Am I responsible for fraudulent charges on my credit card?

By Steven Merkel AAA
A:

In the event that your credit card is stolen in the United States, federal law limits the liability of card holders to $50 regardless of the amount charged on the card by the unauthorized user. In today's world of electronic fraud, if just the credit card account number itself is stolen, federal law guarantees that the card holder has a zero liability to the issuer.

As a card holder, you should notify the issuer immediately if you notice that your credit card is missing or stolen. This early notification will give the issuer time to help you with the following:

1. Verify if and where fraud has occurred.
2. Remove unauthorized charges from your credit.
3. Close down your account to prevent future fraudulent charges.
4. Issue you a new card and account number.

Several credit card companies have adopted a "zero liability" policy which means the consumer is not held responsible for any fraudulent charges. You should also check with the three major credit reporting agencies and obtain a copy of your credit report to be sure that nothing else has been accessed fraudulently.

Be wary of credit card protection offers. This type of insurance is unnecessary because federal law limits your credit card fraud liability. But scam artists try to sell $200-300 credit card insurance by falsely claiming that cardholders face significant financial risk if their cards are misused. According to recent Federal Trade Commission estimates, 3.3 million consumers have purchased unnecessary insurance to prevent unauthorized use of their credit cards. (For related reading, see 6 Major Credit Card Mistakes and Expert Tips For Cutting Credit Card Debt.)

This question was answered by Steven Merkel

RELATED FAQS

  1. Are 'gray' credit card charges legal?

    Read the fine print and all credit card statements carefully to avoid misleading charges that often go unnoticed on credit ...
  2. How can I invest in credit card companies?

    Learn about the different ways to invest in credit card company stock as well as the advantages and drawbacks of each investment ...
  3. What level of default rate is typical for the credit services industry?

    Learn how default rates affect businesses in the credit services industry, and what rates are considered normal for a company ...
  4. How has the shift to e-commerce affected the profitability of companies in credit ...

    Learn how the shift to e-commerce has benefited credit services companies by making it easier for consumers to use credit, ...
RELATED TERMS
  1. Fullz

    A slang term that criminals who steal credit card information ...
  2. Reloaded

    A slang term meaning that a consumer who was previously defrauded ...
  3. Dial-Up Card Reader

    An electronic credit card machine that sends data through an ...
  4. Soft Inquiry

    A credit report check that does not affect an individual's credit ...
  5. Balance Chasing

    The gradual lowering of a consumer’s credit limit by a credit ...
  6. Closed Loop Card

    A credit card or gift card that a consumer can only use to make ...

You May Also Like

Related Articles
  1. Credit & Loans

    Are 'gray' credit card charges legal?

  2. Credit & Loans

    Meet The Company Behind Your FICO Score

  3. Stock Analysis

    How MasterCard Likely Earned a Spot ...

  4. Charts & Patterns

    Why These Are 2015's 10-Best Financial ...

  5. Savings

    Which Are The Best Credit Cards To Take ...

Trading Center