Team Up with your Bank to Stay Safe from Fraud

Card technology has brought so many great advances over the years. The carbon-paper “knuckle-buster” sliders are long gone. Today you can use credit or debit cards to shop online, set up recurring debits, use mobile payment apps, buy from a small business with a card reader and much more. And with tap-to-pay technology, you don’t even have to swipe or insert your card.

While some of these conveniences have come with security improvements, the frequency of card transactions and the speed of daily life have contributed to more card fraud. Fraudsters have been more prolific, year over year. The Fair Isaac Corporation (FICO) data analytics company saw a whopping 100 percent increase in the number of compromised cards in first quarter 2023 compared to first quarter 2022.

Fraudsters take advantage of card users who aren’t paying attention to their statements, and they often get away with repeated unauthorized charges per stolen card or number. “Unauthorized use” means the use of a credit card by a person, other than the cardholder, who does not have actual, implied, or apparent authority for such use, and from which the cardholder receives no benefit.

Under federal regulations, your bank or card issuer may be more limited than you think in what they can do to help, especially with debit cards. For those, you must report the fraud within the allowed timeframe. Your card issuer may have more generous timelines or maximum liability amounts for validated unauthorized transactions, but this is what the federal regulations require:

• Regulation E Electronic Funds Transfers Act (EFTA)– Debit Cards
  This covers any electronic funds transactions (EFTs). EFT transactions include:
  • ATM transfers
  • Direct deposits and withdrawals (Automated Clearing House, or ACH, transfers)
  • Debit card transactions
  • Fund transfers via telephone, such as a bill payment
  • Person-to-person payments, using Zelle or Venmo, for example
  • Gift cards

The EFTA provides that you are not responsible for any charges made on an ATM or debit card if you report it lost or stolen before unauthorized transactions occur. After an unauthorized transaction has taken place, the EFTA provides that your maximum liability is $50 if you report it within two days of learning of the loss or theft. After two days but within 60 days of the date of the next bank statement, the EFTA provides a maximum liability of $500. Beyond that time period, the consumer is liable for all losses.

• Regulation Z The Truth in Lending Act – Credit Cards
  Federal law provides that your maximum liability for unauthorized credit card transactions that occurred before you report a credit card lost or stolen is $50, though your card issuer may not pursue any liability on your part for valid unauthorized use claims. Note: Unauthorized use of a credit card is not the same thing as a dispute with a merchant or a billing error, which generally do have a timeframe within which you must report them in order to avoid liability.

In cases with both debit and credit cards, “unauthorized” means fraudulently conducted without your participation and from which you receive no benefit. Unfortunately, if you initiate the transaction, you may well be liable for the loss. That includes many cases of fraud. For example, if you act on a link or request from a scammer creating an electronic funds transfer between you and the scammer, that’s your liability. Even though you were deceived, you still initiated the transaction, and chances are low for retrieving that money. Exercise extra caution with person-to-person payment apps like Zelle. Another example: if you sign up for an introductory offer that enrolls you in a recurring subscription if you don’t cancel by a certain time, that’s also your liability.

The good news is that you can thwart thieves using these tried-and-true tips from Pinnacle’s card services team:

• First and most obvious: Keep your cards in a secure place and don’t give out the numbers freely. If you lose your card, report it right away and use your mobile app to freeze the card. Don’t put the digits in an email or text. If you must give someone a credit card number, do it over the phone using a trusted phone number or in a secure app using an image, not numerical characters in an SMS/text.
  
  
• Keep close watch on your transaction activity, whether that’s via mobile app or online statements. The faster you catch a fraudulent transaction, the more likely you can recover the money.
  
  
• Use the text or email alerts offered by the bank that issued your cards. Most allow settings to receive a notification for every transaction above a dollar amount set by you. Some let you set blocks or limits on the type of transaction. For example, you can block any transaction made outside the United States. Pinnacle offers debit card controls and credit card alerts.
  
  
• Pay attention to phone calls and text alerts from your bank or Mastercard attempting to verify an unusual transaction that may be fraud. In these cases, you may be called or texted with the dollar amount and any available information on the payee. Call the number printed on the back of your card if you’re unsure whether the call or message is legitimate. Pinnacle will never call you to ask for your card number or pin or password. If you get a message that a transaction was declined and it is legitimate, you can call the number printed on the card to let the card specialists know and then try the transaction again.