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Q.If my credit or debit card is stolen, am I responsible? Should I Purchase Insurance?

A.For credit cards, your maximum liability for unauthorized use is $50. If you report the loss before your credit card is used, the Fair Credit Billing Act (FCBA) prohibits the credit card company from holding you responsible for any unauthorized charges. But if a thief uses your credit card before you report it missing, then the most you will owe for unauthorized charges is still just $50 per card. Is the insurance worth it? Probably not, but only you can make that decision.

If you lose your credit cards, review your statements carefully. If you notice any unauthorized charges, send a written letter via certified mail return receipt requested to your credit card company stating:

As I made you aware on _______ date, my credit card was lost or stolen. Upon review of my credit card statement, I noticed the following questionable charges:

[List Each Questionable Charge In Detail.]

Do not send the letter with a payment, or to the address where you send your payments, unless you are directed to do so. Call the credit card company first and ask to what address you should send a letter disputing charges due to fraud.

For ATM and Debit Cards, your maximum liability for unauthorized use depends on when you report the loss. If you report an ATM or debit card lost or stolen before it's used, the Electronic Fund Transfer Act provides that the bank, or other financial institution, cannot hold you responsible for any unauthorized withdrawals. If, on the other hand, you report the loss of your ATM or Debit Card after unauthorized use has occurred but within two business days of its disappearance, then your maximum liability for unauthorized use is limited to $50. But, if you don't report the loss of your ATM or debit card within two business days, then your maximum liability may be increased to $500. Worse, if you lose your ATM or debit card and fail to report an unauthorized transfer within 60 days of receiving a bank statement containing unauthorized transfers, then you can be held responsible for the entire loss.

If unauthorized transfers show up on your bank statement, report them to the card issuer as quickly as possible. Once you've reported the loss, you cannot be held liable for additional unauthorized transfers that occur after that time.

So what about buying a registration service? For an annual fee, some 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 of your credit, debit and ATM card losses rather than calling and writing each individual issuer. This service, depending on the annual fee, may be worth exploring.

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Copyright 1999-2018 Melissa C. Marsh. All Rights Reserved. All Information on this website is subject to a Disclaimer and Use Agreement. This information is provided as general information only and should not be construed as legal advice. We advise you to seek the advice of competent legal counsel to address your own specific questions, facts and circumstances.