How do I know if I’m liable for credit card fraud?

Despite sophisticated advancements in banking and payment methods, ID theft remains a major risk, with credit card fraud being the most common form. Criminals are sometimes still able to illegally obtain credit card details, even when account holders take all the recommended precautionary steps to protect their funds.

It’s important to know who is liable for any authorized transactions that may occur and what steps to take should your credit card becomes compromised.

Liability for credit card fraud

Since the introduction of the Fair Credit Billing Act, consumers in the United States are liable for no more than $50 in fraudulent charges. This is regardless of the total value of unauthorized charges made to the credit account.

The account holder will have zero liability for stolen credit card number that is obtained through an unsecured online connection or as the result of a data breach.

Additionally, if the account holder reports the credit card as lost or stolen before any unauthorized transactions, then they will not be accountable for any charges.

While US federal law does limit the liability of consumers to $50, many credit card providers have chosen to adopt a zero liability policy. This means that fraudulent charges are waived altogether for customers who fall victim to credit card fraud.

What to do if you fall victim to credit card fraud

If your card is lost or stolen, or you believe it has become compromised, notify your credit card provider immediately. The earlier you report credit card fraud, the sooner the issuer can start the process of investigating where the fraud has occurred and start resecuring your account.

This process involves verifying and removing any unauthorized charges, closing down the account to prevent criminals from accessing the funds, and issuing a card with a new account number.

You should also contact one of the three major credit reporting agencies to set up a fraud alert and obtain a copy of your credit report. Make sure to examine it for any other signs of fraudulent activity.

Regularly check your credit report and credit card statements to identify and report any unfamiliar charges as early as possible. Many credit card providers offer identity theft monitoring services and alerts.