Credit card fraud goes online

Rough Notes, Sep 2001 by McCormick, Roy C

Cardholders/insureds will be gratified to learn that there is an ongoing teamwork effort to combat credit card fraud, including the identification and criminal indictment of highly organized rings. Your insureds will appreciate advice about limitation on their legal liability and the application of insurance as backup protection.

The Federal Communications Commission is monitoring this problem, which is widespread among major credit card companies, merchants who accept cards and the banking industry.

A cardholder contributes to the team effort by:

1. Checking the card account statement promptly upon receipt and immediately reporting an unauthorized charge to the card company. (This is a condition which the cardholder already agreed to anyway when initially receiving the card.);

2. Providing card information by phone only to known merchants from whom purchases have been made; and

3. Submitting account data on the Internet with great care. Everyone wants to protect the convenience of the credit card as well as the use of electronic communications.

The handling of the fraudulent charge on my daughters account by American Express was most impressive. I wouldn't want to be in the shoes of the perpetrators who are the objects of a vast investigative effort! The record shows that other major credit card companies provide similar professional care using skilled investigators.

The author

Roy C. McCormick is consulting editor of the Policy, Form & Manual Analysis Service (PF&M) published by Rough Notes.