“I Didn’t Buy That!”

If you are a credit-card holder, you may get a bill for something you did not buy. It may be due to a billing error made by either the bank or the business where you used the card. However, in addition to such occasional billing errors, every cardholder runs the risk of becoming victimized by fraud.

The fraudulent use of your credit card simply requires access to your name, your account number, and the expiration date of your card. Stolen or lost cards, as well as the carbon copies of your transaction slips, can supply a thief with this valuable information. Some cardholders have received a phone call from an unknown company informing them that they have won a prize. Then, through some elaborate explanation, the caller tries to con the person into giving him the necessary credit-card information for his fraudulent use.

Much has been done to make fraud more difficult. Cards once were just plain pieces of plastic with numbers on them. Eventually, encoded information on a magnetic strip was added. Now holograms and more complicated printing patterns are being used. In some areas experiments are under way with the so-called smart card containing a microcomputer.

While these steps will make fraud increasingly difficult, The New York Times added: “Thousands of fakes abound. And most thieves are guaranteed at least a few hours’ shopping spree before transactions on a stolen card are halted.” A recent report indicated that during 1985 more than $700,000,000 was lost to credit-card fraud in the United States.

In the final analysis, who pays the price? While it would appear that banks do, Parents magazine supplies a more realistic answer. It observes that banks “keep the interest rates charged on . . . cards artificially high to cover losses incurred through their misuse.” Additionally, when banks “are paying 7 or 8 percent to borrow money and charge the credit-card holder 16, 18, or even 20 percent, the huge difference allows them to absorb the cost of a great deal of credit-card fraud.” Yes, in the final analysis, every cardholder is paying the price.

How to Avoid the Trap

You can avoid falling into the trap. How? First, determine whether you really need a credit card or not. Analyze your motives for wanting a credit card before you apply for one. Make a sensible decision rather than being enticed by propaganda.

If you do decide to have credit cards, use them wisely. Handle your credit cards as a business. Become acquainted with the procedures to follow when reporting a billing error or when you suspect fraud. Check local laws that protect you. Carefully check your monthly bills. The computer-generated bills you get from the credit-card company are not infallible.

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Ways to Avoid Credit-Card Fraud

◼ Guard your cards carefully, as you would cash. Never leave them unattended.

◼ Examine your statements and reconcile your account every month. Report any questionable charges.

◼ Never give your card number over the phone unless you are dealing with a reputable company.

◼ After handing your card to clerks or waiters, make sure it is your card they return to you. They could unintentionally switch cards.

◼ Ask for your carbons and destroy them. Also, guard your copy of the transaction slip.

◼ Destroy expired or otherwise unwanted cards.

◼ Keep a complete record of credit-card account numbers in a safe place.

◼ Report lost or stolen cards immediately.