“Attorney Bottaro, Did You Purchase A Plane Ticket From Dubai Last Night?”

The author recounts a recent experience of identity theft and provides legal resources relating to this increasing problem.

This is what my business credit card’s customer service representative asked me last week when I called the company.  Moments earlier, much to my embarrassment, my card had been rejected during a morning breakfast meeting with a colleague.  After explaining that I have never been to Dubai (though I’m told it is magnificent), the rep told me that they had denied the attempted charge and shut down my account.  Fortunately, a replacement card was overnighted to my firm with little further inconvenience.

In this age of electronic payments, identity theft is an increasing threat to all of us.  Identity theft has been described as “a form of fraud or cheating of another person's identity in which someone pretends to be someone else by assuming that person's identity, typically in order to access resources or obtain credit and other benefits in that person's name.”   

Identity theft takes many different forms.  Sony recently reported a 3.2 billion dollar loss based largely on computer hackers breaking into Sony’s Playstation 3 player’s accounts causing the game to go offline for several weeks.  Recently, the federal government’s General Accounting Office released a major report entitled Taxes and Identity Theft.  The report notes that there has been an almost five-fold increase in cases of taxpayer identity theft between 2008 and 2010. 

Obviously, identity theft is a major crime.  For example, misusing a social security number is a federal offense.  42 U.S.C. § 408(a)(7)(B); 18 U.S.C. § 1028A(a)(1).  But that causes little comfort to the average consumer who has been victimized.  There is plenty of information out there about tips to prevent identify theft, ranging from the common sense (protect your passwords) to one tip in the GAO report that I did not know (the IRS does not use email to contact taxpayers, so if you receive such an email it is likely fraudulent).  Other tips can be found at the websites of the Wall Street Journal and the Federal Trade Commission.

One important federal statute, The Fair and Accurate Credit Transactions Act, an amendment to the Fair Credit Reporting Act, allows consumers to place alerts on our credit histories if we suspect identity theft or if we are leaving the country.

What if you become a victim of credit card fraud where your card has already been charged?  The federal Truth in Lending Act, provides significant protection to card holders against unauthorized transactions.  For example, Section 133(a)(1) requires a card issuer to meet a series of conditions before it can impose liability on the card holder, as described in this article.  

As for me, I paid for breakfast with good old fashioned cash, something that may also be a good idea for all of us wherever possible!

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Tom Ferrio June 14, 2011 at 11:22 AM
I have been told that small business card holders must be very careful, that the Truth in Lending Act protections against fraudulent charges do not apply for those cards. A friend of a friend was surprised when she found out she had bought $1500 in airplane tickets in Asia and the bank told her it was her problem. I used to puzzle over the weekly mail promotions to "upgrade to a small business card" and get a bonus of lots of airline miles. Now I'm not tempted.
Mike Bottaro June 15, 2011 at 01:59 AM
Thanks for the comment. Interesting, if true. I have not seen a cite for that distinction. It would seem to make little sense to distinguish between a business card and an individual's card. Don't the same public policy considerations apply?
Sara Michaud June 16, 2011 at 12:01 PM
I own a small business and am treasurer of a local Association and business credit/debit cards are not protected accounts. I was told by the local bank not to have a high limit for the business debit card because if there was a fraudulent charge the bank is not responsible for reimbursing those charges and it would be the loss of the association. I was told the same for the credit card I opened for my small business. I've considered eliminating the business credit card and only using my personal card. It would provide me protection although inconvienent to mix my personal and business finances.
Mike Bottaro June 17, 2011 at 11:12 PM
Sara: Check out the last article in the blog referring to the Act: "the cardholder is not liable for fraud committed through the misuse of his account number or credit card." I have not extensively researched the caselaw, but the Act seems to give consumers the benefit of the doubt. Debit cards are not "credit cards"as defined in the Act, so perhaps the bank rep. was referring to debit cards. As a consumer and business owner, I no longer just take sellers (and that is what your bank is, a seller) at their word. I'd question them further about this topic. Also, a company's "policy" is not the same as the the law (and many times they are diametrically opposite, as is later proven in the court). If you don't like one bank's policy, shop around.


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