Identity theft and credit card fraud

Thieves today aren’t just gun-toting street criminals; you can just as easily be robbed by someone sitting at a computer screen thousands of miles away. And they don’t just get your cash on hand, but all your electronic financial information  with no more physical effort than it takes to brew coffee. From there, the information can be sold and re-sold to others worldwide, which can freeze your accounts and wreak havoc on your credit until it’s all sorted out.

Identity theft isn’t just credit-card fraud, but a broader form of electronic-access crime that involves ATM or debit cards and access to PIN numbers. Regardless of what you call it, the crimes all stem from the intention to loot bank accounts and credit lines, which is often too successful.

How successful? According to a report by Javelin Strategy & Research, identity fraud in 2016 was at an all-time high, impacting 6.15 percent of U.S. consumers a 16-percent increase over that of 2015.


Federal protections

According to the Federal Trade Commission, the Electronic Fund Transfer Act and The Fair Credit Billing Act make it so cardholders are liable for only the first $50 in losses. In many cases, banks will waive the deductible, meaning you will have no financial loss.

ATM and debit cards have different rules, however. If you report a card missing before someone uses it without your permission, you won’t be responsible for any unauthorized withdrawals. But if unauthorized use occurs before you report it, the amount you can be responsible for depends on how quickly you report the loss to the card issuer. 

  • If you report it within two business days after you realize your card is missing, you won’t be responsible for more than $50 of unauthorized use.
  • If you report it 60 days after your statement is mailed to you, you could lose as much as $500 for unauthorized transfers.
  • If you don’t report an unauthorized use of your card within 60 days after the card issuer mails your statement, you risk unlimited loss and could lose all the money in that account.
  • If an extenuating circumstance such as lengthy travel or illness keeps you from notifying the card issuer within the time allowed, the notification period must be extended. In addition, if state law or your contract imposes lower liability limits than the federal EFT Act, the lower limits apply.

The $50 loss limit

Because of the $50 loss limit, the financial institutions and insurance companies are hardest hit by fraud, which is why they take it so seriously. One of the protections provided by credit-card issuers is the tracking of your usage and spending. If you make a purchase outside of your usual spending, you are likely to get a call from an issuer asking if a transaction was authorized. This can be very inconvenient if you’re attempting to buy an expensive item with a limited time window, such as concert tickets or an eBay purchase, but it is for your protection.

Finding and reporting fraud

Keep a close eye on your accounts by taking these steps:

  • Check your statements as they come in. Large charges may be obvious but also look for smaller amounts. If a cyber thief took just $2.57 from two million accounts they would have more than $5 million. Don’t ignore statements from accounts you aren’t using or that have a zero balance.
  • Don't carry cards you don't need, especially on trips. If you do travel, make sure to alert your credit card company in advance so your transactions aren’t declined because of fraud suspicion.
  • Never write down PIN numbers and never relate PIN numbers to such things as your date of birth, street address or phone number. Use different PIN numbers for different accounts.
  • Never sign blank credit forms, and draw a line through blank spaces.
  • Shred old or expired cards.

If you find a discrepancy or false item, or if a card is lost or stolen, contact the issuer immediately by phone.

What about canceling accounts?

One possible defense against identity theft is to have fewer open accounts. While it may seem logical to close accounts you don’t use or plan to use, it can affect your credit score. The ages of your accounts and your "credit utilization ratio," which is the difference between your used and available credit, are part of your credit score, so keeping these accounts helps maximize your number.

On all your accounts, be sure to store the cards carefully, ensure that your online passwords are very secure, and check the statements frequently, even if they have a zero balance. Call (888) 983-3240 for more information.

Republished Sept. 8, 2017

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