How common are credit card disputes?

If you ask someone at the Consumer Financial Protection Bureau, they would tell you that credit card disputes are common. That government agency handled over 5,000 complaints in their first three months of operation, many involving credit disputes.

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If you wonder how likely, it is that you will someday be involved in a credit dispute of some kind, think about this—every single credit card whether it is a gas credit card, store credit card and any other type of credit card you can think of has a written policy for dealing with disputes. They wouldn’t create those policies if they didn’t expect to need to use them someday.

Am I responsible for fraudulent charges on my credit card?

According to Consumer Action, the major credit card companies, Visa, MasterCard, American Express and Discover, all offer a zero liability policy, meaning that you will not be responsible for any charges on your card that are fraudulent. You are responsible for reporting the loss or theft of your credit card immediately. Keep in mind that it is in your best interest to prevent fraud because credit card companies pass the cost of dealing fraud on to you in the form of higher rates and fees.

How does credit card fraud happen?

There are three basic ways that credit card fraud against a consumer can take place:

Someone stealing a credit card
Someone stealing credit card information
A merchant charging you for products or services you didn’t want

If someone steals the credit card or the information on it, they can use it to rack up all kinds charges against your card until you or the credit card company finds out what is going on.

Credit cards are physically stolen in a number of ways:

Sometimes they are in a purse or wallet that is stolen
Sometimes they are accidentally left at a store
Sometimes they fall out of a pocket
Sometimes a new card is stolen from the mail

Once a thief has your physical card, they can use it just like you would until the card is cancelled.

Credit card information is stolen most often from credit card receipts that are not properly destroyed. The information recovered often includes the cardholder name, the card number, and the expiration date. Many vendors require the credit card security code from the card; some do not. Therefore, there are a number of places a thief could make charges with just the information found on a card receipt.

The most common type of unauthorized charge made by a merchant is not actually fraud, but an honest mistake. Sometimes a cashier accidentally double charges somebody or enters the wrong amount. In terms of intentional fraud, an unscrupulous cashier might save your card information and do a cash-back transaction on your card after you leave and pocket the cash.

How do I protect myself from credit card fraud?

First, a credit cardholder needs to be aware of where their card is at all times. When they are done using a card, they should shred it or cut it into pieces. If a card gets lost or stolen, it needs to be reported immediately.

In terms of credit card information, any credit cardholder would be wise to invest in a document shredder. Credit card statements, credit card receipts and anything else that might have credit card information on it should be shredded when it is no longer needed. Until the documents are ready to be destroyed, they should be stored in a secured location, never left lying around.

The other thing a credit cardholder should always do is keep checking their statements for anything that looks odd. In addition to that, most bank credit cards and some store credit cards will let you set security warnings. This means that the credit card company will call you if the conditions you set are met, usually:

Too much money charged in a short time
Too many charges
Multiple charges from the same vendor

You need to watch out for activity on cards you don’t use anymore or unauthorized cards created in your name, too. A credit bureau like Experian is a good place to check to look at your total credit picture.

Credit card disputes are common, but they can be resolved easily when you have a good credit card company. To find the right credit card for you, use the compare credit cards online today.