What to Expect When Your Credit Card is Compromised

You have probably seen the past headlines. 

“94 million Cardholders Affected By Compromise of Credit Card Information.”

“40 Million Credit Card Records Accessed by Hackers in Breach of Merchant Systems.”

“Retailer Settles Claims Related to Breach of Customer Card Data.”

With the number of computer hackers working daily to access consumer data, it may be difficult to escape being part of a credit or debit card compromise.  When it happens, how are you affected and what can you expect?

What is a card compromise?

Card compromises occur when hackers access the card payment systems of retailers and other merchants.  These hackers are criminals who wish to capitalize on this information for financial gain.  They will either use the card account information themselves or sell it to others looking to make fraudulent purchases.

If your card information is included in a merchant data breach, your credit card issuer (usually a credit union or bank) will let you know.  It is important to understand that while the issuer is communicating with you, the financial institution or card issuer systems were not hacked.  The breach of security has occurred at a merchant who accepts plastic cards for payments. 

Once determined that a merchant hack has occurred, the major credit card networks (MasterCard, Visa, American Express, etc.) will notify the issuing financial institutions which will then communicate and take action with their cardholders.

Hackers would probably describe their actions as a “victimless crime,” but it is far from that.  The merchants are victims as they incur a blow to their reputation.  The networks and card issuers incur significant expenses in handling the communications and actions required to protect their cardholders.  Finally, you, the consumer, are inconvenienced.

 

How does a card compromise affect you?

You have zero liability for fraudulent charges as long as you promptly notify your card issuer of the transactions and have exercised reasonable care in safeguarding your card.  However, your card issuer should take action to minimize the potential for fraud on your account.

Some card issuers will simply ask you to monitor your account for fraudulent activity when they notify you that your card information was part of a merchant data breach.  If your card issuer takes this approach, it is important that you monitor your account activity very carefully every day for a reasonable time.  Who wants to do that? Instead, you may want to contact your card issuer and request they cancel your current card and issue a new one to you. 

Some issuers will automatically replace your card.  You will have some inconvenience since you will need to change automatic payments and other accounts associated with your card.  You will also need to remember a new personal identification number (PIN) for your card. 

However, the short-term inconvenience of card replacement is likely preferable to monitoring your account closely and then going through the hassle and risk of reporting any subsequent fraudulent transactions that occur.

When an established pattern of fraud is evident at the discovery of a card data breach, your card issuer may restrict your card use temporarily until issuing a new card.  For example, since more fraud may occur in transactions authorized by signature, your signature limit may be suspended.  In this case, you can complete transactions using your PIN until you receive a new card.

“At Genisys, our stance is to re-issue cards compromised in a data breach,” says Michelle Mattson, Vice President of Remote Delivery Channels for Genisys Credit Union.  “Make no mistake; each merchant hack is done with malicious intent.  We take actions that will cause the least hassle to our members in the end.  We do everything possible to communicate quickly with members affected by a merchant breach and act to maintain as much continuity of card use as possible for our members.” 

“We also have a responsibility to all of our credit union member-owners to limit the costs associated with the reimbursement of fraudulent transactions as much as possible,” added Mattson.

 

What can you do to protect yourself?

You may be tempted to stop using debit cards and credit cards altogether.  However, with zero liability, credit and debit cards are still more secure than paying with cash or checks.

The best action for controlling the use of your cards is to download the CardNav app.  This app gives you the power to turn your card off when you aren’t using it, and on when you need to perform a transaction.  If notified that your card has been included in a breach, this can be an additional way to protect your card from fraudulent transactions until you receive your new plastic.

 

Read those important notifications.

Whether you receive notice by email or snail mail, it is important to read any notifications sent to you regarding your debit and credit cards.  Knowing the actions of your card issuer will help you understand your protection from the potential hassle of fraudulent transactions on your account and any actions you should take.

 

© Genisys Credit Union and www.genisyscu.org, 2017.  Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content.

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