If you lose a credit card — or worse, a thief steals it — you may be worried. And you should be: A card that falls into the wrong hands can be used fraudulently. In…
If you lose a credit card — or worse, a thief steals it — you may be worried. And you should be: A card that falls into the wrong hands can be used fraudulently.
In 2017, consumers filed more than 133,000 reports with the Federal Trade Commission complaining that their information was misused on a credit card account or to open a new one. The FTC said credit card fraud was the leading type of reported crime associated with identity theft.
The good news is that protections built into federal law limit your losses when someone fraudulently uses your credit card. But you still need to take immediate action if your credit card is gone.
“If someone loses a card, they need to be active,” says Bruce Dorris, president and CEO of the Association of Certified Fraud Examiners. “They certainly don’t want to just lose it and fail to report it.”
Losing Your Credit Card: What Is — and Isn’t — at Risk
If you report a missing credit card before anyone uses it fraudulently, you are not responsible for any unauthorized charges, according to the terms of the federal Fair Credit Billing Act.
However, if a thief uses a card before you report it missing, you could be on the hook for some of those charges. Still, federal law limits your maximum liability to just $50.
Many credit card companies will not hold you responsible for any of the loss, including the first $50. “A lot of (credit card issuers) offer zero liability because they want to retain you as a customer,” says Eva Casey Velasquez, president and CEO of the Identity Theft Resource Center.
Fraud that continues after you report the missing card will not be your responsibility. Additionally, the Consumer Financial Protection Bureau says you are not liable for unauthorized charges if thieves steal your credit card number but not the card itself.
Misplacing a debit card is potentially more dangerous. The federal Electronic Fund Transfer Act governs debit cards.
As with credit cards, you are not responsible for any unauthorized charges if you report the card lost or missing before fraudulent activity occurs. However, you must report a missing debit card within two business days of learning of its disappearance to ensure your liability is restricted to $50 of fraudulent activity. If you wait more than two business days but still report within less than 60 calendar days after your next statement is sent to you, you will be responsible for up to $500 in losses. Wait more than 60 days after your statement is sent to you, and you can be held responsible for all losses — including any money taken from accounts linked to your debit card.
If someone steals your debit card number — but not the card itself — you are not liable for losses if you report them within 60 days of your statement being sent to you, according to the FTC.
Why You Need to Report a Lost or Stolen Credit Card
It is easy to see why you need to report a debit card loss, since you can potentially lose so much money if you wait too long. “That fraudster has direct access to your bank account,” Dorris says.
A thief with a debit card can quickly rob you of thousands of dollars, Dorris says, making it difficult for you to pay your bills until the money is recovered. “You might eventually get that back, but it’s going to take a while,” he says. “So, you can see that the risk is much, much higher with debit versus credit.”
Since federal law significantly limits your liability if someone fraudulently uses your credit card, it’s easy to assume you don’t need to care about a missing card. But that’s not true, Dorris says. Thieves who steal credit cards typically begin ringing up fraudulent charges quickly. As these purchases accumulate, it can become more difficult and time-consuming for the cardholder to set things straight.
“The more charges, the more hassle,” Dorris says. “If you’ve got this litany of charges that have been against that card, it is much more difficult to have to go in and dispute each and every one of those.”
If a fraudster runs up a lot of charges on your card, it could also temporarily hurt your credit score. But once the fraud is identified and resolved, your credit score should return to normal, Dorris says.
Velasquez adds that although you are not personally liable for most of the fraud associated with your card, preventing fraud remains important. “We all have an obligation to fight against fraud,” she says.
Credit card companies pass on the costs of fraud to cardholders in the form of increasing annual fees and higher interest rates. “In the end, we’re all paying for fraud,” Velasquez says.
Many credit card issuers include instructions on reporting a missing card with your monthly statement. Otherwise, call your credit card company. Most issuers have 24-hour, toll-free numbers.
Dorris recommends calling your issuer the moment you realize your card is missing. “Don’t waste time. Don’t necessarily look for it,” he says. Instead, he recommends you ask the credit card company if it will suspend charges immediately but temporarily until you can figure out if the card really is missing.
If you determine the card is indeed gone, file a full report by phone and follow any other instructions from the credit card company. It is wise to also follow up with a letter to your credit card issuer, according to the FTC. In the note, include:
— Your account number.
— The date you noticed the card missing.
— The date you filed the report.
The FTC advises consumers to keep a written record of the dates you made calls and sent letters. Also, keep copies of any letters in your files.
Once you have reported the loss, your credit card company should resolve fraudulent activity, Velasquez says. The issuer will replace your card, write off any losses and take steps to secure your account, she says. “It really is up to the institution to lock down the cardholder’s account,” Velasquez says.
After you report the lost card, check your statements carefully for the next few months to make sure there are no fraudulent charges. If you notice something amiss, immediately report it to your issuer.
Once your old credit card has been shut down, expect your credit card company to send you a new card promptly, Dorris says. “Most of them are very proactive now in issuing you a new card,” he says.
Getting a card with a new number can be inconvenient for people who have payments automatically charged to their accounts. But Dorris says calling your creditors and updating your information is a small price to pay for being protected from additional fraud on your account.
Keeping Your Credit Cards Safe
There are several steps you can take to reduce the risk of losing your card or having it stolen. Velasquez recommends carrying just a few cards in your wallet and leaving the others at home. “Clean out that purse and that wallet,” she says. “Do you really need to carry every card with you every day? For some folks, the answer is going to be yes. But that’s not going to be the case for everyone.”
For example, Velasquez says you can use one credit card strictly for online purchases, then keep it in a safe place at home. Do the same thing with retail cards where you shop just occasionally. “If you lose your purse or your wallet and everything is in there, that’s a lot more work than if you have it thinned out,” she says.
Taking advantage of your credit card company’s suite of security protections is another way to protect your account. Velasquez notes that many lenders allow you to set up alerts so you are notified of every transaction on your account above a specified dollar limit. “I’ve set mine to a dollar, so I get an alert every time my card is used,” she says.
She also suggests taking proactive steps before your card is lost or stolen — such as keeping your credit card company’s toll-free number in a safe place. “Flip the card over and write that number down,” she says. If you don’t have the credit card company’s number, you can look for it online. But Velasquez warns you not to fall for a spoof site that pretends to be your lender in an attempt to get your information.
Dorris also suggests taking steps to protect your credit card and debit card accounts. He urges you to change your password regularly and make it complicated. Having multifactor authentication — such as adding a personal identification number to your account or other identifying information — is another way to protect your account. “Make it more challenging for a fraudster to use,” he says.
Dorris says signing up for a credit monitoring service also can make sense so you can spot any suspicious activity in your accounts.
The FTC offers additional tips for staying safe, including:
— Don’t carry your personal identification number with you in written form.
— On charge and debit slips, draw a line through the blank space above the total. This will prevent thieves from changing this amount. Also, do not sign blank charge or debit slips.
— Check monthly statements regularly for errors or unauthorized charges.
— Cut up expired or unused cards before throwing them away.