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This article was last updated Dec 08, 2014, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
With multiple cyber-attacks, identity theft and fraudulent activity going on, it is important to know how you can protect yourself as a consumer. One way to keep yourself safe is by knowing what added benefits are included with your credit cards, such as the types of protections that come with the card.
Two very common benefits that come with most credit cards are $0 Fraud Liability or Dispute Resolution. Usually at least one or the other are offered as an added benefit, but sometimes both are offered for additional protection.
At first glance, one might think that these are the same and consider themselves protected without really understanding what these benefits are and how they can work in your favor. A good place to start explaining the difference between $0 Fraud Liability and Dispute Resolution is by defining them.
$0 Fraud Liability
It is not uncommon for most credit cards to offer some sort of policy that protects cardholders from unauthorized transactions and purchases made with their card. $0 Fraud Liability means that the cardholder will not be held responsible for any unauthorized charges, and the user is protected if the card is lost, stolen, or fraudulently used. These protections apply to purchases made in-store, online, via mobile, or by telephone.
Policies similar to these are usually required to replace any funds that were lost. In the event that your card is used fraudulently, it is important that that you notify your credit card issuer as soon as possible. The sooner the credit card company is made aware of the situation, the sooner they can deactivate the card and an investigation can begin with the appropriate parties.
The credit card issuer may delay, limit, withhold, or rescind replacement funds if the claim in question includes the following:
- The purchases weren’t posted to the account
- Gross negligence or fraud is discovered
- A delay in reporting the fraud
- Investigation and verification of claim
Read more about zero fraud liability policies from major credit card networks:
$0 Fraud Liability pertains strictly to unauthorized transactions and charges, while Dispute Resolution deals with the circumstance that there is a discrepancy between a buyer and a seller. For example, if you return something to a retail store for a full refund and that refund is never received, then there is a disputable situation.
Most credit card companies will work with cardholders to investigate the situation, but only after the cardholder has attempted to mend the situation with the retailer first. Only after the original attempt has been made will the credit card issuer get involved. At that point, they take the matter into their hands and request documentation from the merchant on why the customer did not receive their refund. In this circumstance, depending on the outcome of the investigation, if due process did not occur on the side of the merchant, then it would be their responsibility to compensate the consumer for their losses.
Dispute resolutions are similar to $0 Fraud Liability policies because the credit card company will still try to protect you and your finances, but instead of the credit card company being held liable for the money, the merchant would be. The credit card company works on behalf of the cardholder to try to resolve the matter by investigating which side is at fault.
Read more about dispute resolution policies from major credit card networks:
Why Should You Care?
Most credit card policies come with either one, or both of these benefits. It is important to recognize the differences between these two because a cardholder should know whether or not they are protected prior to their account being compromised. Nobody likes to be that person who finds out that they aren’t protected when they thought they were, or when a situation arises where they need protection and don’t have it at all.
We can only hope that next year after the Pin and Chip security systems are in place in the U.S., that data breaches will finally start to slow down or come to an end. But even then it is always wise to know your rights as a consumer, what protections you are entitled to, and how you could be held financially liable in the event of criminal activity or a financial dispute.
Always Read the Fine Print
Take a look at your credit card benefits and educate yourself on exactly how you are covered in the event that you need protection. Keep a watchful eye over your accounts to make sure you have authorized all of the transactions listed on your bank statements. Some examples include:
- Some issuers won’t honor their fraud policy if you fail to sign the back of your credit card.
- The parties held responsible and the process for investigations varies by issuer. It could be the bank, consumer, merchant, or the issuer.
- The time it takes to receive your funds can range from 1-10 business days.
- Debit and credit card protections differ.
- Some transactions aren’t covered, such as PIN-and-chip transactions.
Lastly, be sure to monitor your credit report regularly. If you are not already enrolled with a credit monitoring service, you should enroll as soon as possible.
*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.