If you haven’t had your credit card information stolen or compromised by one of the many data breaches in the past few years, consider yourself lucky. According to the Identity Theft Resource Center, 14.2 million credit card numbers were exposed in 2017 alone.
Under federal law, your liability for unauthorized credit card charges is minimal. But there are a handful of reasons why you’ll want to be on high alert for credit card fraud, despite legal protections.
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How You’re Protected Under the Fair Credit Billing Act
The Fair Credit Billing Act states that if you uncover an unauthorized credit card charge on your account, your maximum liability is $50. To enact your liability rights, you must reach out to your creditor within 60 days of the statement date to report the fraudulent charge.
Your creditor is legally required to acknowledge your complaint within 30 days of receiving it. The law then requires your creditor to resolve your complaint within two billing cycles from the date it was first notified of the unauthorized charge.
Additionally, many of the major credit card networks in the U.S., including Visa, Mastercard, American Express and Discover, offer zero liability protection in the event of credit card fraud.
3 Reasons You Should Care About Credit Card Fraud
With federal and card network protections in place, taking precautions against fraud may not seem like a priority. But experiencing credit card fraud can put you at risk of further fraud and even identity theft.
“Fraudsters buy card data on the dark web and then use it to run fraudulent transactions at retailers, restaurants or online at e-commerce websites,” says Ruston Miles, founder and chief strategy officer of Bluefin Payment Systems, a payment encryption platform. Here are some ways credit card fraud can still negatively impact you.
Credit card fraud exposes you to identity theft. Sometimes, credit card fraud is confused with identity theft. In fact, credit card fraud covers only unauthorized charges on an existing account. Identity theft is a broader, more problematic issue if left unchecked.
Personally identifiable information – like your credit card numbers, Social Security number, driver’s license number, and health and financial records – are the kind of data that’s sold on the dark web and can open the door to identity theft and account takeovers.
“PII collected are like pieces of a puzzle,” says Mark Testoni, CEO of SAP National Security Services, a subsidiary of the software giant SAP that serves the national security sector. “The more pieces collected, the more likely perpetrators can assemble it for exploitation.”
When logging into your account from a new or unknown device, you might be required to enter a verification code that’s sent to your phone or email. This is called multifactor authentication, and precautions like this help protect against identity theft. But Testoni says that even with these newer controls, perpetrators are coming up with ways to get through.
“The cat-and-mouse game will continue, and consumer awareness will always be an important part of the security equation,” Testoni says.
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You might still be liable for unauthorized charges. A big reason to stay vigilant about reviewing your credit card transactions is that you’re up against a hard timeline: You have 60 days from your statement date to contact your creditor about suspected fraud, not 60 days from the date you notice the suspicious charge.
Also, the same protections may not apply to commercial cards. For example, Visa’s corporate cards do not have zero liability protection.
Failing to stay on top of your credit card’s activity puts you at risk for greater financial liability.
Credit card fraud is a hassle. Anyone who’s been a victim of credit card fraud understands that aside from being a stressful situation, it’s also a major inconvenience. If you’re fortunate enough to catch the fraudulent credit card activity early, kudos – but your work doesn’t stop there.
You’ll need to spend time on the phone with your card issuer, officially filing a fraud complaint. In that same process, you’ll need to request that your card be reissued.
Receiving your replacement credit card in the mail takes time and can prevent you from purchasing things you might need. There’s also the inconvenience of updating any accounts that used the compromised credit card for automatic payments.
What You Can Do to Protect Yourself From Credit Card Fraud
Although you can’t anticipate or thwart every effort by credit card thieves, you can lessen your chances of falling victim to credit card fraud or identity theft.
Set up notifications. Most issuers allow you to receive text or email notifications for specific types of activity on your credit card account. You’ll need to set this up on your own, and at times, you can customize your notifications based on specific criteria.
For example, since an unauthorized charge can be as little as $1, you can create a notification for any transaction that’s greater than $0. This allows you to quickly identify any suspicious activity, large or small.
Enable multifactor authentication. Whenever possible, activate multifactor authentication on online accounts and devices that you use to make payments, e.g. your smartphone. This adds an extra layer of security against credit card fraud by ensuring that whomever is logging into your account is actually you.
Multifactor authentication comes in the following forms:
Something you know, such as a password or PIN
Something you have, such as your smartphone or token device
Something you are, such as your fingerprint or facial or voice recognition
Use your digital wallet. Using your digital wallet at a brick-and-mortar merchant, like a grocery store, lessens the risk of credit card skimmers and chip-based card shimmers that are used to steal your credit card information.
“Use of digital wallets have shown strong security performance,” says Testoni. “You can configure it so that every transaction produces a notification to your phone. This is another way to monitor your credit card transactions.”
Instead of swiping your card’s magnetic strip or entering your chip card into a reader, your digital wallet uses near-field communication technology. NFC is also known as tap-and-pay or a contactless payment and is used to initiate transactions with a merchant’s card processing device.
Since the card never comes into contact with a potentially compromised machine, your credit card information is more secure.
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Review your credit card statement. In addition to setting up digital notifications for new credit card activity, make sure you’re taking a bird’s-eye look at your monthly card statement.
This is especially important if you have your credit card on automatic payments since it’s easy to set a recurring payment and ignore the details of your statement balance.
Report unauthorized charges ASAP. If you see an unauthorized charge on your account, reach out to your creditor as soon as possible to limit your financial liability. Write down when you held the call, who you spoke to and what the next steps are, and keep the information for your records.
“The steady increase of cyberattacks and breaches over the past few years has created a sort of cyber fatigue or desensitization amongst the public,” says Testoni. “Much like neighborhood watch programs that offer physical security for collective homes, more informed consumers and practicing good cyber hygiene will make it harder to steal.”