What to do with fraudulent credit card charges
It happens to almost everyone: You get a notice from your credit card company that your card information has been stolen or hacked.
You may receive this alert after a thief steals the actual credit card. In other situations, scammers fail to swipe your physical card but instead illegally obtain your credit card information. In either case, criminals can lay unauthorized charges.
Knowing that your card information has fallen into the wrong hands can be scary. However, federal law limits credit card losses to just $ 50, and some credit card companies promise zero liability, which means you won’t owe anything. Given these protections, should you even be concerned if your card information goes missing?
Yes, says Michael Bruemmer, vice president of consumer protection and data breach resolution at Experian, one of the three largest credit bureaus.
“It’s always a warning sign when someone has your personal identity information, whether it’s your credit card details, the card itself, your PIN or whatever. other part of the magnetic tape, ”he said.
While lose a card may not put you at risk for major financial loss, it can be the start of many other types of headaches, Bruemmer says.
“This could be a harbinger of identity thefthe said. “So that’s not really the dollar amount; the law protects you. Rather, it is the activity that could be the forerunner of much worse things to come. “
What are the stakes if your credit card is lost or stolen
Federal law offers several protections for consumer credit cards that can limit the amount of financial damage you will suffer as a result of credit card theft or a data breach.
“There are guarantees around personal liability,” said Amy Thomann, senior editor and spokesperson for TransUnion, another of the nation’s largest credit bureaus.
For example, if your credit card is lost or stolen and you immediately report the missing card to the issuer – before it is used in an unauthorized manner – you are not responsible for any charges, according to the terms. of the Federal Fair Credit Billing. Act.
If the card is used fraudulently before you report it missing, your liability is still limited to $ 50. Best of all, many credit card companies offer a zero liability policy and won’t hold you responsible for unauthorized charges, according to the Consumer Financial Protection Bureau.
Additionally, if your credit card account number is stolen – but not the card itself – you generally won’t be responsible for unauthorized charges.
What to do if your credit card is lost or stolen
If your credit card is lost or stolen – or if you think your account information has fallen into the wrong hands – take steps to protect yourself against identity theft. You can:
- Report the event to your credit card company immediately.
- Change your username and password.
- Apply for a replacement credit card with a new card number.
- Contact one of the three major credit bureaus – Equifax, Experian, or TransUnion – and ask for an even more protective fraud alert or credit freeze.
- Keep a close eye on your account in the future and look for unusual activity in other parts of your financial life.
If you lose your credit card, the CFPB invites you to immediately report the problem to your credit card company. Issuers typically have 24-hour toll-free numbers to report these losses, and there are plenty of details on how to report a lost credit card on your monthly statement.
“Call your credit card provider immediately to report fraudulent transactions and help limit the damage,” explains Thomann.
Bruemmer agrees that anyone whose credit card goes missing – or who believes their information has been compromised – must act quickly. Inform your transmitter of what happened and ask them to document the loss. “That way you have fulfilled the requirement to report fraud,” he says.
Your credit card issuer will usually cancel your compromised credit card and send you another with a new number. But you’ll need to immediately change any online passwords and personal identification numbers you use, according to the CFPB.
Then contact at least one of the three major credit bureaus and request that an initial fraud alert be placed on your report. This will last for a year and businesses must verify your identity before issuing a credit. The agency you contact will notify the other two agencies to do the same, and all three will contact you to confirm that the alert has been placed on your file. If you do not receive a confirmation, contact the agency in question.
While an alert will make identity theft more difficult for criminals, another step can protect you more fully.
“Consider freezing your accounts,” says Thomann. “The freeze will block any new credit application made on your behalf. “
You can always access your credit report under a credit freeze. But if you want to open new accounts, you will need to temporarily lift the freeze or organize access.
Whether or not you use a freeze, request a credit report from each of the credit reporting agencies and look for any unusual activity that may indicate that your account is being used fraudulently. Federal law allows you to access one free report per year from each of the three credit bureaus.
You can also get additional free reports if you believe your file is inaccurate due to fraud or if you have placed an initial fraud alert. You can request a report from each office immediately if you suspect fraud and place an alert.
If you don’t know the source of the fraud, ask your credit card company to explain how your data was hacked and to disclose any other key details about the activity. If the transmitter is unwilling to provide this information, it should set off an alarm signal, Bruemmer says.
“You’re probably with the wrong credit card company because that means their fraud service isn’t that good,” he says. “There is no reason not to tell you. In fact, you are the best indicator of whether a transaction has been completed or not, rather than guessing whether someone has used it or not.”
Plus, keep a close eye on bank statements, loan documents, and other financial documents, and look for activities you don’t recognize, or “anything else that can give you an early indicator that something is wrong,” says Bruemmer.
“If any part of your personal identity information is compromised, you just need to be vigilant in other areas,” he adds.
Why you should be on alert for a lost or stolen credit card
Despite consumer protections, staying on top of credit card fraud is important. If you have a credit card account that you rarely use or monitor, you might not notice fraudulent charges. But if you don’t report the charge, the issuer can assume they’re valid and expect you to pay the bill. Missed payments can be reported to the credit bureaus and you may have to pay late fees.
Another reason to be vigilant about credit card fraud is that it could signal a more serious use of your personal information that could lead to identity theft.
“A credit card can be compromised in one instance, and then separately, your social network (security number) can be compromised in another instance, and they actually merge the database and use it together,” says Bruemmer.
Or, if your credit card information was obtained as part of a data breach, the theft could indicate that criminals have already taken more than your credit card number.
Protect yourself in the future
After a credit card theft or data breach, continue to monitor your accounts and credit reports closely. Ideally, check your accounts at least once a month and every credit report at least once a year. This vigilance is the best way to limit the damage.
“The most essential step is awareness,” says Thomann. “Tracking your credit and personal finances will help you quickly spot red flags on your accounts. “