How Credit Card Compromises Effect You:

Everyday millions of Americans use their credit and debit cards for purchases at retailers, restaurants, fast food, on line, gas stations and many more places. All of these merchants use “credit card processors” to clear these purchases through Visa, Master Card, American Express and other card issuers and to guarantee they will be paid for your purchase.

How this process works is that when you purchase an item, the merchant swipes your card for a transaction, the card number and other information contained on the magnetic strip, amount of the purchase and merchant number are transmitted to the processor who then connects with the issuers (Credit Union, bank, etc) for approval or denial. After the approval or denial is issued and sent back to the merchant, the processor is only supposed to keep on their system the last 4 digits of your account number, the transaction amount, and the merchant id. Some processors are of the opinion that the cost of the software to remove all but the last 4 digits of your card number is too expensive and therefore make the business decision not to purchase the software. Unfortunately, hackers know this and target these processors to obtain credit card numbers. No one is immune to this as card holders cannot choose who a merchant uses to process their transactions and therefore are at the mercy of the processors.

What does this mean for the consumer? Every consumer needs to be very diligent about reviewing their monthly statements and responding to any written correspondence from their card issuers. Do not give any information to anyone calling and representing themselves as being with your card issuer and needing information. If a consumer ever finds themselves in this situation, where your card number has been obtained fraudulently, (the odds are it is not a matter of if, only when this will happen to most consumers), it can be very labor intensive for consumers to correct. With automatic deductions being taken from their credit cards, automatic payments to their cards, or if it is a debit card, the consumer may have to close their account which may present another set of obstacles to overcome. Even though this can be a lot of work, the alternative can be exponentially more labor intensive for the consumer in trying to regain the lost funds. Remember, according to Federal Law, a consumer has 60 days to dispute a charge, after that, you own it. If your card number is obtained fraudulently and you have not opted to obtain a new card and/or you have not checked your statement monthly, you will be in for a lot of paperwork to prove that the charges were not made by you and not be held responsible for them. Remember, you must catch and report them to your credit card issuer within 60 days of receiving your statement. You also run the risk of not only having your card number compromised, but if the “fraudster” can cross reference any of your personal information to the card you may also become the victim of identity theft.

Bottom line, take heed to what your card issuer is requesting you to do via written correspondence that can be verified, as it may take some initial work on your part, but it will save you a lot of grief in the end. It will also keep costs down as the issuer will not pay as much in fraud claims that are usually passed on to consumers.