When Credit Cards Are Compromised

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When Credit Cards Are CompromisedJan. 31, 2007

(CBS) Millions of credit and debit card users should be worried about more than their holidaybills. They should be checking for errors or fraudulent charges.The Early Show financial

adisor !a" #artin explains how to get any unauthorized charges taken off your card.

Now is the time to be checking your credit card bills because those bills arriving in the mail showyour purchasing transactions over the busy holiday shopping season. The more charges youmake, the greater the chance there will be incorrect charges and fees on your account. This year,there is another reason for some shoppers to check their credit and debit card statements.

Retailer T! "os., which owns and operates more than #$%% big discount stores, such as T.Maxx, Marshals, &.. 'right and (ome )oods, reported two weeks ago that due to an*unauthorized intrusion* into it+s computer systems, the credit and debit card numbers and cardexpiration dates of their customers had been compromised, and in some cases, stolen from their

computer systems. &ccording to the company, a smaller number of customer+s names, addressesand drivers license numbers were also stolen the most likely being customers who provided thisinformation while returning merchandise without a receipt.

&ccording to the company, the card numbers and related transaction information did not includecustomer addresses and names, and the main risk posed to customers is the risk of possiblefraudulent charges on the compromised accounts. -ther than the instances where drivers licensenumbers, names and addresses were stolen, the company says that it+s extremely unlikely to beexposed to the risk of / Theft on the customers breached credit and debit card accounts.

$rotectin% C&stomers ' or olida" Sales

T! "ompanies nc states on their web site that they discovered the *unauthorized intrusion inmid0/ecember #%%1* and they believe it began in May #%%1 with customer data compromisedfrom then until /ecember #%%1. Their first move was to hire computer security experts )eneral/ynamics "orporation and nternational 2usiness Machines "orporation, and then they notifiedlaw enforcement authorities. &ccording to the company, it delayed it+s public announcement of thebreach until mid0anuary out of a concern to reduce the risk of more customer data beingexposed. They also state they maintained confidentiality of the intrusion as re3uested by lawenforcement. t+s probably an unfortunate coincidence that they made the announcement after theholiday shopping season when asked if this factored into their decision, 4herry 5ang, 67 ofnvestor 7ublic Relations replied, *t would be a pleasure to categorically deny that. 'e waitedbecause it was in the best interest of our customers.*

*on+t Call s ' And We Won+t Call -o&

&ccording to company sources, most of the customer data compromised and stolen did notinclude customer names and addresses and affected shoppers who used their credit and debitcards to buy stuff at T.. Maxx, Marshals, (ome )oods and &.. 'right 4tores in the 8.4 and7uerto Rico after May #%%1. 4ince they believe this involved account numbers and expirationdates, T Maxx has notified the banks and credit card companies who sponsor the cards. Theirrecommendation it that customers who may be concerned about their accounts should reviewtheir account statements and notify their bank or credit card company if they detect fraudulentcharges or transactions.

My recommendation for those whose credit or debit card accounts could have been compromisedin the T Maxx breach9 call your credit card company and have them issue a new card with a newnumber and a new expiration date:and have them cancel the affected card account.



;or customers whose drivers license numbers, name and address was stolen, T Maxx sentletters and established a dedicated help line that is available on their web site.

&ccording to a recent report in the 'all 4treet ournal, some cases of fraudulent or unauthorizedcharges are already surfacing a Massachusetts man reported about <1,=%% in unauthorizedtransactions including purchases from 'al0Mart 4tores, nc, ;lowers.com and iTumnes.com

made with his card account number on anuary #.

-ne thing is for sure after the dust settles, shopping at T Maxx and its affiliated stores shouldbe safer, as far as the security of customer data is concerned. &s significant and unfortunate thissituation is for T Maxx, consumers need to know that information you provide can becompromised anywhere and anytime and you need to play an active role in thwarting fraudulentaccount activity.

Credit Card $rotections

f you are going to use plastic as your purchasing tool, credit cards are preferred over debit cardsbecause consumers have the right, under the ;air "redit 2illing &ct >;"2&? to dispute incorrect

charges on their credit cards. 8nfortunately few consumers understand their responsibilitiesre3uired to ensure the protections provided. 'hile you can use the protections under the ;"2& tohelp you avoid billing disputes, there are certain guidelines and timelines you need to follow.

@ou also need to clearly understand that none of the following procedures or protections appliesto /A2T cards. Many consumers use their debit cards like credit cards these days 0 debit cardseven look like credit cards because they carry the Master"ard and 6isa logos. 4ome debit cardissuers do offer similar protections, however, the most complete protections under federal lawsare only offered to credit card users.

&nti0credit card fanatics please take note9 this does not advocate the use of credit cards to buywhat cannot be paid for immediately. The best way to use a credit card is as a purchasing tool

and to pay off the balance in full each month.

The following types of billing errors can be cleared up with a simple phone call instead of anofficial written dispute9

Clerical rrors/ Mistakes such as an incorrect date or amount of a legitimate charge item can beeasily changed over the phone.

nfamiliar Char%es/ -ver half of all disputes arise from consumers not recognizing a charge.8sually, this is because the merchant+s corporate name is displayed on the bill in place of theindividual store name. 7eople looking for a charge from a particular store will be confused by anunfamiliar corporate name. ;or example, the charge at 2rite 'ay "ar 'ash could show up as6AR" ANT on a 2ank &merica 64& card statement.

ra&d&lent Char%es/ f a fraudulent charge does appear on your bill, companies are typically3uick to address it because they want to maintain your faith in their card+s security. -ften they willresearch the transaction, and send you an affidavit stating that you sign and return stating thatyou did not authorize the charge.

&ll other billing problems or errors re3uire you to send a written letter to your credit card company,stating that you are disputing the charges. 4uch errors might include9

"harges from an nternet service provider that you used in the past but have since cancelledtheir service, *"ramming* or charges tacked on by the creditor such as insurance or otherservices they sell and you don+t want.

& merchants failure to post a correct credit for returned items.



"harges for services or goods that you ordered and never received.

"onsumers mistakenly believe they also can automatically dispute and not pay for charges forpoor03uality products they receive. 8nfortunately, that+s not covered under the ;"2&. )oods *notdelivered as agreed* are covered by the law and can be disputed for a refund. (owever, the lawdoes not cover poor03uality goods. That+s because poor03uality goods are not seen as an *error*

on your bill. f you hope to receive a refund, you must return the product and frame your disputeas being about a product or service that wasn+t delivered as agreed. This may seem like a fineline, but this is your best bet for getting your money back according to "onsumer Reports and the;ederal Trade "ommission.

'hen disputing a credit card charge, you need to be sure and follow the correct process.

;irst, when you write the letter, /- N-T send it to the same address where you send yourpayments. nstead, send the letter to the address for *billing in3uiries* which is typically listed onthe back of the credit card statement. n your letter, include your name, address, account numberand a clear description of the error. nclude "-7A4 of documents that support your claim. 2e

sure to keep the originals for your own recordsB and also keep a copy of your dispute letter.

4end the letter by certified mail, return receipt re3uested.

The letter must reach the credit card issuer within 1% days after you receive the billing statementthat includes the charges you are disputing.

;or a sample letter and an explanation of the dispute process, refer to the C e site.

-nce you+ve completed these steps, the burden lies with the credit card issuer. The companymust acknowledge your complaint N 'RTN) within C% days of receiving your dispute letter.Then, the card issuer is bound to resolve the dispute within two billing cycles.

&ll of this sounds fairly easy, but while you are working through the process, which can potentiallylast up to five or six billing cycles, you are continuing to receive bills which claim that you not onlyowe the disputed amount, you also owe a growing finance charge on the amount.

&nd disputing a charge on your credit card should not affect your credit rating. ;irst, it is withinyour rights to withhold payment on the disputed charge &N/ the finance charges during theinvestigation. 2ut regular billing rules apply to all other charges and finance charges. The creditcard issuer is not allowed to try and collect this money, your account cannot be closed orrestricted, and the issuer cannot report you as delin3uent to a credit bureau or reporting agency.

&ssuming that the card issuer agrees with your dispute and finds that your bill is indeed incorrect,expect to receive a letter detailing the error and what corrections will be made to your account.

The creditor must remove all finance charges, late fees or other charges related to the error.

f it turns out that your bill was correct, you will receive a letter explaining what you owe and why.@ou may write back saying that you refuse to pay the amount, however, the creditor can nowbegin the collection process 0 this includes reporting you to a credit bureau.

@ou should know the law only re3uires a *reasonable* investigation into the dispute, not anexhaustive one. ;or example, the creditor will probably not go so far as to check the storesecurity camera footage when tracking down a disputed charge.

*The good news is that it+s in a credit0card company+s interest to fix most problems fast,* says"onsumer Reports. *t costs at least <#$ to process a disputed charge but it can cost more than

<#%% to replace you. 4o it+s cheaper simply to credit you for small amounts without an

http://www.ftc.gov/bcp/conline/pubs/credit/fcb.htm

http://www.ftc.gov/bcp/conline/pubs/credit/fcb.htm



investigation* ;or larger disputes, credit0card issuers also probably weigh whether you+ll take thematter to court or cut up your card.

Ray MartinD MM6, "24 nteractive nc. &ll Rights Reserved.

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When Credit Cards Are Compromised