It was the $6 donut store charge.
The charge showed up on the list of my credit card transactions, which I usually check at least weekly on my bank’s website. I should say “charges” because there were five of them, each from the same donut chain but in different states. Except I had been in Texas the entire time and had not authorized a credit card purchase from a donut store.
The small dollar amount of the repetitive charges was alarming. The charges indicated to me that the thief was verifying that the card would be accepted in those states and wanted the amount to be insignificant enough to avoid triggering a fraud alert. I had no doubt that the thief was setting the stage for a much bigger fraudulent purchase.
When I saw those charges, I immediately called the number on the back of my card and reported the fraud. I told them the date, vendor and amount of each fraudulent transaction and requested a credit.
Those remedies were available to me because I had not authorized the credit card payments to the donut store. It would have been a different story if someone had fraudulently induced me to pay the donut store with my card. Consumers generally have very limited rights and remedies for fraudulently induced transactions.
The law protecting unauthorized payments is not limited to credit cards. State Uniform Commercial Code (UCC) laws give consumers the right to dispute unauthorized signatures on checks, including remotely created checks and check alterations. The Electronic Funds Transfer Act (EFTA) gives consumers the right to dispute electronic fund transfers, including those made through Zelle and Venmo.
Whichever law applies to a transaction, the protection is not unlimited. Each law has procedures and time periods to notify the institution to limit liability for unauthorized purchases.
Take my case, where the charge was on my credit card. The Fair Credit Billing Act limited my liability to $50 because I reported the fraudulent charges within 60 days of receiving my credit card statement. My bank was more generous – because I reported the charges within 30 days after they were made, the bank gave me credit for 100% of the fraudulent charges.
Had the fraudulent charge been made on my debit card or from an ATM withdrawal, then the EFTA would apply. I was required to report the first loss within 60 days.
Now comes the really strict part. If my debit card had been lost or stolen (as opposed to just having someone make a fraudulent charge), then I was required to report it within two business days after I learned of the card’s loss or theft. My liability would be limited to $50. If I missed the two-day deadline, but reported it within 60 days, then my liability was capped at $500. If I did not report it until after the 60 days – well, I could be liable for all of the fraudulent charges.
There are exceptions, definitions and error resolution provisions that apply, of course. To be safe, if you are the victim of a fraudulent charge or your credit or debit card has been stolen, then you should do the following immediately:
• Report it to your credit card company (credit card) or financial institution (debit card).
• Review all of your transactions online to determine if any are fraudulent. If they are, then dispute them.
• Place a fraud alert on your credit report with Equifax, Experian and TransUnion.
• Consider freezing your credit reporting company accounts.
One last recommendation: Always pay cash for donuts.
Attorney Virginia Hammerle will present “Finances for Seniors” from 2 to 3 p.m. on June 4 (W) at the Timberglen Branch Library, 18505 Midway Road, Dallas. Registration is required. To register, visit dallaslibrary2.org, click on Events, choose the library branch and the date of the seminar. You can also call the branch at 214-671-1365 (Timberglen).
Attorney Virginia Hammerle is board certified in civil trial law by the Texas Board of Legal Specialization and an accredited estate planner. To receive her monthly newsletter, email legaltalktexas@hammerle.com or visit hammerle.com. This column does not constitute legal advice.
