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!