A few days ago, I received a “Credit Card Warning” email forward and felt a duty to dispel wrong information and myths that are spreading on the Internet. Yes, I said email forward, some of us choose to stick with sharing funny pictures, heartwarming stories and laughs for days by email still instead of social media.
MYTH 1: A friend went to the local gym and placed his belongings in the locker. After the workout and a shower, he came out, saw the locker open, and thought to himself, ‘Funny, I thought I locked the locker… Hmm, ‘He dressed and just flipped the wallet to make sure all was in order. Everything looked okay – all cards were in place… A few weeks later his credit card bill came – a whooping bill of $14,000! He called the credit card company and started yelling at them, saying that he did not make the transactions. Customer care personnel verified that there was no mistake in the system and asked if his card had been stolen… ‘No,’ he said, but then took out his wallet, pulled out the credit card, and yep – you guessed it – a switch had been made. An expired similar credit card from the same bank was in the wallet. The thief broke into his locker at the gym and switched cards.
THE WARNING EMAIL’S FALSE ANSWER: The credit card issuer said since he did not report the card missing earlier, he would have to pay the amount owed to them. How much did he have to pay for items he did not buy? $9,000! Why were there no calls made to verify the amount swiped? Small amounts rarely trigger a ‘warning bell’ with some credit card companies. It just so happens that all the small amounts added up to a big one!
THE TRUTH: If he didn’t know his card was lost he couldn’t report it lost. Consumers have the right to dispute any fraud within 120 days. However, most cardholders notice charges on their statement and begin the dispute process well before the deadline. It’s the banks responsibility to track out of sequence buying and alert the cardholder that there’s a problem or put a temporary hold on it. Unless he averages $14,000 in transactions every month, the bank’s fraud detection system should recognize the increase in transactions. Consumers should subscribe to bank alerts on transactions especially if there’s more than one that happens in a short period of time. Now the bank will charge those transactions back to each of the merchants, and the bank gets an income for each transaction for handling the item. I can’t imagine the bank wants to lose a customer who has a credit line large enough to do $14,000 a month. The bank and the merchant have the liability of the losses and were therefore negligent in not calling the cardholder. The cardholder has no liability in this case.
Stay tuned for the truth on scenarios 2 and 3 included in the “Credit Card Warning” email going around.