Exposure Coverage: Know the Law!
It’s frightening to think of what could happen if your credit card is stolen. You may not realize it’s gone right away, and by the time you do, someone could have charged thousands of dollars in your name. And what if someone were to get your credit card number without your knowledge? By the time you receive your statement and catch on, the damage is already done.
Fortunately, the Fair Credit Billing Act (FCBA) protects cardholders from charges made when their credit cards are stolen. But it is important to understand the law in order to make it work for you. There are certain things you must do in order to take advantage of the protection the FCBA offers.
The FCBA is designed to cover cardholders who experience billing errors. In some cases, these errors may be the fault of the credit card company or a store from which you made a purchase. But unauthorized charges, including those made by someone who fraudulently obtained your credit card or account number, are also covered by the law.
According to the FCBA, a cardholder may not be held responsible for more than $50 in unauthorized charges if the creditor is notified of such charges in writing within 60 days after the first bill showing the error was mailed. That means that as long as you check each statement for errors and notify the credit card company in writing as soon as you catch them, you can’t legally be required to pay more than the first $50. The key here is that the communication must be written in order for the cardholder to be protected by law.
If you realize that your card is missing, it is best to notify the issuer by phone right away. Most credit card companies have a 24-hour toll-free number for reporting missing or stolen cards, and that number should be on your credit card statements. Once you’ve notified the creditor by phone, you should not be responsible for any charges made after the notification. And most companies will not charge you the $50 allowed by law even if charges have already been made. This is, however, at the creditor’s discretion.
Even if you do report your card stolen or missing by phone, it is important to follow up by mail within the 60-day time frame. Make a copy of the letter for yourself, and send it to the company via certified mail or with a return receipt request. This will give you proof that you provided proper notification should you ever need it.
Losing a credit card is a harrowing experience. But it’s reassuring to know that you are protected from unauthorized charges by law. As long as you notify the card issuer quickly, a misused card shouldn’t leave you with a mountain of debt.