Credit Card Loss Protection
Just Say No!
Telemarketers call and say I need credit card loss protection insurance. They just need my approval and they will send out the free trial – no risk kit. Sometimes they offer the first year free, but the renewal payment is automatic. The “free kit” for credit card loss protection is a place for you to list all of your cards, account numbers, and their 800 number to call when you need to notify of a lost card. It is a great idea to make that list, but you don’t need to buy a service or a form for you to be able to do that. I have a friend who took all her credit cards out of her purse, laid it on the copy machine – front side first, then back side in the same order, and that is her list. Make your list, but keep it safe!
Don’t buy the pitch – and don’t buy the “loss protection” insurance. There may be great commissions for selling it, but credit card loss protection and insurance programs are worthless. If you didn’t authorize a charge, don’t pay it. Follow your credit card issuer’s procedures for disputing charges you haven’t authorized. According to the Federal Trade Commission, your liability for unauthorized charges is limited to $50.
Beware False Claims
The FTC says worthless credit card loss protection offers are popular among fraudulent promoters who are trying to exploit consumers’ uncertainty. As a result, the agency is cautioning consumers to avoid doing business with callers who claim that:
- you’re liable for more than $50 in unauthorized charges on your credit card account;
- you need credit card loss protection because computer hackers can access your credit card number and charge thousands of dollars to your account;
- a computer bug could make it easy for thieves to place unauthorized charges on your credit card account; and
- they’re from “the security department” and want to activate the protection feature on your credit card.
The FTC advises consumers not to give out personal information – including their credit card or bank account numbers – over the phone or online unless they are familiar with the business that’s asking for it. Scam artists can use your personal information to commit fraud, such as identity theft. That’s where someone uses some piece of your personal information, such as your credit card account number, Social Security number, mother’s maiden name, or birth date, without your knowledge or permission to commit fraud or theft. An all-too-common example is when an identity thief uses your personal information to open a credit card account in your name.
What You Need Instead
For an annual fee, companies will notify the issuers of your credit card and your ATM or debit card accounts if your card is lost or stolen. This service allows you to make only one phone call to report all card losses rather than calling individual issuers. Most services also will request replacement cards on your behalf.
Purchasing a card registration service may be convenient, but it’s not required. The FCBA and the EFTA give you the right to contact your card issuers directly in the event of a loss or suspected unauthorized use.
If you decide to buy a registration service, compare offers. Carefully read the contract to determine the company’s obligations and your liability. For example, will the company reimburse you if it fails to notify card issuers promptly once you’ve called in the loss to the service? If not, you could be liable for unauthorized charges or transfers.
For More Information
To learn more about protecting yourself against credit card fraud and identity theft, call the FTC toll-free, 1-877-FTC-HELP (1-877-382-4357).
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