When you become a Victim of Identity Theft

The majority of credit card users will never have to deal with fraudulent use of their card. Many more who have their cards physically stolen or who lose them will likely be able to stop their card before fraud occurs. But some cardholders are not so lucky some may be a victim of card theft and have no idea anything is wrong until they get their statement, or their bank calls them and asks if it was really them that just bought a new plasma-screen TV. If this happens to you, remember the old adage forewarned is forearmed. Here’s the chain of events that occurs when you have your card stolen, and information that you need to know.

First and most important, you are not liable for fraudulent use of your credit card. This is not only a policy of card issuers like Visa, it’s law. If someone steals your card, your number, or whatever, you don’t have to pay for what the thieves purchased. It’s that simple. There’s only one stipulation: you ARE liable for cash advances. This is because cash advances require someone have your PIN, or to present identification proving you are the card holder. This doesn’t mean for certain that you’ll have to pay for the advance, but you’re going to have to prove it wasn’t you that took it, and that you kept your PIN secure.

When you identify that your card is being used fraudulently, contact your issuing institution. Have your credit card statement ready and make sure you know which transactions are fraud. The rep on the phone is going to ask you, and will go over the statement with you, but you should make sure you know. Actually, a decent rep will probably be able to look at your statement and tell you which charges are most suspect.

The rep is going to cancel your card immediately. This is non-negotiable. If you have a major transaction that needs to go through on your card, then you need to make that transaction BEFORE you call your bank, because the moment you report fraud on your card, your bank is going to minimize further exposure and cancel your number. You’re out of luck until your new card comes in. If you really need your card, most banks will courier a new card to you but usually only if you ask.

The rep is going to take a report on all the charges that were run fraudulently and pass it to their claims department. This report is going to include not only the fraudulent charges, but also the circumstances of use, and the last time you used the card. The rep will ask you not only about your statement, but about current authorizations on your card, so try to work a mental record of recent charges that you’ve made.

The rep at this point will likely inform you that you are not responsible for the transactions as you know from reading above, and they’ll also tell you not to pay for fraudulent charges that appear on your card. This can be tricky if you can afford to do so, you should pay the entire balance. That way, you won’t incur any interest charges that you’ll have to bicker about later credit card issuers hate to reverse interest that is, after all, their profit they’re giving away.

Once the report is completed, it’s passed to a claims department that will issue transaction receipt requests with the card issuers, to see who signed for the purchases, and to see if the signatures on the slips match known samples of the card holder’s writing like the signature you put on the original application for the card. If they don’t match, or if there is no signature (such as from a mail-order), then the rep working the case will gather all the receipts from the transactions and send them to you, along with an affidavit that states that you did not make the transactions. You’ll be required to sign the affidavit and return it to the issuing institution to indemnify yourself. When the issuing bank receives the document, they’ll remove the charge from your card.

Another important clarification the bank will not instigate a criminal investigation. While most issuers probably have an investigation depart that looks for broad trends and known criminal rings, don’t expect your bank to call the police and report it. If banks reported every credit card theft, police departments would likely send a cease and desist letter stations would receive dozens (in some places, hundreds) of reports daily. If you feel the need, YOU call the police and report the theft.

So, there you have it. Monitor your statement closely, and make sure you call if you notice anything on your statement that’s shifty. Most card holder agreements provide 30 days from the statement date to dispute any transaction as incorrect or fraudulent. After 30 days, you’re on the hook.