Credit Card Companies, Made to Look Saintly by the Media
What About the real Victims of Credit Card Fraud--No, not You and Me
The news headlines are full of alarming stories about the theft of credit card information. Headlines such a s "40 million Credit Card Users at Risk" communicate to the public in no uncertain terms that credit card holders (you and me) have reason to worry.
But, is that really the whole story? Are we, the credit card holders, the actual victims if our credit card information is used in fraudulent purchases? The news media, while initially alarming us with such possibilities, usually go on to tell us (correctly so) that the credit card companies will come to our rescue, and void any fraudulent charges. All we need to do is report suspicious and false charges.
In other words, we do not have to worry after all. Here, unfortunately, the story usually ends, and the credit card companies come out looking saintly and generous. The impression is left that they protect us by assuming the risks and swallowing the losses on our behalf. For years, I have thought so. Be honest, is that not the impression you had as well?
But now, after personally experiencing losses, I am embarrassed to realize that the media withheld or failed to report "the rest of the story," and I fell for the partial truth. The real losers of credit card fraud are neither the credit card holders nor the credit card issuers. The real and immediate victims are the businesses and merchants we frequent every day.
Here is how it usually works. During a sale the business takes the buyer's credit card information, and, after obtaining authorization for the charge from the credit card company, hands over or mails the merchandise in good faith; within a couple of days the business receives the funds in their bank account.
However, when a credit card holder subsequently questions or disputes a charge (even months later), the credit card company will without warning (yes, despite the authorization previously given) withdraw the money again from the account. The burden then rests on the business to provide proof of the legitimacy of the charge to affect a reversal. If that proof cannot be furnished (i.e., in the case of fraud), the business is out the merchandise AND the money.
Did the credit card company risk or swallow anything? no. Did the credit card holder whose information had been stolen lose anything? no. Who paid for the fraud? the merchant; end of story!
Why does this seem to be kept from the public, is it a secret? Why do businesses and business associations not stand up and insist on having this impression corrected? Is there some common good achieved by having the credit companies look so benevolent?
If we do not realize that the merchants we do business with every day are the actual risk takers and immediate losers, we might not realize that in the end, we ourselves become the losers by having to pay higher prices to offset the losses that merchants--and not the credit card companies--have been burdened with.
Here is a thought: U.S. Regulatory agencies should take a lesson from Europe where businesses are not the sole risk takers. Credit card issuers in Europe apparently have to share in shouldering the risks and losses incurred. Now, does that not sound appropriate?!
