“Credit fraud” is a broad term that describes using credit to buy goods or services with the intention of evading payment. Sounds scary, but the truth is, many consumers aren’t really worried about it. In fact, it’s exactly that complacency that contributes to much of the identity theft that occurs today.
So why don’t consumers care? The answer might surprise you.
In 1970, Congress passed The Fair Credit Billing Act (FCBA), which established the legal process for dealing with fraudulent or erroneous credit card charges. The key provision of this act limits consumer liability for unauthorized credit card charges to just $50 per card.
Meanwhile, because the risk of victims’ exposure through credit fraud is limited, many consumers are relaxed about their credit cards, especially in comparison to the way they handle their Social Security numbers and pay stubs.
So, while it’s true that credit fraud victims are generally protected financially, this protection causes them to lose sight of two critical details:
- Financial protection does not protect consumers from paperwork and major inconvenience.
- We (the tax-paying public) all end up paying for credit card fraud via higher interest rates, and those higher interest rates lead to higher prices.
Sources of Credit Fraud
There are a variety different ways that credit thieves gather your personal information in order to perpetrate credit fraud. Here are the most common ones you should be on the lookout for:
- Using your lost or stolen credit cards
- Stealing from your unlocked mailbox
- Looking over your shoulder in line during transactions
- Going through your trash
- Sending you unsolicited email
- Making false telephone solicitations
- Looking at your personnel records
If You Are a Victim of Credit Fraud
Many companies protect consumers from credit fraud. Without that protection, taking advantage of the consumer protections in The Fair Credit Billing Act (FCBA) in the case of credit fraud can be a little tricky, but here are the basic steps:
- Keep track of your billing statements and immediately follow up when your bills don’t arrive on time. If a bill you’re expecting doesn’t show up, call the company right away to avoid being held liable if you miss a payment due to thieves changing the address on your bill.
- As soon as you see a fraudulent charge on your credit account, write to the creditor with your name, address, account number, a description of the fraudulent charges, the amount of each charge, and dates of the charges.
- Gather any documents that support your claim that the charges are fraudulent and keep a copy of those documents.
- Send your letter and supporting documents to the address given by your creditors for “billing inquiries,” not the address for sending your payments. Send your package via certified mail, with a return receipt. And make sure you keep a copy of your dispute letter.
- Set a reminder to check your calendar 30 days later. If you haven’t received acknowledgement from the creditor by that time, call and write to them again, or your claim of credit fraud could be void.
If you follow these steps (or subscribe to credit fraud protection), you should not be held financially responsible for the credit fraud. In most cases, the creditor will resolve the dispute within two billing cycles (but not more than 90 days) after being made aware of the credit fraud.