TIP: Recovering Fraudulent Charges

Recently, breaches in both the retail and hospitality industry exposed thousands of consumers to potential identity theft. While in some instances, hackers were not able to steal or use financial information, it is important to know how your bank or credit card company will handle reports of fraudulent charges.

Here are some thoughts to keep in mind:

  • Information can be stolen by getting the information from card-scraping when they make purchases at various locations.
  • Hackers can obtain your private information without the use of your PIN through off-line transactions, such as online purchases.
  • If you are made aware that your private information is being illegally used, your bank has no responsibility to replace your funds that were in your account for a minimum of two weeks while the investigation is occurring. This can pose difficulties for those who need to make payments, such as loans, rent, and more. Meanwhile, the bank will cover any fraudulent charges that occur during an investigation if you used a credit card.
  • The law puts restrictions on how much liability a debit card can hold, which is $50.00. However, it is important to note that this can only happen if you contact your financial institution within two business days of realizing a theft has occurred. If more than 60 days has passed, and the financial institution has not been notified, all money within your account could be lost- this not only includes your checking account, but any linked accounts as well.
  • The process of reporting misuse of your ATM or debit card
    • The bank begins its investigation within 45 days of the incident being reported.
    • For errors involving new accounts (opened in the last 30 days), point-of-sale transactions, and foreign transactions, the bank may take up to 90 days to investigate the error.
    • Usually, the investigation will last for 10 days, unless it is restoring the money back into your account. It can take even longer (20 days) if the account is new.
    • If it finds no error, the bank must explain in writing why it believes no error occurred and let you know that it has deducted any amount re-credited during the investigation. You may ask for copies of documents relied on in the investigation.
    • If the bank concludes that no error was committed, it must state in writing how they came to such conclusion, and must notify the affected party that it has rescinded the re-credited amount from your account. You are permitted to ask for documentation related to the investigation.
  • If a lost or stolen card is reported before being misused, the cardholder is not responsible for any amount of money that has been taken from the account.
  • Be sure to ask about your bank’s policy regarding fraud guarantee on a debit card.