How to dispute credit card charges
According to a 2013 Nilson report, credit and debit card fraud were the cause of over $11.2 billion in losses in 2012. And if you think that sounds bad, just wait; it's expected to get much worse.
As USA Today reported last year, hackers and scammers have turned stealing credit card numbers into an art form. By focusing on major retailers such as P.F. Chang's, Target, and Home Depot, they can score thousands of credit card numbers in one fell swoop — numbers that are then packaged and resold for a profit.
And stolen credit card numbers aren't as cheap as one might think; they often pull in big profits. According to Neal O'Farrell, founder of the non-profit Identity Theft Council, stolen numbers are often sold for $120.
With so much money to be made and lost, the stakes couldn't be higher for retailers, merchants, and individuals. Even though card issuers and merchants incurred the vast majority of these losses in 2012, individual victims endured stress and fear as they figured out how to escape the situation with their credit and identity intact.
Sounds scary, doesn't it? With credit and debit so prevalent for most of society, it certainly is. Fortunately, your liability is limited if you dispute fraudulent charges right away. Here is what you should do if you discover a fraudulent charge on your debit or credit card:
How to Report Fraudulent Debit Card Charges
Although debit cards are often seen as a convenient alternative to credit, they actually offer fewer protections compared to credit cards. According to the Federal Trade Commission, your liability for fraudulent charges on a debit card follows this schedule:
If you report fraudulent activity …
- Before any charges are made: $0
- Within two business days after you learn about the loss or theft: $50
- More than two business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you: $500
- More than 60 calendar days after your statement is sent to you: Unlimited liability
If you are someone who doesn't watch your accounts closely, you could be on the hook for a pretty penny if someone steals your digits and starts making charges. And if you don't notice anything funny going on after 60 days have passed, watch out; your account could be emptied with little to no recourse available to you.
Because of the extra liability that comes with using debit cards, you should always stay on top of your accounts to make sure that you are the only one making charges. The second you notice anything out of the ordinary, you should take these steps:
- Contact your ATM or debit card issuer the second you notice any charges or withdrawals you didn't make.
- Write a follow-up letter to your bank or card issuer and send it certified mail.
- Take notes of your actions, including dates and contact information for any bank representative you have spoken to.
- Follow up with your bank until the issue is resolved.
How to Report Fraudulent Credit Card Charges
You should dispute fraudulent credit card charges in the exact same manner as you would debit card charges. Contact your card issuer immediately, send a certified letter to follow up, and take notes of all of your communications.
The good news is, the stakes aren't quite as high when someone uses your credit card or credit card number without your consent. According to the Federal Trade Commission (FTC), liability for unauthorized use of your credit card tops out at $50. And if your card number is stolen but not your actual card, your liability is zero. In most cases, your card issuer will simply cancel your account and reissue you a card with a new number.
Preventing Credit or Debit Card Theft
Obviously, the best case scenario is one where credit and debit card fraud are prevented altogether. According to the FTC, there are plenty of moves you can make that will limit your exposure to theft and fraud — or at least help you discover it as quickly as possible. Here are the FTC's suggestions when it comes to protecting your data:
- Don't share your account number over the phone (unless you are on a call you initiated).
- Keep your account information private. Never leave your private information where anyone else might see it.
- Keep a record of all of your accounts. In the case of theft, it is helpful to have a record of your account numbers and telephone numbers of each card issuer.
- Keep your eye on your card while transactions take place. Don't let your card out of your sight if you can help it.
- Cut up old cards and destroy your account numbers in the process.
- Don't sign blank receipts.
- Check your monthly statements for fraudulent activity frequently. If you bank online, make an effort to check every few days or at least once a week.
- Keep your PIN number private. When using debit, never write your PIN number on a receipt or where anyone can see it.
Disputing Other Types of Charges
The Fair Credit Billing Act (FCBA) makes it possible for consumers to dispute other types of charges in addition to out-and-out fraud. Referred to as “billing errors,” these types of charges can include the following:
- charges that list the wrong date or amount
- charges for goods and services you didn't accept or that weren't delivered as agreed
- returns that were never credited
- charges that were never received due to failure of the creditor to send a bill to the appropriate billing address
Also, according to the FTC, you should write to your creditor at the address they list for billing errors as soon as an error is noticed. Include your account numbers and details on any disputed charges, send your letter via certified mail, and keep a copy for your records. By law, your creditor must acknowledge your complaint within 30 days after receiving it. In the meantime, you can lawfully withhold payment on the charges you are disputing.
Disputing fraudulent credit or debit charges can be a huge hassle, but it is much easier to recover if you notice the fraud immediately and take the appropriate steps to report it right away. With identity theft and credit card fraud becoming so prevalent, simply being aware of what is going on with your accounts is one of the best weapons you have.
Have you ever disputed a fraudulent credit or debit card transaction? What was the outcome?