Your Rights in Case of Lost or Stolen Credit Cards

What are your rights if your card is lost or stolen?

You reach for your credit card and it isn’t there! Don’t panic: Your losses are limited whether the card fell out of your pocket or was stolen by a thief. You’re also protected if your credit card number was used without your permission over the phone, on the Internet, or by mail. If your credit card is illegally used, your liability is limited to a maximum of $50. Although debit cards are governed by a different federal regulation, your maximum liability is still limited in most cases. As long as you tell your bank about your missing card in a timely manner, your liability for unauthorized use is generally limited to $50. However, this amount can increase if you are slow to notify your bank about the missing card.

What should you do if your credit card is lost or stolen?

Call the card issuer immediately

If you discover that your credit card or charge card is missing, or if you discover unauthorized charges on your card statement (indicating that your card number may have been used without your knowledge), call the card issuer immediately. Most card companies provide 24-hour customer service for such emergencies, but you have to know the number. If your card has been stolen, you won’t be able to flip it over and dial the toll-free number printed on the back. It’s important to keep this information in a safe place. You’ll need to provide your account number when you call, so make sure you have recorded this information as well.

Follow up with a letter

Many card issuers will require you to follow up your phone call with a letter. This letter should include your name and account number, the date you realized your card was missing or discovered the unauthorized charges on your statement, and the date you first reported the loss. Write down the name of the customer service representative who takes your phone report and include that in your letter as well.

Don’t use your account

Most card issuers will freeze your credit card account as soon as you report your card or account number lost or stolen, in order to prevent further loss. This means that you (and anyone else who is named as an authorized user) won’t be able to use the account. The card issuer will usually issue a new card and account number immediately.

How is your liability established if your credit card is lost or stolen?

If you report the loss before the card is used, you have no responsibility for any unauthorized charges. If your cards are used before you report them missing, the most you will owe is $50 per card. You’ll never owe more than $50, even if the thief uses your card at an ATM to access your cash advance.

If you discover that a friend or family member has stolen your card, you have a choice to make. Reporting the stolen card limits your liability to $50, but it may mean identifying your friend or family member as the thief, because you must provide any information necessary to assist the card issuer in investigating the loss. You may decide it’s better to pay for the unauthorized charges rather than giving your friend or family member a criminal record.

What should you do if your ATM or debit card is missing?

Notify your bank

If you discover that your ATM or debit card has been lost or stolen, or if you notice unauthorized transactions on your bank statement, notify your bank immediately. You should call your bank first, since this is the quickest way to notify it. However, you should follow up with a letter so that you have a record of your notice.

Stop using your card

As with a credit card, most banks will deactivate your ATM or debit card as soon as you report it missing in order to prevent further loss. They will generally issue you a new card right away.

What is your liability for a lost or stolen ATM or debit card?

Your liability for unauthorized transactions using your ATM or debit card depends on how quickly you notify your bank of the loss. Guidelines for determining your liability are as follows:

Unauthorized use of card

There must be an unauthorized use of your card.

Within two days of discovering card missing

Your liability is limited to no more than $50 if you notify your bank within two days of the time you discover your card is missing.

More than two days after discovering card missing but less than 60 days after unauthorized transactions appear on bank statement

Your liability is limited to no more than $500 if you notify your bank more than two days after discovering your card is missing but less than 60 days after the unauthorized transaction appears on your bank statement.

More than 60 days after unauthorized transactions appear on bank statement

If you wait more than 60 days after receiving a periodic statement showing unauthorized transactions, your liability is unlimited. This means you could lose everything in your account and possibly more if your account is attached to an overdraft line of credit.

Unauthorized use of account number without actual card

If a thief finds out your debit card number without actually taking the card, this information can be used to shop by phone, mail, or on the Internet. You would probably not know your card is being used fraudulently until the transactions appear on your bank statement. Your liability for this type of unauthorized transaction is limited to $50, as long as you report the fraud within 60 days of the time the information first appears on your bank statement. Failure to report fraudulent use within this time frame can increase your liability significantly.

As long as your liability is limited, why bother protecting your cards?

You generally don’t pay for unauthorized usage of your credit or debit cards and credit card thieves are seldom caught, so who is left holding the bag? In most cases, the card issuers are stuck with the loss. Or are they? Credit card companies are usually quite profitable, even though they suffer large losses from credit card theft. What this really means is that the card issuers pass their losses on to you in the form of increased interest rates and fees.