Phishing is sending bulk fake emails to consumers hoping one or more of its recipients will fall for the phony bank emails, or other phony “official” emails, and click on links to provide personal information. They succeed because they are very sophisticated looking, with logos or even URLs that are surprisingly similar to the real thing. Many times an unsuspecting victim clinks on the link and is taken to a fake web-site (I write “fake web-site” but they are very real; the only “fake” thing about them is their real intent, which is criminal). The victim then unknowingly supplies his/her own personal information.

Banks will never ask for personal information in this way. Be particularly cautious with your credit card numbers, your bank numbers, and even your mother’s middle name. Instead, if you receive one of these emails, visit your bank or other institution in person, via the bank’s secure web-site, or call directly. At any rate, you should never send this type of information in an email because emails are not secure, and the information could be intercepted. If you go to your bank’s secure web-site, you will know it’s secure by seeing the little key lock icon, usually in the lower-right-hand corner. Also, secure web-sites begin with "https," not "http.' Look for that in the URL of the site you are visiting. If you do bank online, do not use the automatic sign-in option, and that goes for any credit card site as well. By the way, you will not be notified via email should you win a foreign lottery!

The security code is a three- or four-digit number on the back of your card. Merchants may use this number to ensure the card is actually in your possession when you make purchases over the phone or Internet. Zealously protect this number as well, as if thieves make off with the other information, they won’t be able to use it without this security code in some cases. (Many merchants now also verify your mailing address and zip code, so make sure these are up to date.)

To protect new cards, make sure you phone in verification as soon as you receive a new card. Sign the back in black, permanent ink. Some folks have taken to writing “ask for ID” on the signature line, but credit card companies recommend against this as some merchants require a signature. Record all the credit card information and keep in a secure place (not traveling with you!) in case there’s ever a problem, and keep copies of all receipts – both point-of-sale and ATM – to check against your monthly billing statement.

So what else can we do to protect ourselves? Of course always keep a close watch on all your belongings. Never travel with more credit cards than you will need. Do not travel with your social security card unless you’re going to need it. Put your credit cards separate from your wallet. If you lose your wallet or purse, or it’s stolen, notify your bank and credit companies immediately (your liability for unauthorized purchases is limited to $50 per federal law, but you could lose that protection should you be negligent in reporting the card missing or stolen).

Notify the post office immediately if you are moving, and if you move, call all of your creditors and let them know as soon as you do. Always put your complete return address on outgoing bills, and never leave outgoing bills in a mailbox in front of your house -- leave them at the post office or other secure mailbox instead. Shred all credit and other solicitations before disposing of them, and know when your billing statements are due to arrive. Better yet, check to see if there’s an online billing statement option and choose that instead (though go to the site direct to pay!).

Some web-sites that you visit offer “free access” if you provide credit information. Don’t fall for this – it’s likely you’ll be charged a one-time fee or even a revolving fee. Monitor your account for such activity.

Don’t write your PIN number down – memorize it. If a merchant calls you regarding a purchase, ask to call them right back. Don’t keep your PIN number with your cards. Don’t use your birthday or your children’s birthday for your PINs. Don’t lend out your card, because you will be responsible for whatever charges that person makes (if you knowingly and willingly give out your card).

If you will be traveling or making unusually large purchases, let your credit company and bank know. If you don’t, you may just get to Timbuktu and find you can’t use your card. On the other hand, Joe Criminal won’t be able to use it, either.

Notify your bank or credit company immediately if your cards are lost or stolen. Your liability is limited only if you take care of this notification in a timely manner. Follow verbal or email notification up with a letter and keep a copy. The letter should include your account or card number, the date the card went missing, and the date you reported it. When you report this loss or theft, you will be sent a fraud affidavit. Fill it out and have notarized immediately, return it, and keep a copy for your records.
Review your monthly statements immediately as they arrive. Consider using companies that allow online account access. This way you can monitor your account activity daily. Know when your bills are due, and report missing ones promptly (you are responsible for paying your bills even if you didn’t receive the statement).

Read the federal Fair Credit Billing Act. Know that you have the right to dispute charges on your credit card and ask for a “chargeback,” or a refund from the credit company. You cannot dispute a charge that has not yet been made, but with an online account, you can monitor daily for questionable charges. You must notify your credit company within 60 days to dispute a charge or you may lose that right. Always chronicle disputes in writing. If you phone your credit company, follow up with a letter. Make sure you fill out any forms or affidavits they send you, and always keep a copy.

Everyone is entitled to at least one free credit report annually. You have the right to get one free report from each of the three major reporting entities -- Equifax, Experian, and Trans Union -- for a total of 3 reports annually. Call 877.322.8228, or go online to www.annualcreditreport.com.

One last thing, you don’t have to pay extra for fraud protection provided you report any problems timely. Don’t be snookered into spending extra money each month that you don’t have to spend. Just make sure to report lost or stolen cards immediately.

UPDATE: Case in point - please see Sept. 15 Houston Chronicle article "Houston police bust large ID theft ring"

Source: www.consumer-action.org

For more info: People's Lawyer Richard Alderman