No matter how diligent you are, credit card fraud can happen to anyone. Even highly established companies and retailers fall victim to credit card data breaches from savvy hackers. Luckily for consumers, credit card companies bear a large load of liability when it comes to credit card fraud.
Credit Card Liability
For the most part, credit card companies foot the bill for fraudulent purchases. Under the Fair Credit Billing Act, consumer liability for unauthorized credit card use is $50. Many credit card companies waive this $50 as a courtesy and don't charge consumers anything for fraudulent purchases. If you report your card lost or stolen before the fraud occurs, you're not technically liable for anything. Consumer protections aren't as strong for debit card fraud -- you could be completely liable if you don't dispute the fraudulent charges within 60 days of your statement indicating fraud.
Consumers also have credit card protection when businesses try to defraud them. If you make a credit card purchase, and the payee doesn't deliver the goods or mischarges your card, you have recourse. Contact your credit card company within 60 days of the billing statement with the disputed charge. By law, the credit card company must acknowledge your complaint and resolve it within two billing cycles. You can withhold payment for the disputed item until the credit card company resolves the issue.
You're protected if a business never delivers goods and services, but complaints about quality of goods are a different matter. The Federal Trade Commission contends that quality issues aren't technically billing errors, so you aren't covered under the same dispute procedure, and your credit card company doesn't have to investigate. However, some credit card companies do offer extended purchase protection that could cover quality issues, and you can always seek direct legal action against the seller.
Above and Beyond
In addition to federally imposed regulations, many credit card companies go above and beyond in protecting consumers from fraud. Because they're liable for most credit card fraud, many credit card companies actively monitor your account for suspicious activity. Card companies use software to check your spending for anomalies. For example, they may flag a purchase made in a strange location or for a higher-than-normal amount and temporarily suspend your account. Many card companies also impose daily spending limits to mitigate the damage if a fraudster does get a hold of your card.
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