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. What is the difference between a prepaid credit card and a gift card?

    Although prepaid and gift cards are used in the same manner, a prepaid credit card can be used repeatedly, while a gift card ...
  2. Will having several credit cards hurt my credit score?

    The manner in which you use your credit cards may affect your credit score more than the number of credit cards you own will.
  3. What's a better way to borrow money: overdraft or credit cards?

    Overdraft and credit cards will allow you to spend more money than you have, but whichever option you choose, be sure to ...
  4. What are the pros and cons of overdraft protection?

    If you sign up for overdraft protection and link your checking account to your savings account, a credit card or an overdraft ...
RELATED TERMS
  1. Credit Card Authorized User

    Definition of an authorized user of a credit card.
  2. EMV

    A standard relating to integrated circuit cards, point-of-sale ...
  3. Integrated Circuit Card

    A card that has an embedded circuit, such as a computer chip. ...
  4. Gray Charges

    Fees consumers pay via credit card or debit card for unwanted ...
  5. Credit Card Teaser Rate

    A lower-than-normal interest rate that a credit card company ...
  6. Debt Consolidation

    The act of combining several loans or liabilities into one loan. ...
comments powered by Disqus
Related Articles
  1. 8 Common Refinance Mistakes
    Home & Auto

    8 Common Refinance Mistakes

  2. Is Cash or Credit Better for European ...
    Credit & Loans

    Is Cash or Credit Better for European ...

  3. Are You A Target For Identity Thieves?
    Credit & Loans

    Are You A Target For Identity Thieves?

  4. Avoid Becoming An Identity Thief's Next ...
    Credit & Loans

    Avoid Becoming An Identity Thief's Next ...

  5. Best Business Credit Cards
    Savings

    Best Business Credit Cards

Trading Center