Laws protect your credit, debit cards
By EILEEN ALT POWELL
Associated Press
NEW YORK — Earlier this year, consumers who thought they were requesting a free trial of a tooth whitener from an Internet site soon found withdrawals of $106.90 from their bank accounts or similar charges to their credit cards, according to a nonprofit consumer education group.
Consumer Action, based in San Francisco, said it appeared that people who asked for the free samples were automatically enrolled in a recurring payments program for the product, whether they wanted it or not.
In this case, most of the victims of the scam had federal law on their side to get their money back, said Linda Sherry, a spokeswoman for the group.
In fact, there are more than two dozen consumer protection laws aimed at keeping people safe in financial dealings that range from check writing to credit and debit card payments, setting the interest rates on loans, investing, data privacy and the accuracy of credit reports.
But, Sherry points out, "some of them can be confusing, so consumers have to make sure they're taking the right steps" in filing complaints and claims in a timely manner if something goes wrong.
The laws that draw the most consumer attention — and helped those caught up in the tooth whitener scam — cover credit and debit card use:
Janet Kincaid, senior consumer affairs officer with the Federal Deposit Insurance Corp., the agency that insures bank and thrift accounts, said the issue that draws the most consumer complaints is disputed credit card bills.
"A lot of people have credit cards, and they use them for multiple transactions," she said. The FDIC's call center, which she manages, "gets a lot of questions and complaints about billing errors."
Kincaid said the FDIC, which is in Washington, D.C., tries to educate consumers about their rights under the law, including advising that they read their monthly statements and take action as soon as they discover something amiss.
If a complaint is filed — either through www.fdic.gov or on the hot line at (877) 275-3342 — the FDIC can go to a financial institution and make sure it's following proper procedures to resolve the consumer's complaint.
Andrea Rock, a senior editor at Consumer Reports, said it's important for consumers to understand that protection against unauthorized charges is better for credit cards than debit cards. "With credit cards, the liability is limited to $50 or less by law, no matter what," she said. "In fact, most credit card companies have a zero liability policy."
Consumers also have greater flexibility in disputing charges for goods that arrived damaged or were not what the consumer ordered. "With debit cards, there are reporting requirements that need to be carefully observed," Rock said.
Consumers only are covered by the $50 liability limit if they notify their financial institution within two business days of discovering a problem of unauthorized use of their debit cards. "Wait longer, and that liability can jump to $500," Rock said.
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