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Having recently had my interest peaked on the subject of convenience checks (see Credit Card Tricks For Holiday Treats), I was fortunate to contact Linda Sherry for a follow-up story on credit card fraud. Linda is the Director of National Priorities for Consumer Action (CA), a non-profit advocacy organization that was founded in San Francisco in 1971. Consumer Action offers numerous resources and publications to consumers with financial complaints and problems.
Concerning convenience checks, Linda had the following to say:
CA believes that the [convenience] checks should bear a statement on their face that lets consumers know that the use of this check will almost always trigger not only a cash advance fee, but a higher APR and that interest will begin to accrue immediately. If they have not done so already, all credit card issuers should ensure that the checks can only be used after activation by phone from the user's home phone number of record. We don't believe the checks should be sent unsolicited, instead they should only be sent when a consumer expressly asks for them. Many consumers don't realize that if they give a check to someone who loses it, there is a hefty fee to stop payment.
Following that very powerful response, I subsequently inquired about specific recommendations Consumer Actioncould offer to avoid being a victim of credit card fraud.
It's important to report a lost or stolen card immediately as it is very easy for a thief to use a card by simply "copying" (forging) the signature on the back of a card. We recommend also that people do not have astronomical credit limits on their cards as this makes the fraud that much larger. This is a hard area to get consumers interested in because they are not liable for fraudulent charges unless the PIN was used and it can be proven that the card holder allowed the PIN to be compromised.
Linda forwarded two new educational pieces produced by Consumer Action, which includes the following action steps that should be taken if fraud strikes:
- Call the card issuer immediately if your card is lost or stolen.
- Follow up your phone call with a letter to the card issuer. The letter should contain your card number, the date the card was missing, and the date you reported the loss.
- Once you report the lost card, you are not responsible for any unauthorized charges.
- Even if you are late in reporting the loss, or were not aware of the unauthorized use until your next statement arrives, your liability is limited to $50 per card by federal law. However, you may lose your protections under the law if you negligently fail to report the loss of the card or the unauthorized charges on your statement in a timely manner.
- When you report credit card fraud to your issuer, you will be sent a fraud affidavit for you to fill out, sign and return.
- Return the fraud affidavit promptly.
Linda also added,
Read the fine print on your credit card statement. All kinds of traps lurk there. Higher interest rates if you miss a payment, arbitration clauses, etc.
I sincerely hope these tips will help you avoid becoming a victim of fraud and/or identity theft.
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