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LOST OR STOLEN: CREDIT AND ATM CARDS

Increasingly, people find it convenient to shop with credit cards

or to bank at automated teller machines (ATMs) with ATM cards.

But the ease with which these cards can be used also makes them

very attractive to thieves.

Loss or theft of credit and ATM cards is a serious consumer

problem. However, two federal laws, the Fair Credit Billing Act

(FCBA) and the Electronic Fund Transfer Act (EFTA), establish

procedures for you and your creditors to follow to resolve

problems with credit cards and electronic fund transfer accounts.

This brochure explains what to do if any of your cards are

missing or stolen, suggests how to protect your cards, and

explains what you can expect from a credit card registration or

protection service.

Limiting Your Financial Loss

There are at least two good financial reasons for you to report

the loss or theft of your credit and ATM cards quickly. First,

the sooner you report the loss, the more likely you will limit

your liability if someone uses your card without your permission.

Most card fraud occurs within the first 48 hours after a card is

stolen.

Second, the sooner you report any loss, the more card costs in

general can be kept down. You pay higher interest rates and

annual fees because card fraud costs issuers hundreds of millions

of dollars each year.

If any of your cards are missing or stolen, report the loss as

soon as possible to your card issuers. Some companies have

toll-free or WATS numbers printed on their statements and 24-hour

service to accept such emergency information. For your own

protection, you should follow up your phone calls with a letter

to each card issuer. The letter should give your card number, say

when your card was missing, and mention the date you called in

the loss.

You may wish to check your homeowner's insurance policy to see if

it covers your liability for card thefts. If not, some insurance

companies will allow you to change your current policy to include

protection for card losses.

l           Credit Card Loss. If you report the loss before these cards

are used, the FCBA says the card issuer cannot hold you

responsible for any unauthorized charges. If a thief uses your

cards before you report them missing, the most you will owe for

unauthorized charges on each card is $50. This is true even if a

thief is able to use your credit card at an ATM machine to access

your credit card account.

However, it is not enough simply to report your credit card loss.

After the card loss, review your billing statements carefully. If

your statements show any charges not made by you, send a letter

to the card issuer describing each questionable charge on your

account. Again, tell the card issuer the date your card was lost

or stolen and when you reported it to them. Be sure to send the

letter to the address provided for billing errors. Do not send it

with a payment or to the address where you send your payments

unless you are directed to do so.

l           ATM Card Loss. If you report an ATM card missing before it

is used without your permission, the EFTA says the card issuer

cannot hold you responsible for any unauthorized withdrawals. If

unauthorized use occurs before you report it, the amount you can

be held responsible for depends upon how quickly you report the

loss to the card issuer. For example, if you report the loss

within two business days after you realize your card is missing,

you will not be responsible for more than $50 for unauthorized

use.

However, you could lose as much as $500 because of an

unauthorized withdrawal from your bank account if you do not tell

the card issuer within the two business days after you discover

the loss. And, you risk unlimited loss if, within 60 days after

your bank statement is mailed to you, you do not report an

unauthorized transfer or withdrawal. That means you could lose

all the money in your bank account and the unused portion of your

maximum line of credit established for overdrafts.

If any unauthorized transactions appear on your bank statement,

report them to the card issuer as soon as you can. As with a

credit card, once you have reported the loss of your ATM card you

cannot be held liable for additional amounts, even if more

unauthorized transactions are made.

Protecting Your Cards

The best protections against card fraud, of course, are to know

where your cards are at all times and to keep them secure. For

ATM card protection, it is important to keep your Personal

Identification Number (PIN) a secret. Memorize this number.

Statistics show that in one-third of ATM card frauds, cardholders

wrote their PINS on their ATM cards or on slips of paper they

kept with their cards.

The following suggestions may help you protect your credit and

ATM card accounts.

For credit cards:

l           Be cautious about disclosing your account number over the

phone unless you know you are dealing with a reputable company.

l           Never put your account number on the outside of an envelope

or on a postcard.

l           Draw a line through blank spaces on charge slips above the

total so the amount cannot be changed.

l           Do not sign a blank charge slip unless absolutely necessary.

l           Rip up carbons from the charge slip and save your receipts

to check against your monthly billing statements.

l           Open billing statements promptly and compare them with your

receipts. If there are any mistakes or differences, report them

as soon as possible to the special address listed on the billing

statement for "billing inquiries." Under the FCBA, the card

issuer must investigate billing errors if you report them within

60 days of the date your card issuer mailed you the statement.

l           Keep in a safe place (away from where you keep your cards) a

record of your card numbers, expiration dates, and the telephone

numbers of each credit-card company for the emergency of

reporting losses.

l           Carry only those cards that you regularly need, especially

when traveling.

For ATM cards:

l           Select a PIN (personal identification number) that is

different from other numbers noted in your wallet, such as your

address, birthdate, phone, or social security number.

l           Memorize your PIN.

l           Do not write your PIN on your ATM card or carry your PIN in

your wallet or purse.

l           Never put your PIN on the outside of a deposit slip, an

envelope, or on a postcard.

l           Examine all ATM receipts and bank statements as soon as

possible.

Buying a Card Registration Service

Many companies offer card registration and protection services

that will notify all companies where you have credit and ATM card

accounts in case your card is lost or stolen. With this service,

you need make only one phone call to report all card losses

instead of calling each card issuer individually. Also, most

services will request replacement cards on your behalf.

Registration services usually cost $10 to $35 yearly.

Purchasing a card registration may be a convenience to you, but

it is not required by card issuers. The FCBA and the EFTA give

you the right to contact credit card companies and ATM card

issuers directly in the event of loss or suspected unauthorized

use.

If you do decide to buy a registration service, compare offers

and look for one that will best suit your needs. Read the service

contract carefully to check the company's obligations and your

liability. For example, will the company reimburse you if it

fails to notify charge card loss promptly after you report the

loss? If not, you could be liable for unauthorized charges.

For More Information

For additional information about credit or ATM card fraud or

credit card billing problems, send for: Credit and Charge Card

Fraud; Fair Credit Billing; or Credit Billing Blues. These

brochures are available free.  Write to: Public Reference,

Federal Trade Commission, Washington, D.C. 20580.

The following federal agencies are responsible for enforcing

federal laws that govern credit and ATM card transactions.

Questions concerning a particular card issuer should be directed

to the enforcement agency responsible for that issuer.

State Member Banks of the Federal Reserve System

Consumer and Community Affairs

Board of Governors of the Federal Reserve System

20th & C Sts., N.W.

Washington, D.C. 20551

National Banks

Comptroller of the Currency

Compliance Management

Mail Stop 7-5

Washington, D.C. 20219

Federal Credit Unions

National Credit Union Administration

1776 G St., N.W.

Washington, D.C. 20456

Non-Member Federally Insured Banks

Office of Consumer Programs

Federal Deposit Insurance Corporation

550 Seventeenth St., N.W.

Washington, D.C. 20429

Federally Insured Savings and Loans, and Federally Chartered

State Banks

Consumer Affairs Program

Office of Thrift Supervision

1700 G St., N.W.

Washington, D.C. 20552

Other Credit Card Issuers

(includes retail/gasoline companies)

Division of Credit Practices

Bureau of Consumer Protection

Federal Trade Commission

Washington, D.C. 20580

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