July 7, 2014

The Day I Became A Victim of Credit Card Fraud

(And Why I Prefer Credit Cards Over Debit Cards)


Credit Card fraud is something I've read about, I've studied the laws, I've heard about it in the news, Target anyone? Heartbleed bug? I know there are laws to protect consumers, like me, against credit card fraud. Credit and Debit card companies like to advertise as if these low/zero liability laws are a benefit specific to their card. 

However, I don't think I really believed that I could actually be a victim until it happened.

I logged on to Mint.com to do some budgeting. I login about once a week to categorize transactions and see where I'm at budget-wise. That night I logged in, waited for my accounts to update and then went in to categorize, the first thing I saw was a pending transaction from two days before in the amount of $402 at PetSmart. I haven't set foot in a PetSmart in at least a year, and I'm not sure I've ever made a purchase there. My stomach dropped. I know there are laws protecting me from unauthorized charges to my card, I also know that these type of things can be a big hassle, hours of phone calls, paperwork, waiting for charges to be reversed, I was devastated.

All in all the ordeal went quite smoothly, within 5 minutes I was on the phone with my credit card company informing them of the unauthorized charge (and texting my husband to make sure he hadn't just purchased a bird, two fish, and adopted a puppy), I was told I couldn't dispute a pending transaction. When I explained that I absolutely hadn't been inside ANY pet store within the last year, that I do not even OWN a pet, and that I was positive my info had been stolen somehow, but that my card was still inside my wallet, they quickly filed the dispute and cancelled my card. That phone call took about 10 minutes.
All the legitimate charges from my previous card were transferred to the new one, and less than 48 hrs later I had the new card in hand. Then I checked my account online about every 2 days until two LONG weeks later, I saw that the charge had been removed.


What I did WRONG...
I didn't put it in writing.
I should have written a follow-up letter(sent by certified mail) or e-mail(with a read-receipt) to document that I had notified them so that if for some reason they tried to hold me responsible for those charges I would have a legal case against them. Every time money is involved keep a paper trail.

Why I Prefer Credit Cards Over Debit Cards:
If the charge had been made on a debit card the money would have been gone. Instead of just waiting for the charge to be dropped, I would have been waiting for the money to be put back into my checking account. Depending on the day, that missing money could have made me late in paying bills, short on my house payment, or without enough money to buy groceries. Those situations could have resulted in expensive late fees, high interest loans, or overdraft fees. 
Now, hopefully I have an emergency fund that would have saved me, but what if I hadn't noticed immediately and they had maxed out my card; or with a debit card, drained my checking account and even sent me into overdraft? 
This does NOT mean that every person should use a credit card. If credit cards are a temptation for you to go into debt, STAY AWAY. The expenses incurred from a one-time incident like mine would still be smaller than racking up credit card debt and paying interest every month. Every situation is different. 
If you stick to a budget and are good at exercising self-control so that you don't end up carrying a balance on your credit card, then a credit card can be a great tool and a protection against financial damage from fraud.

For more information about Lost or Stolen Cards and the laws that protect YOU, visit the Federal Trade Commission Website here.

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