This article has nothing to do with genealogy. However, I believe everyone who has a credit card or a debit card should be aware of this information. I have had my credit card numbers stolen three different times, always from in-person use of the cards. My financial losses to date? ZERO. I haven't yet lost a dime, partly because I follow the suggestions offered here. I suggest you do the same.
Credit card theft is a serious problem. I am sure that anyone who watches news programs or reads newspapers is already aware of this. What can we do to prevent fraudulent charges? Short of moving to a cash-only lifestyle or becoming Amish, there’s nothing you can do to prevent in-store, checkout-line hacks like the recent Target problem. If you think that moving to a cash-only lifestyle is a good option, you should know that cash is probably even more risky than using credit cards. Cash is much easier to steal than is a credit card's numbers. Unlike credit cards, cash is not insured against theft. However, a bit of knowledge and some common sense can significantly reduce the risks of credit card usage.
Nothing is ever guaranteed, but I can speak from experience: All three of the thefts I went through happened after using a credit card in person in a store, not in an online transaction. Thanks to a few simple precautions I take, plus the fact that my cards are all insured, I have never lost any money.
First, let me offer some background information. I used to work for Internet Commerce Services Corporation (iCOMS), a dot-com company whose business was processing credit card purchases for merchants who sold goods online. As the senior customer service rep, I trained customers and fellow employees alike in credit card processing and in theft protection and detection. I also traced cases of suspected fraud and worked with the merchants and with law enforcement to identify the perpetrators. It was a great experience; I learned more about credit cards than I ever expected to know. Sadly, iCOMS went the way of many other dot-com start-ups: the company eventually downsized to zero employees and no longer exists. At least I was able to walk away with some great experiences.
It seems appropriate for me to share the lessons I learned with my readers. In the US, federal law limits the liability of card holders to $50 in the event of theft of the actual credit card, regardless of the amount charged on the card, if reported within 60 days of receiving the statement. That is another reason you want to check your credit card charges daily (more about that later) or at least monthly; if you wait too long to report a problem, you may be denied reimbursement. In practice, most credit card companies waive the $50 fee. Their customers pay zero if the card is stolen and used inappropriately, as long as the theft is reported promptly. One caveat: the U.S. laws concerning a maximum of $50 liability apply only to U.S. consumers who purchase from merchants in the United States. Use extra caution when making purchases from merchants in other countries.
I find it interesting that some people are afraid to use credit cards online but will use the same cards in stores, gas stations, and other in-person transactions. Recent experience shows that they should reverse their thinking. In fact, all the recent thefts of millions of credit card numbers were from transactions where the customer physically presented the card while inside the store. The recent thefts of credit card numbers at Target, Neiman Marcus, DSW, TJX Companies, and others all stole credit card numbers that were not from online transactions. Hackers prefer to break into corporate systems just to show that they can or to strike back at The Man (in the case of “hacktivists”). Hackers rarely, if ever, try to steal individual credit card numbers when purchases are made on the web. It is easier and far more productive to steal thousands of credit card numbers all at once from a corporation's database than it is to attempt to steal numbers one at a time on the web. In short, experience in the past few years has proven that credit card and debit cards used for online purchases are actually safer than using the same cards in person, despite the phobias of some consumers.
How do you protect yourself from credit card theft? There is no perfect answer, but you certainly can minimize the risks.
First of all, you need to recognize that debit cards and credit cards are not the same thing and historically did not enjoy the same protections. However, that has changed in recent years, and most debit cards are now fully insured in the same manner as credit cards. There still may be a few rare exceptions, however. Credit cards and most debit cards in the United States, Canada, and in many other countries are fully protected against fraudulent use. For details, read the following in the providers' own words:
VISA credit cards and debit cards are fully insured against fraudulent purchases, both online and in person, with no deductible charge. Details are available at: http://usa.visa.com/personal/security/visa_security_program/zero_liability.html
MasterCard (including both debit cards and credit cards) is fully insured against fraudulent purchases, both online and in person, with no deductible charge. Details are available at: http://www.mastercard.com/us/personal/en/learningcenter/stayingsecure/index.html
American Express: Use the American Express card online or off, and you won't be held responsible for any fraudulent charges. Period. If someone uses your American Express card without your consent, you'll never pay any part of the fraudulent charges—not even the first $50. See http://www.americanexpress.com/us/content/fraud-protection-center.html?inav=footer_fraud_protection_center
Discover Card: You're not responsible for any unauthorized charges on your account—online, offline, anytime, anywhere, with absolutely NO deductible. See https://www.discover.com/credit-cards/member-benefits/security-center/protect-account/
For example, I recently received a notice from one of my credit card companies, Capital One 360, that states, "If fraud happens, you won’t pay for any charge on your Debit Card that you didn’t authorize. It’s that simple." I will not use any credit card or debit card that does not have a similar policy.
If a thief ever steals the numbers of any of these protected cards and makes a fraudulent charge, the cardholder probably will suffer some inconvenience but will never lose any money, as long as the theft is reported promptly.
Even better, PayPal provides DOUBLE insurance. PayPal insures all online transactions against fraud. In addition, if the PayPal transaction is funded by a credit card, that credit card company also provides similar insurance. You won't get back double the amount of your loss, but you are assured that the two companies will work together to make sure you always get 100% of your money back. Details may be found at: https://www.paypal.com/cgi-bin/webscr?cmd=xpt/general/SecurityFraud-outside.
Keep in mind that personal checks typically are not insured against fraudulent charges although a few individual banks may offer such insurance. Call or visit your bank to determine what protection you have on your checking account, if any. Most so-called free checking accounts do not provide insurance against theft although there are a few exceptions. Sending a check through the mail is a high-risk method of paying for anything. Checks are frequently stolen, either from the postal service, from mailboxes, or by dishonest company employees after the envelope is delivered. If the check is cashed, you will typically lose the money, except for checking accounts from one the few banks that do provide insurance against fraudulent transactions.
I never send a check through the mail. For security reasons, I pay all utility bills, credit card bills, and any loan payments online. In the rare case when I need to write a check, such as for registering an automobile or for paying property taxes, I either deliver the check in person or use my bank's very secure "pay bills online" service. I never write a check and stuff it into an envelope for mailing. Luckily, most utility companies, mortgage companies, credit card companies, and other creditors accept direct electronic payment from your bank's "pay bills online" service. Use it!
Another, even better, method of catching problems immediately is to only use banks and credit card companies that report all deposits and charges to you immediately by email. For instance, I have a debit card from PayPal. Whenever a charge is made on that card, PayPal sends me an email within seconds. I have used that debit card in person many times. By the time I walk out of the store, across the parking lot, and get into my automobile, I can see a receipt for the purchase by checking my email messages with my cell phone. In contrast, my Bank of America account sends one email message per day detailing all new transactions made in the past 24 hours, including deposits, withdrawals, and debit card purchases. A daily update is almost as good as an immediate message and is much, much better than a printed monthly statement sent in the mail! If a fraudulent charge is ever made to your card, you will know about within minutes or hours, not at the end of the month. Reporting the fraudulent charge to the credit card company promptly almost always results in immediate dismissal of the charge(s).
Two years ago I was driving on a 1,000-mile+ trip across the US and was using a debit card for all my hotel, gasoline, and restaurant charges. I typically check for new email messages several times a day, even when traveling. That's easy to do with any of today's smartphones. On one stop along the way, I received email messages about several charges made within the previous few hours, all of them made in one city about 600 miles from my current location. It was a city I had never visited in my life. It was obvious that a store clerk, waiter, waitress, or hotel clerk had stolen my credit card number when I gave it to them in person because I hadn't used that card online in months but had used it a dozen or so times in person over the previous two or three days.
I made a quick call to the bank that issued the debit card and explained the situation to the customer service rep. She checked the charges and verified that I had made legitimate charges a few minutes earlier about 600 miles away from the location of the fraudulent charges. She asked me to verify the legitimate charges, then she zeroed out the fraudulent charges, canceled my debit card, and sent me a new, replacement card by overnight delivery to the hotel where I planned to spend the night.
The total cost to me for all the fraudulent charges? One phone call, nothing else.
Monitoring for fraudulent charges is easy if your bank or credit card agency sends prompt email messages for every transaction. Many banks and credit card companies offer that service, but not all of them do so. I will not do business with any bank or credit card company that does not offer that service. There is no need to wait for a monthly bill; you should be checking all charges within hours, if not within minutes, after the charge is made. If any charge ever appears that you do not recognize, investigate immediately.
Comment: While writing the above paragraph, I received an email message from my bank informing me of a charge made a few minutes earlier. It was legitimate: I pay for my lawn service every month by using the bank's "pay bills online" service. Ever since I set up the automatic payment, the bank automatically sends a payment on the last day of every month, without my involvement. The lawn service usually receives the payment on the next day, the first day of the new month. I thought it was ironic that my bank sent me an email message about an electronic payment at the exact moment I was writing a paragraph about monitoring electronic payments by email messages.
In short, we live in a connected world. In most ways, that is a good thing; but, we do do need to recognize that the world has always been dangerous, and new dangers are replacing the old. We no longer need to worry very much about someone stealing cash from our wallets, but there are new risks of electronic theft when using "electronic money” (in other words, credit cards). Even today, we must remain on guard. There is no perfect method of protecting yourself from thefts but the vigilant consumer certainly can minimize the risks.