Sunday, December 21, 2008

Give Cards Some Credit

We have two credit cards. One is just a backup that we never use. Our primary card is used mostly for travel-related expenditures: airline tickets, accommodations, car rental. And that is how I discovered the $850 purchase from an online jewelery retailer in New York. I was simply reviewing the damage from our October Disneyland trip.
  • Hotel? Check
  • Enterprise? Check
  • Alaska Airlines? Check
  • Sara bought herself some very nice diamond earrings over the Internet? Huh?
I can't say I was surprised. But I also can't say I was overly concerned. I cut my teeth on credit cards when I first started in the banking industry. Fraud is generally only a big issue for the customer when they are away from home, such as on vacation in another state - or worse, abroad. The reason? The moment the card issuer catches wind of fraud, it kills the card and the financial resources available to the customer are now severely limited.

A simple call to Chase was all it took to get the ball rolling. I told them it wasn't my transaction and they immediately gave me a provisional credit in the full amount. At that point the onus was on the merchant to prove the transaction was valid. Since the jeweler could not prove that (since it was fraudulent), the credit became permanent.

Then I received a letter from Chase asking me to identify all fraudulent charges on the account. We have several companies that charge our card automatically. The declaration of fraud listed transactions from Netflix, Amazon, iTunes, PayPal and Walgreen's, but those were all valid. The only fraud was the transaction from the New York jeweler.

From what I was able to learn, it sounds like the jewelery purchase was shipped to an address within 5 miles of our house. My guess is the perpetrator was some employee from one of the local businesses where we may have used the card in the past. We were fortunate, I suppose, that there weren't more fraudulent transactions. There easily could have been. This also reinforces my assertion (and others) that we are more likely to have our credit card compromised physically than electronically. 

We now have a new card number and all is well. This experience highlights one of the key benefits of a credit card versus a debit card. Had the fraud occurred on my debit card, that $850 would have gone missing from my account instantly. That could have caused a number of problems for me like overdraft, declined transactions, bounced checks and/or negative reporting to CheckFree. As it was, my credit line was merely hindered by $850 only temporarily and I was made whole, including interest, upon reporting the fraud.

To be clear, there is little, if any, difference between the liability protection between most debit and credit cards. They are both offer near complete, no fault, protection. The difference, to me, lies in the extent of the collateral damage.

1 comment:

Julie said...

This happened to us and I was amazed at how fast the credited us. We got a call early one morning and asked if we had just spent $3,000 in Paris... yikes. I'm sure our credit card number leaked somehow through an internet purchase. It's not fun even when you are credited.